1. General
1.1 Governing Law
In the Dominican Republic, construction contracts are mainly governed by the Civil Code.
The construction industry is governed mainly by the following laws and regulations (other regulatory agencies and regulations apply in specific industries and sectors not listed below):
- Law 160-21, which creates the Ministry of Housing, Habitats and Buildings;
- Law No 687-82, establishing a system for the development of technical regulations for the preparation and implementation related to engineering, architecture and related fields;
- Law 158-01 on incentives for the development of the tourism industry;
- Law 108-05, the real estate law;
- Law 189-11 on trusts and development of the mortgage market of the Dominican Republic;
- Law 340-06 on public procurement (which concerns government contractors for construction projects);
- Law 47-20 on public-private partnerships (PPPs);
- Law 176-07 on the national district and municipalities;
- Law 64-00 on environmental protection;
- Regulations of the Ministry of Housing for private constructions;
- Regulations of the Ministry of Public Work for public constructions and infrastructure;
- Regulations of municipalities for zoning of each demarcation of the Dominican Republic;
- Regulations of the Ministry of Tourism for touristic developments; and
- Regulations of the City Halls for zoning and allowances.
1.2 Standard Contracts
In the Dominican Republic, construction contracts are primarily governed by the principle of contractual freedom.
Various formats are used and are influenced by civil law countries, as well as common law practice, including engineering, procurement and construction (EPC), general contractor and turnkey contracts, depending on the nature of the project and the parties involved.
While international models such as FIDIC are occasionally applied – particularly in projects financed by multilateral institutions (ie, the IDB or World Bank) – there is no mandatory use of standard forms.
Contracts are generally drafted on an ad hoc basis.
2. Parties
2.1 The Employer
In the Dominican Republic, employers in construction projects include:
- Dominican estate (government), considered the main source of these activities;
- real estate for home and commercial developers;
- touristic real estate and hotel developers;
- industrial investors and developers;
- energy investors and developers;
- international organisations or NGOs; and
- private companies or entities.
The employer is generally responsible for paying the agreed price in accordance with the terms and conditions established in the contract. The price may be paid upon delivery or in instalments. Progress payments are typically made based on quantity surveys (locally referred to as pagos por cubicación), certified by the supervising engineer. There is contractual freedom in this regard.
The employer is to receive the work completed by the contractor. Reception of the work is a unilateral legal act by which the employer formally approves the work performed.
The employer is not necessarily linked to the subcontractors. In big projects or developments, the employer tends to have a general or EPC contractor that will take care of all the elements for building the project and delivering it. In that sense, subcontractors are only parties linked contractually to the general contractor.
In the Dominican Republic system, a subcontractor's breach of contract towards the general contractor can trigger a claim by the employer based on a civil liability figure as a tort, but not a contractual action or claim.
Regarding financing parties, it is common for lenders to require comprehensive security over the project, including:
- performance bonds;
- parent company guarantees;
- assignment of contractual receivables (cession of contract flux);
- pledge over project accounts;
- mortgage over land or buildings;
- fiduciary transfer of assets; and
- other typical project finance collateral.
In some projects, depending on the risk and value of main collaterals, lenders may also request subsidiary guarantees from shareholders or related parties, as well as a pledge of shares in the project company.
In public projects, multilateral financing entities typically require the issuance of sovereign debt, which must be approved by Congress in accordance with constitutional and legal procedures.
2.2 The Contractor
In the Dominican Republic, in principle any company can act as a contractor for a construction project.
From a regulatory standpoint, however, construction work requires the involvement of a licensed engineer and/or architect registered with CODIA (Colegio Dominicano de Ingenieros, Arquitectos y Agrimensores, the national professional association). No construction project may proceed without such licensed professionals, who must be the appointed persons responsible for the execution of the works.
The employer generally has the right to demand that the contractor fully and faithfully execute the project as per the agreed scope of works.
The contractor must have the technical, financial and professional qualifications necessary for the job. These requirements are more strictly applied in public procurement, where the contractor is selected based on specific criteria outlined in the bidding documents.
In the private sector, although the demands are less formalised, the contractor is still expected to possess the necessary capabilities and relevant experience to carry out the project as promised in the contractual relationship.
