Legal Steps for purchasing real estate in sunny Punta CanaMay 1, 2019 10:17 pm
You already made up your mind. You said to your partner – or to yourself!- ‘I’m making the decision; I’m buying real estate in sunny Punta Cana. So, what’s next?
Well, here’s the thing. Next comes paperwork -tons of it- a lot of visiting and a lot of talking, too.
Luckily, at Canablue we love making life easier to our clients. We are pros in making all these paperwork simpler and do all the visiting and talking.
And because we love making life easier to our clients (and real estate), we came up with a list of all the legal steps needed to buy re-sale or pre-construction real estate in Punta Cana, so you can get an idea of what to expect and also why it is best to let a real estate professional accompany you in all the steps that must be taken to finally enjoy your spot in Punta Cana.
Honestly, having a real estate professional is worth trying because he or she is aware of the best offers in the area and in the real estate market, and that’s a game changer for you and your money. 😉
First, do you know which type of investor are you? Are you looking for a second home investment or are you retiring in Punta Cana?
When you know why you’re making the decision of buying real estate it can be easier to determine between buying a re-sale or pre-construction property.
If you’re going to purchase re-sale…
Buying re-sale is great because you don’t have to deal with pre-construction: you are buying what you are getting, no surprises!
Step 1: Visit the property.
We always recommend visiting the property. You have to see, smell, touch and experience it. This gives you the opportunity to visualize yourself in the place and making an informed decision.
Once interested -and really excited about the place!- sign off a formal offer with the corresponding payment plan. A unit is usually reserved with 5% of the value of the purchase price, which is valid for 30-60 days. This gives your attorney enough time to review and prepare all legal work (a.k.a sales contract) and complete the proper due diligence of the property.
Step 2: You must hire an attorney.
We don’t recommend doing and revising all the paperwork without any guide or orientation.
Let the pros do their magic! (a.k.a us!)
Remember, closing costs are about 1% to 1.5% of the value of the purchase price, your attorney must know this. Also, keep in mind the following revision points:
- Liens on the Property (Certification of the legal status of the property in the Real Estate Jurisdiction)
- Property tax on the property (Tax on real estate property at the General Directorate of Internal Taxes (DGII).
- Confirm that the owner is not faulty with any maintenance or services (condo fees, phone, electric and water bills, etc).
- Property inspection by an expert inspector, find out more here.
- Any other needed inspections depending on the property to purchase, includingsurveyors, contractors, etc.
Step 3: Your attorney conveys the title to the new buyer.
Once everything is in place, sales contract is drafted, signed and notarized between the parties. The attorney, then, must convey the title to the new buyers’ name (a.k.a you!).
Step 4: It’s payment time!
Payment must be made of 3% of the value of the purchase price to transfer title to you in internal revenue. This is the transfer tax, and must be paid in this particular case, since we are talking about a re-sale. Re-sales are never applicable for the CONFOTUR tax exemption. Learn more about CONFOTUR here.
Step 5: Sale is registered.
After the payment is done, the sale is registered in the Title Registry and title certificate is issued under the new buyers name.
Step 6: Get to know if you have to pay any property tax.
You attorney must inform you If this is your case. Find out more about property tax here.
If you’re going to purchase pre-construction…
It’s new and it’s cheaper, pre-construction real estate has capital gain and added value just because it’s, well, new. Best of all? CONFOTUR law (we made a whole article about this on our blog).
Step 1: Yes, visit the property site, get to know the construction company and study all the corresponding plans.
Once interested and excited, sign off a formal offer with the corresponding payment plan. A standard payment plan in a pre-construction development would be as follows:
- 5% to lock price and place unit off the market.
- 15% for the signing of the promise of sale.
- 30% – 60% paid a long the course of construction.
- Remaining is paid upon delivery of unit. (Local bank financing is always possible!)
Step 2: A promise of sale is drafted.
A promise of sale is a contract that obliges the two parties: the construction company and the buyer, to finish and meet their payment installments in a stipulated time and to complete construction on a specific time frame.
Step 3: Revision of clauses, payments and warranties.
An attorney is not always needed in this case as construction companies usually cover this expense and the contracts to be signed are very standard. Nonetheless, we recommend hiring an attorney to review the following:
- Penalty clauses for late delivery in the promise of sale.
- Revision of the payments that must be made by the buyers.
- Revision of warranties that must be given by the seller.
Once promise of sale is signed and unit is delivered, the seller may hire a property inspection to go over the unit before receiving it. Find out more about inspections here!
Step 5: Title certificate is delivered.
Once received, the construction company must deliver to the buyer title certificate of the property.
Step 6: CONFOTUR is requested.
This is a crucial step when purchasing in a pre-construction development. Your attorney must walk you through this lengthy but much needed process which will allow you to enjoy your well deserved tax exemption. A transfer in 0 is requested to the Ministry of Hacienda, and later deposited in Internal revenue. This will allow your sale to pass by Internal Revenue tax free, from transfer tax and property tax for 15 years.
Step 7: Title is transferred.
For this to happen, the hired attorney must complete steps 3, 4, 5 and 6 above, so the transfer of the title in your name is done, tax free :). Find out more about CONFOTUR here.
Do you have any questions or doubts? Find out more about our legal services here or write or call us to make an appointment for further advising and consulting.
Remember we pride in being the only real estate company in Punta Cana that offers a full cycle service range, and that includes assistance in all the legal transaction side of your purchase in Punta Cana.
We make real estate easy!