Real Estate 2025

1. General

1.1 Main Sources of Law

For the first 100 years or so following its independence in 1844, the Dominican Republic had a legal system based on French law, specifically on the Napoleonic Codes – civil, civil procedure, commercial, criminal and criminal procedure – under a constitution based on the US model, with three branches of government: a strong presidency, a legislature and a judiciary with the power to cancel acts of the other branches found to be unconstitutional.

Since the first half of the 20th century, however, there has been a move away from the French model, with the adoption of many statutes and codes inspired by other legal systems. Examples include:

• the Land Registry Law of 1920, founded on the Torrens system of Australian origin;
• the Labour Code of the 1950s and 1992, modelled on South American codes;
• the new Code of Criminal Procedure of 2002, based on the same adversarial principles that govern US criminal litigation;
• the new arbitration statute of 2008, taken from the model arbitration code prepared by the United Nations; and
• the new bankruptcy and insolvency statute of 2015, influenced greatly by US bankruptcy law.

The Constitution of the Dominican Republic lays out the fundamental framework for the organisation and operation of the Dominican government and its institutions, and recognises an impressive list of civil rights for all individuals, Dominicans and non-Dominicans, including an equal protection clause for non-Dominican citizens and investors. Article 25 of the Constitution expressly states that foreign nationals are entitled to the same rights and duties in the Dominican Republic as Dominican nationals, except, understandably, for the right to take part in political activities. Article 221 of the Constitution sets forth that the government will ensure equal treatment under the law for local and foreign investments.

Individuals and entities, domestic and foreign, have a quick and inexpensive remedy for the protection of their constitutionally protected rights: the writ of amparo, which is granted by all the courts and is subject to an appeal to the Constitutional Court.

Cases in Dominican courts are decided by judges, not by juries. Judges rule based on the texts of the Constitution and existing statutes, the precedents of the Constitutional Court (which are binding) and the precedents of other courts (which are not binding). They do not rule in equity, as in some common law countries, but the principle of good faith is recognised by statutory law and grants the courts some discretion. Punitive damages are not awarded in injury cases – just compensatory damages.

Regarding evidence, parol evidence is admissible in criminal, labour and commercial matters, and, under certain circumstances, in civil and real estate matters.

Finally, real estate laws are national in scope and application.

1.2 Main Market Trends and Deals Market Trends

The main trends in the real estate market in the Dominican Republic continue to be the development of important projects in the tourism sector. Many well-known international developers have created multiple projects, some of which are already operational, in the areas of Punta Cana, Bani, Miches, Puerta Plata, Santo Domingo and the southwest provinces of Pedernales, Barahona and Peravia.

A growing trend has been the use of publicprivate partnerships to develop new regions for tourism such as the development of the southwestern area of the country, Cabo Rojo and Bahia de las Aguilas in Pedernales, which are virgin beaches. This will be an eco-friendly development which will include hotels and residential developments.

There has also been Ciudad Juan Bosch, a real estate development of more than 12,000 homes, to which the government contributed land and infrastructure. The private sector is developing low-cost housing for low-income families in the city of Santo Domingo.

Tourism and luxury properties

Recently, local promoters, hotel operators and prominent landowners from the eastern region of the Dominican Republic created the Hotel and Tourism Association of El Seibo and Miches (PROMICHES), with the aim of positioning Miches as an environmentally responsible and inclusive tourist destination. PROMICHES will promote the development and growth of innovative and socially responsible businesses that protect and enhance the environmental and cultural diversity of the area, aimed at diversifying the country's tourism offering. Its 13 members represent projected investments totalling USD1.18 billion, as well as developments that will bring 3,400 new hotel rooms and 1,400 residential rooms to Miches, and the required infrastructure necessary to maintain its operations.

One of the most notable real estate trends in the Dominican Republic is the effect of the booming tourism industry on the market, which is driving demand for both commercial and residential properties, particularly in coastal areas. Another factor is the surge in foreign property investors, which has been pushing demand up. There is also an increasing demand for housing from the local middle class, driven by economic growth and improved access to financing. In terms of real estate as an investment, there is a noticeable trend towards buying properties for rental income, particularly in tourist-heavy areas. Properties such as beach-front villas, apartments in popular tourist destinations, and properties near major attractions are in high demand among investors. Areas with high tourist traffic, like Punta Cana, Puerto Plata, and parts of Santo Domingo, typically see a robust demand for short-term rentals. These regions cater to tourists and seasonal visitors who prefer renting over buying, leading to a vibrant rental market.

Another trend is the increasing popularity of luxury properties. The Dominican Republic has become a hot spot for wealthy individuals looking for high-end vacation homes and investment properties. The volume of luxury property transactions has been rising strongly since the end of the pandemic.

