Buying a home

Types of home available

Once you have made a decision that you want to buy a home in the Punta Cana/Bavaro area, the next thing to do is find your ideal home. Max United Realty can take you through your options, and remember they are experts in finding that special ‘wild card’ which you may not have considered, but which could be perfect for you.

As we have discussed there are a range of areas available, some busier than others, and you may want to consider things like how far from the beach, from the airport, from shops, from schools, you wish to be. Decide if you want a condo, or a free-standing home. Do you need a pool, or access to a pool? How many bedrooms? Do you want a live-in maid? Would you like to be in a gated community, or on a golf course? Is the home just for vacations, for a vacation rental, for long term rental, an investment property or for year round living?

There are homes for every taste and every budget, from studios, through to one, two- and three-bedroom condos, penthouses, single family homes, mansions, anything and everything to suit all tastes and requirements.

Should you want something further afield, but still with easy access to the airport and the region, just let Max United Realty know, and you can be sure, with their local knowledge and contacts, they will find you just what you are looking for.

Purchase process in the Dominican Republic

The first thing to realize is that buying property in the Dominican Republic will not be anything like buying property in your home country. The good news, is that there are no restrictions on foreign ownership of property. Residents and non-residents enjoy the same rights and obligations as if you were citizens of the Dominican Republic.

However, procedures regarding the purchase of a real estate property in the Dominican Republic can be quite complicated, and of course, all of the documentation is in Spanish. This is one of the reasons you need a realtor who can speak both fluent English, and fluent Spanish so that they can translate everything for you. In addition to being able to do this for you, Max United Realty believes in providing their clients with all of the information, but at the same time, holding their hands and guiding them seamlessly through the whole home purchase process.

The first thing to know is that all real estate transactions are determined by law, in this case Property Registration Law No. 108-05 and its Regulations, which has been in force since April 4, 2007.

There is no concept of a written offer, as the first thing you have to do, once you have found your dream home, is to check out the legal situation of the property, as it is not unknown for people to sell property, which is not theirs to sell. Max United Realty will help you with all of this – in fact they may have already carried out the legal checks before they even list the property.

There are two main checks to carry out. First to go to the local titles’ office and check that the person selling the property is the actual owner, and at the same time to check that there is no mortgage or lien on the property. If there is, it will be recorded on the back of the title deed.

The second check is to go to the taxation office, Impuestos Internos, and check that all taxes relating to the property have been paid. While you can of course do this yourself, most people appoint a lawyer, or ask their realtor to carry out this task.

You also need to check to see if an official government demarcation survey has been carried out, known as a deslinde.

What is a deslinde?

Under the Property Registration Law, the sale of properties without a government-approved demarcation, known as a deslinde cannot be recorded at the Title Registry, except in the following cases:

1. Sales which happened before April 4, 2007, which may be recorded during a two-year period ending on April 4, 2009, and

2. Sales of the entire property which happened after April 4, 2007 (sales of portions are not allowed), just once.

This means that if the property has been sold on more than one occasion since April 4 2007, there will have to be a deslinde done before title registration can take place. This costs around US$1,500 or more, depending on the size of the lot. If the property does not have one, do not lose hope as the seller can arrange to have one done, prior to your purchase, or he may discount the price so that you can do one. You do need to be more careful, buying a property without a deslinde, but Max United Realty are the best people to advise you.

Agreeing the price

The price is reached verbally between the buyer and seller, which may be affected by any unpaid taxes or liens, or lack of a deslinde, and then a Promise of Sale Contract is drawn up by the seller’s attorney, and signatures witnessed by a notary public. Please note, that notary publics are not the same in the Dominican Republic as in the United States for example. They have to be a lawyer as well in the DR, and only so many are allowed in each province. All work they carry out must be done within the province.

At this stage, it is usual for a 10% deposit to be paid. Note: The buyer normally will cover the costs of the seller’s attorney.

The promise of sale contract will include:

• Full name and particulars of all parties. If the seller is married, under Dominican law, the spouse also must sign.
• Full legal description of the property to be purchased.
• Purchase price and payment terms. Note: often the payment terms can be flexible, so there can be some form of owner financing.
• Default clause.
• Date of handing over of the property.
• Due diligence still required to be done, in the case that the checks of title and taxation have not yet been carried out.
• Remedies in the case of misrepresentation.
• Obligation by seller of signing the Deed of Sale upon receipt of final payment.

