| The town itself,
which owes its name (“silver port” in English) to Christopher Columbus
(who discovered the island in 1492), is crowded and bustling. Motorbikes
are ubiquitous, darting in and out and around. I wouldn’t want to drive
here. Not only because of the constant traffic, but both sides of the narrow
city streets are lined by large sewer culverts, at least a 12-inch drop
off. I can only imagine what might happen if you had to swerve into one
of these.
But Puerto
Plata is not without charm. With colorful Victorian-style houses, lively
plazas, and a nice ocean promenade, it has a truly Caribbean lilt…bringing
to mind Belize City or Nassau, for instance. There are some interesting
tourist sites here, including the ruins of the old San Felipe Fort, the
Brugal Rum Factory, and a couple of nice amber museums and galleries. (Dominican
amber is the best in the world.) Still, I wouldn’t want to live in Puerto
Plata. Too much hustle, bustle, and congestion. Instead, I would set my
sights further east along the coast.
The “Acapulco
Of DR”
A few miles
east of Puerto Plata is Playa Dorada, name to both a beautiful stretch
of beach and a gated complex containing (at last count) 17 resorts, an
18-hole golf course, several dance clubs and casinos, and a sizable shopping
center with a multi-screen cinema. Many visitors here never leave this
complex.
A bit farther
east (15 miles from Puerto Plata) is Sosúa. After Puerto Plata,
it is the commerce center of the north shore, followed by Cabarete, further
east.
In Sosúa,
you can still find a few of the lovely handcrafted houses built by Jewish
settlers in the 1940s. Nearby Playa Sosúa is a gorgeous stretch
of tranquil beach. Because the north shore of the DR is bordered by the
Atlantic Ocean, many of the beaches here are a bit rough. But not sheltered
Playa Sosúa. Occasionally referred to as the “Acapulco of DR,” this
area is known for its nightlife, but in my opinion, seems to attract a
more sedate crowd than Cabarete, which is a popular windsurfing spot and
attracts a younger, hipper crowd.
Cabarete is
funky, fun, and lively. Located on a lovely white-sand beach along an enormous
bay, the former fishing village now caters to tourists. Surfers, windsurfers,
divers, and party-makers crowd the beaches by day and the bars at night.
A “perfect moment” can be had at one of the many beachside restaurants
here, enjoying a meal on a warm, tropical night. Good food, good wine,
twinkling lights, a cooling sea breeze rustling through the palm trees,
lapping waves, your shoes kicked off, and toes dug firmly into the sand…it
doesn’t get much better.
Between Sosúa
and Cabarete you will find many lovely expanses of beaches, including Perla
Marina, Seahorse Ranch, Encuentro, Punta Goleta, Kite Beach, Playa Laguna,
and others. This area is home to many of the area’s residential districts,
both along the beach and high in the hills with an ocean or mountain view.
Many foreigners have invested here.
A Thriving
Property Market
Realtor Juan
Perdomo of Century 21/Juan Perdomo Real Estate Company provided some perspective
into the local property market. From 1989 to 1992 and from 1999 to 2002,
the area suffered through an economic recession, he said, and there was
no growth at all in real estate sales. Prices were stagnant. From 1993
through 1998, though, a real estate boom occurred and prices rose accordingly.
He is seeing this trend repeat itself now, with properties starting to
sell steadily beginning in 2004. He is confident that prices will continue
to rise, and investments appreciate, during the coming years.
Juan informed
us that along the north shore, prices of well-built residences are highest
in Sosúa (approximately $15 per square foot), up to two-thirds less
in Cabarete ($4 to $5 per square foot), and much less the further away
you get ($2 to $2.50 per square foot).
Realtor Dean
Brown showed us properties along the north shore. Dean is a transplanted
North Carolinian who moved to the DR about four years ago and has never
looked back. He says that the generosity and hospitality of the people
is one reason he stays, along with the relaxed island lifestyle. Families
with young children will be happy to hear that the English-based International
Schools of Sosúa is accredited in the U.S., and Dean tells us tuition
is approximately $5,000 per year.
Some Property
Samplers
You can buy
a magnificent ocean-view house in Sosua measuring 3,766 square feet, with
three bedrooms and four bathrooms for $340,000. The property sits on 1.7
acres of land with a swimming pool. Or, how about this—a seven bedroom/six
bathroom home with 5,380 square feet, on 1.11 acres of land with a swimming
pool, waterfall, and Jacuzzi for $330,000—it was originally listed for
$550,000. That’s on the high end of the property scale. $179,000 will buy
you a two-bed/two-bath house in a good location, with a swimming pool.