Eco-friendly real estate and government policies

There is also a growing trend for producing ecofriendly real estate. Many developers are now incorporating sustainable design features into their projects, such as solar panels, rainwater harvesting systems, and green roofs, making them more appealing to environmentally conscious buyers.

Regarding government policies in 2024, areas of focus include further development of infrastructure, like road expansions and airport upgrades, enhancing tourism facilities, and continuing to improve the legal framework for property transactions.

Disruptive Technologies

Disruptive technologies have transformed every step of the real estate value chain, providing massive opportunities for the industry. The technologies with the highest rate of adoption include augmented reality (AR), drones and artificial intelligence (AI), along with instant communication channels and social media, big data and the 5G network.

So far, the fastest adoption has been in AR and drones for surveying properties and neighbourhoods and for providing virtual tours. At the same time, due to the fast-paced nature of the business, instant communication tools and social media have also had a significant impact.

There is still room for improvement in the way big data is being used by the industry, but this will likely change as AI-powered customer relationship management and listings become more prevalent.

There are also high expectations of the 5G network, to which the president has given priority, as this will influence real estate development, from the way existing structures are used, to the way in which new structures will be integrated into the internet of things. Smart buildings have been the standard for new constructions in the country for some time now.

In addition, the expectation is that as blockchain technology becomes more mainstream, it will permeate the industry, having been touted as a far more secure and transparent way to conduct transactions.

1.3 Proposals for Reform

The Dominican Republic has been improving the legal framework to make the buying and selling of property more straightforward and secure. These efforts include streamlining the process for verifying property's title status, as well as improving transparency.

Regarding government policies in 2024, areas of focus include further development of infrastructure, enhancing tourism facilities and continuing to improve the legal framework for property transactions.

The government could not obtain the consensus for the comprehensive fiscal reform it had planned for the second half of 2024, so all taxes related to property purchase and tenancy remain the same

2. Sale and Purchase

2.1 Categories of Property Rights

Dominican real estate law recognises the following interests in real estate:

• absolute ownership;
• usufruct;
• easements;
• betterments;
• leases;
• condominium regimes; and
• privileges and mortgages.

It does not recognise co-operative ownership arrangements or other occupancy interests.

2.2 Laws Applicable to Transfer of Title

Registration rules are established by the General Director of the Registries of Title and are applicable nationwide. The Dominican Civil Code states that buyers pay all the fees, expenses and taxes required for conveyances, unless agreed otherwise by the parties.

2.3 Effecting Lawful and Proper Transfer of Title

The legal requirements for recording conveyances are the following:

• deed of sale (sales contract), authenticated by a Dominican notary;
• certificate of title, issued to the owner by the Registry of Title – a completely different document from the deed of sale, which serves as the only proof of ownership;
• certification showing that the seller is up to date with its property taxes;
• a receipt attesting to the payment of the real estate transfer taxes (currently 3% of the government-appraised value of the property) – the buyer is exempt from this tax in some cases (eg, first purchases in certain tourism projects and low-cost housing acquired with a bank loan);
• a copy of the identity card or passport of the parties, or tax card if a legal entity – non-resident foreigners need to provide an additional identity card from their country of origin in addition to their passports; and
• a copy of evidence of the purchase price or mortgage payment through a non-cash method, for operations involving more than DOP1 million (about USD16,858).

Registration rules are established by the General Director of the Registries of Title and are applicable nationwide. The Dominican Civil Code states that buyers pay all the fees, expenses and taxes required for conveyances, unless agreed otherwise by the parties.

2.4 Real Estate Due Diligence

The typical real estate due diligence overseen by the buyer's attorney regarding title consists of the following:

• obtaining a certification from the Registry of Title stating the legal status of the property;
• obtaining a certified report from an independent surveyor confirming that the official survey coincides with the property and that there are no overlapping surveys;
• obtaining a certificate from the Internal Revenue stating that the property tax, if any, has been paid;
• confirming that the property to be purchased may be used for the purposes sought by the buyer;
• investigating whether a third party is occupying the property;
• investigating the property's environmental status; and
• ensuring that the seller, especially if a corporation, has the authority to sell and can convey clear title.

Under the Torrens system (used for land registration as noted in 1.1 Main Sources of Law), there is no need to conduct a chain-of-title search. Title insurance is available but is not used frequently for various reasons – especially limited protection and costs – even though the indemnity fund set forth by the Real Estate Registration Law does not function properly.

The Real Estate Registration Law establishes that whoever registers first has priority over those who register after. Registration is deemed to be complete on the date the application is submitted for registration, provided that the application is approved, not on the date the Registry of Title issues the corresponding certificate.

Priority among different interested parties can be contractually reordered.

2.5 Typical Representations and Warranties

The Dominican Civil Code establishes that the seller has two main obligations: (i) the delivery of the thing that is the object of the sale; and (ii) guaranteeing the object of the sale.

