Steps Involved In A Good Real Estate Transaction
Preliminary Steps: Real estate purchases in the Dominican Republic do not always follow the North American pattern of a written offer tendered by the buyer to the seller, followed by the seller's written acceptance. At Prestige Realty we follow the North American pattern. After a written offer is prepared and accepted by both the buyer and seller, a more detailed Promise of Sale is prepared by an attorney (solicitor) or notary public which is signed by both parties. Notaries in the Dominican Republic are required to have a law degree. At Prestige Realty we follow the North American pattern and we start with a written offer and a signed acceptance before we move on to the Promise Of Sale. This is for the protection of buyer and seller.
It is recommended that the prospective buyer retain a real estate attorney (solicitor) before signing any documents or making a deposit. Depending on the wishes of the parties, the attorney (solicitor) may proceed with the due diligence first, before preparing the Promise of Sale, or alternatively, prepare the Promise of Sale first, conditioning the purchase to the results of the due diligence to be done in a specified term. At Prestige Realty we work only with the best and most reliable of lawyers.
Promise of Sale:
This a formal document, binding on both parties, and signed by them in the presence of a Notary Public. From a practical point of view, it is more important than the Deed of Sale, since it generally contains a complete and detailed description of the entire transaction up to the time when the purchase price has been paid in full and the property is ready to be conveyed to the buyer. A well-drafted Promise of Sale should contain at least the following provisions:
(a) Full name and particulars of the parties. If the seller is married, the spouse must also sign.
(b) Legal description of the property to be purchased.
(c) Purchase price and payment terms.
(d) Default clause.
(e) Date of delivery of the property.
(f) Due diligence required or done.
(g) Representations by the seller and remedies in case of misrepresentation.
(h) Obligation by seller of signing the Deed of Sale upon receipt of final payment.
Many attorneys (solicitors) and notaries in the Dominican Republic do not protect the buyer adequately in the Promise of Sale. Among the most common deficiencies are the following:
(a) The buyer is allowed to pay a large percentage of the price of sale without any security or direct interest over the property. In case of misuse of these funds, the buyer's remedies may be limited to suing the seller personally. Many condo buyers in Santo Domingo have suffered through this experience in the last few years. Generally, the developer uses the buyers' funds, along with a bank loan, to finance the construction. The bank collaterizes the loan with a mortgage on the property. If the developer runs into financial difficulties or misappropriates the funds, the bank forecloses and the buyers lose both their money and "their" property. At Prestige Realty we make sure you are protected.
(b) Payments are not conditioned on the availability of clear title or the adequate progress of construction. Sellers, therefore, may demand payment or place the buyer in default without performing their own basic obligations.
(c) Escrow agents are rarely used. The seller, therefore, has control over the funds as they are paid. At Prestige Realty we make sure you are protected by keeping the fund in YOUR lawyers escrow account until the project is completed. We also do hold-backs until the Title is cleared.o:p>
Deed of Sale ("Contrato de Venta"):This is also a formal document binding on both parties, and signed by them in the presence of a Notary Public. It is used primarily for the purpose of conveying the property from the seller to the buyer.
In case of a cash purchase, it is simpler and cheaper to go directly from verbal negotiations to the signing of a "Contrato de Venta", instead of taking the preliminary step of signing a Promise of Sale.
Determination and Payment of Transfer and Registry Taxes: The authenticated Deed of Sale is taken to the nearest Internal Revenue Office where a request is made for the appraisal of the property. The Internal Revenue Office checks if the seller is in compliance with his tax obligations and selects an inspector to do the appraisal. The determination of the amount of taxes to be paid may take a few days or weeks, depending on the availability of the property inspector.
Filing at the Registry of Title: Once the property has been appraised and taxes paid, the Deed of Sale and the Certificate of Title of the seller are deposited, along with the documentation provided by Internal Revenue, at the Title Registry Office for the jurisdiction where the property is located.
Certificate of Title: At the Title Registry Office, the sale is recorded and a new Certificate of Title is issued in the name of the buyer. The property belongs to the buyer from the time the sale is recorded at the Registry. The time for the issuance of the new Certificate of Title may vary from a few days to a few months depending on the Title Registry Office where the sale was recorded.
Many attorneys (solicitors) in the Dominican Republic do not perform the required due diligence on real estate transactions, limiting themselves in many cases to obtaining a certification on the status of the property from the Title Registry Office. It often happens that the real estate agent and/or the seller pressure the buyer into a hurried closing despite the advice of legal counsel.
To start the due diligence, the seller should provide the buyer or the attorney with the following documents:
Copy of the Certificate of Title to the property.
Copy of the official survey to the property or plat plan. Under the new Property Registry Law, the sale of properties without a government-approved plat ("deslinde") cannot be recorded at the Registry, except in some cases.
Be Aware: Real Estate is not regulated here. Many "companies" are nothing more than a web site and many "agents" have no training and ever less scruples. I was trained and licensed to sell real estate in Canada and have been selling here in the Dominican for six years. All of our clients are very satisfied with our experience integrity and service.