Or an apartment in a secure complex with swimming pool for $43,500. All
these properties are through Century 21 (www.juanperdomo.com)
It’s Easy
To Buy
In 1998, a
law was written allowing foreigners to buy property in the Dominican Republic
with the same rights and obligations as a Dominican citizen. The only requirement
is that the Title Registry Offices keep a record, for statistical purposes,
of all purchases made by foreigners. Acquiring property here is straightforward,
but, still, foreigners purchasing property anywhere in the world outside
their native countries need to exercise extra caution. The realtor and
the notario (real estate attorney) you work with should be able to help
you through the process. It never hurts to hire your own attorney, but
it is common for realtors to recommend attorneys they feel comfortable
with. The attorneys I have listed were recommended to me by Turalu Murdock
of First American Title Insurance Company. The attorneys, in turn, recommended
who they believe are the island’s best real estate brokers. I trust their
judgment but it never hurts to seek your own resources and advice.
Real estate
purchases in the DR work a little differently than in the U.S. Instead
of tendering a written offer, you first negotiate and reach a verbal agreement
on the price with the seller. Then, a binding “Promise of Sale” or “Option
to Purchase” is prepared by an attorney and signed by both parties. At
this time, the deposit or advance payment is normally made.
I am told that
many attorneys and notaries in the DR do not protect the buyer adequately
in the “Promise of Sale.” For instance, sometimes buyers are asked to pay
a large percentage of the sale price without any security or direct interest
over the property. (Escrow agents are rarely used.) If these funds are
misused, the buyer’s only recourse is to sue the seller personally—and
he may have become insolvent by then. This can be particularly disconcerting
if a bank forecloses on a development property. Even if the developer has
not performed his basic obligations, you could still be responsible for
making your payments as contracted.
Your best protection
is to get a trustworthy, reliable attorney, and title insurance. In the
Dominican Republic, as in many Latin American and European countries, the
government provides title insurance. Unfortunately, this governmental arm
is not known for its solvency, so seek out a private insurer like First
American Title Insurance.
Four Simple
Steps To Ownership
1. Buyer and
seller sign a “Contract of Sale” before a notario who authenticates it.
(Notaries in the Dominican Republic are required to have a law degree.)
The Contract of Sale contains the legal description of the property, the
price, and conditions of sale.
2. The authenticated
Contract is then taken to the nearest Internal Revenue Office for payment
of the appropriate taxes.
3. The Contract
of Sale and the Certificate of Title of the seller are deposited at the
Title Registry Office for the jurisdiction where the property is located,
and the sale is recorded.
4. The Title
Registry Office issues a new Certificate of Title in the name of the buyer
and cancels the old Certificate issued previously to the seller.
The time span
from the filing of the Contract of Sale to the issuing of the new Certificate
of Title may vary from a few days to a few months, depending on the Title
Registry Office where the sale was recorded.
Taxes And
Closing Costs
Expect to pay
approximately 5% of the sale price for taxes and closing costs. This amount
includes a transfer tax of 4.48%, document taxes, special stamps for registration,
and tips. Taxes must be paid before filing the purchase at the Title Registry
Office. Many buyers, with the complicity of their attorneys or notaries,
have been known to evade paying part of the transfer tax by lowering the
true purchase price in the Contract of Sale. This is common practice in
the DR and it has become so blatant and widespread that the tax authorities
have now set a minimum value for properties in some locations.
But, considering
that property taxes here are extraordinarily low (1% per year of the declared
value), unless you are buying a high-priced property, your annual taxes
will be negligible. So, committing fraud to lower your annual rate may
not be worth doing…especially if, when you go to resell, and 25% capital
gains taxes are due, your property is assessed at its true worth.
For these reasons,
you should probably do the right thing from the beginning and claim the
true price of purchase in your purchase documents. Ask your attorney for
advice…if you use a loophole in the law that allows you to buy property
through a DR corporation you have formed, you can lessen your tax burden
considerably.
Inheritance
Of Real Estate
There are no
restrictions on foreigners inheriting title to property in the Dominican
Republic. Inheritance taxes range from 17% to 32% of the appraised value
of the estate depending on the relationship between the beneficiary and
the deceased. If your beneficiary resides outside the DR, inheritance taxes
are subject to a 50% surcharge.
As in many
Latin countries, inheritance of real property is governed by a law which
provides for “forced heirship,” meaning that part of the estate must go
to certain heirs. For example, a foreigner with a child must reserve 50%
of the estate to that child despite the existence of a will, or of the
law of his country of residence. To avoid this application, you can own
your property indirectly through a holding company. Again, ask your attorney
to advise you of your options.
Perform
Due Diligence
Before purchasing
a property, hire a real estate attorney to do the due diligence. To start
this process, the seller should provide you and/or your attorney with:
1. Copy of
the Certificate of Title to the property.
2. Copy of
the survey to the property or plat plan.
3. Copy of
his/her identification card (cédula) or passport.
4. Copy of
the receipt showing the last property tax payment (IVSS) or copy of the
certificate stating the property is exempted from the IVSS tax.
If The Seller
Is A Corporation, It Should Provide
1. Copy of
the corporate documentation, including by-laws and resolution authorizing
the sale.
2. Certification
from the Internal Revenue Office showing the corporation is current with
its income tax filings.
If The Property
Is Part Of A Condominium, You Need
1. Copy of
the condominium declaration.