2.3 The Subcontractors
In the Dominican Republic's construction industry, it is common for general contractors to engage specialised subcontractors to handle specific aspects of the project, such as electromechanical installations, mechanical systems, plumbing, finishing works, landscaping, furniture-fixtures-equipment (FFE), elevator installation or lighting. These subcontractors operate in niche segments within the broader construction scope and are often necessary to ensure highquality and technically complex execution.
There are no legal limitations on the use of subcontractors. However, many civil and commercial contracts require prior disclosure of subcontractors for purposes such as background checks or conflict-of-interest assessments.
In public procurement, subcontractors must often be approved by the contracting authority, especially if their participation exceeds a certain threshold – typically 25% of the project value – set either by law or by the terms of the tender.
Subcontractors typically have a contractual relationship only with the general contractor, not with the project owner. As a result, any claims or disputes generally arise between the general contractor and the subcontractor. Nonetheless, it is advisable for the owner to review key subcontracting agreements to ensure that they include appropriate termination or exit clauses, thereby avoiding disruptions to the overall project due to subcontractor-related issues.
2.4 The Financiers
Construction financing in the Dominican Republic is flexible and encompasses a wide range of models depending on the nature and scale of the project.
Financial arms in the Dominican Republic's construction sector are of various kinds. The main, most common and simplest is the bank, through debt financing.
There are also pension funds, investment funds and brokerage firms that securitise specific projects in order to attract investors to contribute capital for the development of construction works, mainly with the objective of keeping the final asset as part of the portfolio.
Hedge funds, venture capital firms, multinational banks and multilateral institutions (such as the World Bank and CABEI) are also involved.
When the Dominican State is a party to the contract, it is required by decree that proof of funding approval be presented. However, these funds are often allocated to the contracting entity's budget through a sovereign debt loan previously approved by Congress.
Something specific to the Dominican Republic – particularly in small to mid-scale residential and commercial developments – involves suppliers themselves, who finance their materials or even deliver them in exchange, either fully or partially, for part of the final product of the construction. Part of the construction budget is financed through materials that are later paid for with delivery of the completed product, such as apartments or commercial units to the creditors (suppliers). In many cases, a significant portion of the developer's debt to suppliers is settled partly with units from the project and then with cash.
Financing methods are adapted to the commercial purpose, scale and risk profile of each project. The regulatory framework permits a high degree of contractual freedom, allowing developers and financiers to structure custom solutions that balance risk, control and profitability.
Guarantees offered in construction financing may include:
- mortgages over the land and improvements;
- pledges of company shares or contractual receivables;
- personal or corporate guarantees from developers;
- pledges of construction materials, equipment and movable assets; and
- escrow accounts or fiduciary fund control mechanisms, specially structured via Law 189-11.
2.5 The Designer
In the Dominican Republic, architectural design is generally provided by architectural firms, which may be either local or international. Several prominent international firms operate in the country and have been responsible for major design projects.
It is common for developers or promoters to engage well-known foreign firms – often based in the United States or Europe – to create the design for the construction project.
These designs must ensure compliance with local building codes, regulations and construction practices.
For execution, local guidance is necessary. This local guidance is crucial, as fully foreign designs often encounter challenges during implementation due to differences in technical standards and construction methods. For this reason, the involvement of a local team is recommended.
Regardless of whether the original design is developed abroad, Dominican regulations require that all construction plans submitted for permitting be signed and sealed by a licensed architect or engineer registered with CODIA. Without this, the plans cannot be processed or approved by the relevant authorities.
In terms of compensation, design services may be billed as a professional fee paid by the developer. In other cases, the design may be contributed as equity to the project. Some firms waive the design fee altogether if they are also contracted to carry out the construction, in which case the cost of the design is integrated into the overall construction budget.
3. Works
3.1 Scope
In this jurisdiction, the scope of work in construction contracts is freely determined by the parties, in accordance with the principle of contractual freedom. The definition of the contractor's obligations generally depends on the type of contract involved.
In the case of EPC contracts, the scope of work is typically more comprehensive and includes not only construction but also the design, procurement of materials and equipment, and commissioning of the project. These contracts usually require the contractor to deliver a fully operational facility that meets specific performance criteria agreed upon with the project owner. Accordingly, the description of deliverables in EPC contracts tends to be highly detailed.
In turnkey agreements, the scope of work typically includes all components necessary for delivering a fully functional project.