The first obligation is fairly straightforward, as the seller fulfils its obligation with the delivery of the keys or the delivery of the title that protects the ownership of the real estate property.

As for guaranteeing the object of the sale, this involves (i) the peaceful possession of the object, and (ii) ensuring the absence if redhibitory (ie, hidden) defects. Although there are several statutes of limitation prescribed by law, the parties are also free to determine the period of enforceability of these obligations.

The typical cap is between 60 and 90 days, which gives the buyer enough time to carry out the corresponding procedures to transfer ownership of the property into their name. The sale contract must state the agreed period and the release in favour of the seller upon its expiration.

Warranties typically specify that:

• the property is registered to the seller and is of the dimensions mentioned in the title;
• there are no overlapping parcels;
• there are no liens, mortgages or third-party registered rights;
• the conveyance will not be affected by any tax liabilities;
• the seller will have to provide any documentation and sign any additional sets of documents required for the final conveyance of the title to take place; and
• all liabilities, including utility bills and contractors' fees, will be paid up to the date of closing.

The warranties are provided both in relation to the property and to the shares of the holding entity being purchased, if that is the case.

2.6 Important Areas of Law for Investors

Any investor who wishes to participate in the real estate market of the Dominican Republic should consider the impact on their investments of tax law, real estate law, environmental legislation and administrative law for licences, planning and the registration of the title of ownership before making a purchase.

2.7 Soil Pollution or Environmental Contamination

Issues of environmental clean-ups in real estate transactions are still very rare in the Dominican Republic. So far, this has been a problem only in the mining sector. Therefore, there are no general covenants in use. Of course, the parties to a contract are free to insert mutually agreed terms regarding long-term environmental liability and indemnity issues.

2.8 Permitted Uses of Real Estate Under Zoning or Planning Law

All planning and land use matters are handled by municipalities, the Ministry of Tourism (in tourist areas) and the Ministry of Environment and Natural Resources. The municipalities and the Ministry of Tourism establish the general rules regarding use (eg, residential, commercial, industrial, mixed, density, maximum height). Any construction or development that may affect the environment must also be approved by the Ministry of Environment and Natural Resources.

2.9 Condemnation, Expropriation or Compulsory Purchase

The Constitution and Law 344 of 1943 establish the legal regime for the government's compulsory purchase or condemnation of real estate. The Dominican Constitution states: "No person shall be deprived of his or her property, except on justified grounds of public utility or social interest, for which a person shall be paid a fair value before expropriation, as determined by the mutual consent of the parties or by the judgment of a court of competent jurisdiction, pursuant to the law. In case of the declaration of a State of Emergency or Defence, compensation may not be paid before the expropriation."

Law 344 establishes the specific procedure that the government must follow in any case of expropriation. Because the provisions of this law are of public order, allocations cannot be modified by contractual arrangements between the parties.

2.10 Taxes Applicable to a Transaction

A conveyance tax must be paid before registering the purchase of real estate. The conveyance tax amounts to 3% of the price of sale or the market value of the property as determined by the tax authorities, whichever is higher.

A 1% annual tax is assessed on real estate property owned by individuals, based on the cumulative value of the properties owned by the same individual, as appraised by the government authorities. Properties are valued without taking into account any furniture or equipment to be found in them. For built lots, the 1% is calculated only for values exceeding approximately USD150,000. For unbuilt lots, the 1% tax is calculated on the actual appraised value without the USD150,000 exemption. Individuals pay this tax every year on or before 11 March, or in two equal instalments: 50% on or before 11 March, and the remaining 50% on or before 11 September. This threshold is adjusted annually for inflation.

The following properties are exempt from the property tax:

• built properties valued at USD150,000 or less;
• farms; and
• houses inhabited by owners who are at least 65 years old and have no other property in their name.

Properties held in the name of a corporation or other entity are not, at present, subject to a property tax per se; however, a 1% tax is levied on company assets, including real estate.

There are also different tax treatments with regard to leasing to individuals or to corporate entities. Leases to entities are subject to valueadded tax and leases by individual landlords are subject to a 10% withholding tax that is credited towards the landlord's annual income tax.

2.11 Legal Restrictions on Foreign Investors

There are no restrictions on foreign individuals or entities owning or leasing real estate in the Dominican Republic. The process for purchasing or leasing real estate for foreigners is the same as for Dominicans; there are no national defence or security limitations. Foreign individuals and entities, and Dominicans, must register locally with the tax authorities before registering purchases of real estate. Individuals must submit their application directly at the Internal Revenue office, while entities must first register at the Chamber of Commerce and obtain a mercantile registry certificate, before applying for their tax number. These are merely formal requirements that can easily be fulfilled.

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Originally Published by Chambers and Partners

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.