Real Estate F.A.Q.
Frequently asked questions about purchasing property in the Dominican Republic
1. Financing : What should you know
In the Dominican Republic, financing, as in many countries outside North America and Europe is seldom available as you are accustomed. The majority of purchases are cash in full.
In the rare exception when financing is available then the following applies:
1) Local mortgage rates run approximately 20% to 21% per annum. USD mortgage rates run approximately 7,5% to 9,5% per annum
2) If you think of borrowing at home you will find that most North American banks do not offer home or property financing outside continental North America unless you take an equity loan on existing property you own there or take out a personal loan. Most European banks operate the same.
3) Rarely will a seller will offer to take back/hold financing (since he also paid cash and needs cash back to move on or purchase elsewhere)
BUT WHEN A SELLER DOES OFFER FINANCING it is generally a term no longer than 3 to 5 years with a minimum 50 to 60 % down payment of the sale price, at 4 to 6 % interest and equal payments to be made so that the full balance is paid off during that 3 to 5 year period.
So you see that IF you are to find affordable financing it will usually be direct from the seller. In those cases the seller will not transfer final title until the property is paid for. To protect your position the lawyer will hold the title in trust and the conditions of sale etc are registered at the land registry office. Upon payment in full the title is then transferred to you. This system works very well in the DR.
** PROPERTIES WITH FINANCING AVAILABLE FROM THE SELLER WILL HAVE A NOTE IN THE LISTING INFO** other wise there is none available
2. Can a foreigner buy and sell property?
Yes, you only need a valid passport to buy and sell. There is no need of a visa or residency to buy and sell any property. The purchase is easy. If you had agreed the price and conditions of the purchase with the seller or buyer, you both sign a „promise of sale and purchase“ contract. Next step is to make a 10 % downpayment to the lawyers escrow account. If the title check find out that anything is OK with the title and legals, the lawyer does the transfer of the downpayment to the seller. If not, he will refund the downpayment to the potential buyer! At least the restpayment ( 90 % ) will be done directly from buyer to the seller. Finally the title will be transfered into the name of the buyer.
3. What about transfer taxes when you buy property ?
It is normal that the buyer pay for all closing costs such as attornies fees transfer taxes, etc. approximately 4 % to 5 % of the purchase price. There are a number of government fees and taxes related to this process, some are fixed fees where as others relate to or are a direct percentage of the transaction amount. There are situations where tax exemption can occur, but it is important to find out where this is legally the case. The best thing to do is speak with us to learn what your options are for the particular property you are interested in purchasing.
4. What are property taxes in the Dominican Republic?
Only in the last couple of years has the government started to collect property taxes. Basicly it depends upon the value of the property you purchase. If you purchase a residential property and it is worth RD$ 6 Million Pesos or less (about US$134,000) then you pay 0 (zero) annual property taxes. If the home is worth more than that amount, you pay 1% of the value over and above RD$ 6 Million Pesos (or US$134,000). If you purchase raw land or undeveloped land , then in that case there is an annual property tax calculation regardless of the value. In our real estate listings you will find a large number of middle class home or luxury apartment for less than 6 Million Pesos (about US$134,000), so you will not have any annual tax payments on your Dominican Real Estate.
5. Can I, as a foreigner, own property in the Dominican Republic?
Yes, there is no restriction. A client need only present a copy of a current and valid passport as the identity document used for any sales contracts and eventual titles obtained from the title office. Recent legislation passed in the Dominican Republic has also strengthened the legal rights of foreigners as it pertains to property ownership and investments inside the country. You may use a real estate purchase as proof of local economic solvency as it pertains to the residency application process as well.
6. Is title insurance available in the Dominican Republic?
Yes. Stewart Title, a US company that is well known to many Americans. While obtaining title insurance may offer peace of mind for many buyers, regardless of whether or not you decide to purchase title insurance or not, you should always conduct a title search by a trusted company. You will not need to spend any additional money when you purchase your new property with Dominican Estate.