In real estate, tourism or industrial developments, the scope is defined based on the construction documents, along with a general and detailed description of all deliverables required for proper acceptance by the project owner.
It is rare to find a construction contract that does not include a clear and precise definition of the contractor's obligations with respect to the final product to be delivered. These obligations are usually aligned with the general description of the project, as found in the construction documents prepared by the project's architects or engineers.
In fact, in most cases, the construction documents, plans and technical specifications developed by the design professionals are included as annexes to the contract. Similarly, the description of materials, the brands of the equipment to be installed, and other technical features form part of the contractor's obligations and define the deliverables of the project.
3.2 Variations
In more complex construction contracts, it is common for the parties to adopt communications and change management protocols for all matters related to modifications, additions and clarifications.
These include requests for information (RFIs), submittals, change orders and additional work orders, which are typically formalised using templates agreed upon by the parties. Such documents usually specify the nature of the change, the pricing adjustment, the scope of work and any extension of the substantial completion deadline.
Also, these changes and additions fall within the scope of contractual freedom, and the parties may choose to implement such protocols or to proceed with modifications as they see fit. It is important that these be mutually agreed on and properly documented, in accordance with Dominican civil law. It is essential – particularly in fixed-price or lump-sum contracts – that any changes be formalised in writing (whether hard paper or electronic), to comply with provisions of Article 1794 of the Civil Code.
The communication protocol and the way in which modifications are documented are very important, since the risks of improper execution or unauthorised changes typically fall on the contractor.
Therefore, proper legal planning and contract administration are crucial to managing construction risks effectively.
3.3 Design
In most cases, the project design is prepared by architects and engineers hired by the employer.
Once the construction documents are finalised, they serve as the basis for contractors to submit their bids or prepare budgets in accordance with the design. It is therefore not common for the contractor to also be responsible for doing the design, although there is no legal restriction against it and in some cases this approach is also adopted.
A key issue in such situations is whether the contractor performs a design audit or technical review of the plans and specifications.
During execution, inconsistencies or omissions in the original design may arise, requiring adjustments or additional works – for example, the need to construct footings or slabs not originally shown in the plans; this can be a situation adverse to the contractor, if no provisions or proper language are included in the contract.
3.4 Construction
The party responsible for the design and plans is usually the one hired by the project owner for that specific purpose. This same party is often also tasked – either directly or in co-ordination with a legal or technical team – with managing all necessary permits and approvals for the construction.
Once the project is ready for execution, the general contractor typically assumes responsibility for construction. This general contractor is free to engage subcontractors as needed for specific components or work packages, according to the structure and complexity of the project.
In terms of liability, it is uncommon for the project owner to directly engage multiple contractors for different portions of the work. The standard practice is to appoint a single general contractor, who is then responsible for organising and managing all related subcontractors, suppliers and collaborators.
3.5 Site
In this jurisdiction, liability for environmental matters related to the land and site – such as contamination or archaeological findings – rests primarily with the project owner, who is generally also the landowner.
While the contractor may be held liable for environmental harm directly caused by its own actions, overall responsibility for ensuring compliance with environmental regulations throughout the development process lies with the project owner.
Nevertheless, the owner may seek indemnification from the contractor if the breach of environmental law is attributable to the contractor's fault or negligence.
3.6 Permits
Construction licences, environmental permits, land use authorisations from municipal authorities and any other required permits – such as those issued by the Navy in coastal areas or by mining authorities, electrical authorities or tourism authorities, depending on the project – are all the responsibility of the project owner.
Although it is common for the contractor to be delegated the task of managing and processing these permits, the legal obligation to obtain them remains with the owner.
In some contracts, the contractor is expressly required to act as permit manager, but the responsibility for ensuring that all necessary licences and approvals are secured for the construction and real estate development lies with the project owner, since they are the party liable towards authorities.
3.7 Maintenance
Under the law and most standard construction contracts, the responsibility for maintaining the worksite – including all materials deposited onsite and the construction camp – generally falls on the contractor (typically the general contractor when designated as the main builder).
In some exceptional cases, a specific contractor may be assigned custodial duties, though this is uncommon. This obligation is both legal and contractual in nature.
While the parties may contractually agree to shift this responsibility, the general and prevailing practice is for the general contractor to bear it.
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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.