The next stage is to move on to the Deed of Sale, which is called the contracto de venta, and it is signed by both parties, again in front of a Notary Public, and used to convey the property from the buyer to the seller. In some cases, the Promise of Sale contract does not happen and the parties moved directly to the Deed of Sale.

Filing the Title Deed

Once the tax has been paid (see Taxation section), then the title deed is filed, to be changed into the name of the new owner, and the new title deed is issued. This will normally take a few months, although you can pay an additional amount for the VIP service which is faster. However, from the day the title is filed the property is said to have transferred ownership.

What will I pay in taxes?

Once you have the authenticated Deed of Sale, this is taken to the nearest Taxation Office, where a request is made for the appraisal of the property. This is necessary to find out if the new owner will need to pay what is called the Impuesto Patrimonio Inmobiliario (IPI). Many people just call it the Rich tax, rather than the IPI. If the home is worth above RD$RD$7,438,197, which is around US$140,000 then a tax of 1% of the value over that amount has to be paid each year. For example, if the home is valued at US$250,000, then IPI is payable on US$110,000 at 1% which is US$1,100 a year.  This tax is paid annually, or can be divided into two payments, payable in March and September. However, there are some exceptions.

• If the home belongs to people aged over 65 and it is their only home, then no Rich tax is payable.
• Those foreigners who come to the Dominican Republic, and have Dominican residency, having qualified for it for being in receipt of a pension or rental income, if they are under 65, only pay 50% of the tax.
• No tax is payable on rural land.
• No tax is payable on any property worth under US$140,000.

In addition to the Rich tax, there is a property title transfer fee of 3% of the property value, which has to be paid. Once the inspector has appraised the property, the transfer fee is payable, but only once. The amount of tax to be paid, is determined by an inspector, and the time taken to do the inspection depends on his or her workload, but it can be a few weeks.

What do I need to look for in my new home?

Buying a home in the Dominican Republic can be straightforward but for someone not used to the country there can be pitfalls. Here are a few hints and tips to bear in mind, although remember, Max United Realty can advise you on all of these, and many more things to consider.

• Before purchasing a property check which electrical circuit it is on. Punta Cana and Bavaro area have their own private electricity company which rarely goes off, but the rest of the country is divided into A, B, C or D circuits. ‘A’ circuits have electricity 24 hours a day, but the other circuits have less with a ‘D’ circuit only having around 8 hours a day. If you are not on an ‘A’ circuit you will need a backup system such as a generator or an inverter. Even in Punta Cana/Bavaro area, it is worth checking if the property has access to an inverter or generator, just in case of any problems with the electricity.
• Check the water situation. Is it a cistern or a well or is there continuous street water? If it is the latter, how often does the water go off, if it goes off at all? Is there a tinaco, which is a roof top water tank, which provides water by gravity, should there be no street water?
• What is the hot water situation in the home? Central hot water shared by others? Is it an electric water heater, or solar power? What is the pressure like?
• Is there good cell phone coverage and internet? Which providers work well and which don’t.
• Ensure your lawyer checks that there are no unpaid water, electricity, phone or internet bills, otherwise you will be liable for them.
• Is there garbage collection? This service is not available throughout the country and if there is none you will have to dispose of your own garbage.
• Are there management fees payable? If so, how much and what do they provide?
• Are pets allowed in the home, or are there any condominium rules preventing this. What do the rules allow and not allow?
• There is rarely piped gas in the country for cooking, do you have to buy your own gas tanks or does the development have central gas? How is this paid for?
• What are the neighbors like? Not as important for single family homes as for condos, but try and find out if they can be noisy, or if any apartments are let out by Airbnb and full of party people all the time.
• Is the title deed in the name of the people who now own the home? Given the fact that you have to pay 3% when you transfer the title, many people do not bother, so when you buy a home you may find you are buying from the people who owned the home before the current owners. This is not necessarily a problem, as long as you can find the previous owners.

Financing options

Max United Realty are the best people to advise you on your financing options. Most homes in the Dominican Republic are bought for cash, mortgages are not that common. If you do want a mortgage from a Dominican bank, it is not impossible, but it is much more expensive than the United States for example, with APR at around 14% or more. You will also need to build up credit rating in the country, credit scores from overseas are not transferable.

You may also be able to get a mortgage on a Dominican property from your home country, or, some owners of property for sale may indeed agree on owner financing, which is usually significantly cheaper than the bank. Not all will do this though, and most insist on a hefty down payment.

Talk to Max United Realty about your financing options, the company really is an expert in this area and will be able to provide you with the best solution for you.