7. How much do dominican attorneys charge to escrow a purchase?
The standard fee is one percent ( 1% ) of the purchase price This will include title search, transfer of title, attorneys fees,etc.. Other work is on a case by case basis
8. What utilities are available?
Same as the US or Canada. Electricity 110/220 Volt 60 Hz at the North Coast .electric service has improved greatly electricity stills goes off from time to time depending on where you live. Some areas have 24hr circuits. Water: No problem with the water supply in most areas. Also well water is an option however not for drinking. Always use bottled water for drinking. Cable TV at the northcoast over 60 english based channels such as CNN, HBO, TNT, MTV....(all this for 15 USd monthly). The most advanced Telephone system in the Caribbean biggest Provider Claro also GSM System provided by Orange, Internet ADSL Flash and many WIFI access points in restaurants and internet cafes on the north coast. Propane gas tanks 50 or 100 lbs. Good Infrastructure with several international schools, supermarkets with international selection, A lot of bars, restaurants, hardware stores, boutiques etc.
9. What is the cost to build a house, standard quality in the Dominican Republic?
You can expect to pay at least US 60.40 per square foot or 650 USD / m2. This will include spanish ceramic tile floors, pine wood, or aluminum windows and doors, standard bathroom and kitchen fixtures. Plans and gardening are extra. A nice outdoor pool with filter and waterpump is arround 15.000 USD. Of course for your new home we will do an exact calculation.
10. How long does it take to build a house in the Dominican Republic ?
We generally say six to nine months. The only real time stopper is rain. All materials are available here on the island. Some materials imported some made or assembled on the island .We can help you build your dream home. Our experienced architects and engineers are at your service. With over twenty years of building and remodeling experience on the north coast we can eliminate the stress and frustration that comes with not knowing much about the area. You can plan to spend as little as US$ 60 to $ 70 dollars per square foot for a standard home or villa with all standard materials such as: Dominican ceramic tiles, aluminum windows, treated pine wood. Naturally we can also build a home of the highest quality with all imported material , here you will spend approx.US$ 800 to $ 1000. per sq. feet.
11. What about furniture, appliances etc.?
All the items necessary to furnish your new home can be purchased here in the country. To ship your furniture in containers is costly and time consuming. We do not recommend it! The typical caribbean style furniture rattan, wicker, is cheaper than anywhere else and all made by hand here in the country. With some design ideas and some pictures from newspapers and magazines many Dominican workers can custom build them to fit your needs.
12. Money related issues Banking, Accounts, CDs, Checking
All are available in US Dollars, EUR and Dominican Pesos. Banks do vary in interest paid on CDs. Dollar accounts are in savings and CDs only. The are many banks located in Sosua and Cabarete. Most of them are offering also Online Banking. The Dominican Peso is stable. Calculating the inflation from the Dominican Republic the real interest rate will be a lot lower.
13. Setback from ocean?
There is a sixty meter setback (60 mt or 200 ft) from the water line. This law is readily enforced however arrangements can be made which permit less distance in some cases.
14. How high can I build?
The maximum allowed on the north coast is eleven point twenty meters (11.20 mts.) or approximately thirty seven feet (37 feet). In some cases (below ground level) you can gain another floor. There is legislation in the works at this time to raise the heigth to four (4) stories, but needs to be approved . Properties that are advertised in the area do not necessarily reflect there true market value. We know how real estate purchases work in the Dominican Republic, what's involved, any other costs that may be associated, what questions to ask, etc., we will help ensure you make an informed purchase decision. Let our experience work for you ! We will provide you with at least a photocopy of the title to the property so that you or your lawyer can verify that the title is clear and that there are no liens against the property. It is also wise to have the seller provide a recent copy of the tax assessment of the property, matching it against the title to ensure it fully describes the property and all of its buildings. If you are a first time buyer in the Dominican Republic, it is in your best interest to gain the assistance of a reliable Real Estate Company to assist you with your purchase to ensure all of the particulars have been addressed in order to avoid future surprises.