2. Copy of
the condominium regulations.
3. Copy of
the approved construction plans.
4. Certification
from the condominium showing the seller is current with his condo dues.
5. Copies
of the minutes of the last three condominium meetings.
If The Property
Is A House, You Need
1. Copy of
the approved construction plans.
2. Inventory
of furniture, etc. (Many properties in Latin America are sold furnished
and you want to be sure that, come closing time, you get the furnishings
you originally agreed to purchase and not lower-cost substitutions. This
should include bathroom and lighting fixtures, etc., right down to the
kitchen sink. (Tip: take photos.)
3. Copies
of the utilities contracts and receipts showing the seller is current with
his payments.
Once all the
above documentation is obtained, your attorney should go through this checklist:
Title Search:
A certification should be obtained from the Title Registry Office regarding
the status of the property, whether any liens or encumbrances affect it,
and you should insist that he/she confirms the results of the Registrar’s
search by personally investigating the appropriate files at the Title Registry
Office.
Survey:
An independent surveyor should verify that the property being sold coincides
with the one shown on the survey provided by the seller. (An exception
can be made if the property is located in a previously inspected subdivision.)
The survey should be checked even when the seller provides a government-approved
plat. Inspection of improvements: A qualified builder or architect should
examine any improvements to be made to any structures to confirm that the
plans presented are correct and that the improvements are in good condition.
Permits:
Have your attorney confirm that the property may be used for the purposes
you desire. Why? Because restrictions may exist that you are unaware of.
For example, a 60-meter “maritime zone” exists along the entire Dominican
coastline—from the high tide mark inland—designating all beaches as public
property. No building is allowed within the maritime zone without a special
permit. And in tourist zones, there are specific building restrictions.
Possession:
Your attorney should ensure that the seller is in possession of the property
and that no squatters rights exist. Dominican law is protective of the
rights of any tenants on the property, and evicting someone who doesn’t
want to leave willingly is time consuming and expensive. Be especially
careful with unfenced properties outside known subdivisions. Fencing them
before closing is advisable.
Employees:
The seller should pay any employees working on the property their legal
severance up to the time of the closing; otherwise you may find yourself
liable for these costs later.
Want A DR
Passport?
It is an easy
matter to obtain residency visas in the DR. You may first obtain a provisional
residency visa at the Dominican consulate closest to you and then your
permanent residence card at the General Immigration Office in Santo Domingo.
If you buy property in the DR, your residency visa will be expedited. To
speed the process, the Office for Foreign Investment Promotion has implemented
a special program for foreign investors making investments of more than
200,000 DR pesos. This means you need to investment less than $6,000 to
expedite your visa request.
Should you
want to become a Dominican national, it is easy to do so. If you were born
in the DR or have a Dominican parent, you are eligible for citizenship.
If you do not meet these requirements, you can apply for naturalization.
This request is made to the President of the country through the Ministry
of Police and Inner Affairs. Documents including birth certificate and
police records from your country of origin are required, as well as an
explanation of why you wish to become a naturalized citizen. You can submit
documents that support your request, including copies of your Property
Certificate if you have made a real estate investment, as required for
a residency visa. A DR attorney will normally charge $15,000 to $20,000
to help you through this process. The naturalization procedure lasts from
one to two years and then, voila, you are a passport-carrying Dominicano.
Who You
Need To Know In The DR
Real
Estate Agents
Century 21/Juan
Perdomo (Dean Brown or Juan Perdomo), Pedro Clisante 3, Sosúa, Puerto
Plata, Dominican Republic, West Indies; tel. (809)571-2100; fax (809)571-3121;
e-mail: wandabrown@codetel.net.do
(Dean) or jperdomo@codetel.net.do
(Juan); website: www.juanperdomo.com.
West Indies
Real Estate (Jose Lainz), Calle David Stern #6, Sosua, Dominican Republic,
West Indies; tel. (809)571-2820; fax (809)571-2860; e-mail: i.west@codetel.net.do;
website: www.caribpro.com/west-indies-real-estate.
Title
Insurance
First American
Title Insurance (Turalu Murdock), tel. toll free (US and Canada) (877)641-6767
or tel. (954)839-2900; e-mail: tmurdock@firstam.com.
Attorneys
De Marchena
Kaluche & Asociados (Lcdo. Enrique De Marchena Kaluche), Calle Max
Henríquez Ureña No. 34, Santo Domingo, República Dominicana;
tel. (809)549-3446; fax (809)566-5075; e-mail: m.kaluche@codetel.net.do.
Guzmán,
Ariza & Asociados (Lcdo. Fabio Guzmán), Duarte No.2, Tercer
Piso Sosúa, Dominican Republic, tel. (809)571-2880; fax (809)571-2928;
e-mail: fguzman@guzmanariza.com;
website: www.guzmanariza.com.
Lic. Guido
Perdomo, Sosúa, Puerto Plata, Dominican Republic, West Indies; tel
(809)571-1950; e-mail: Guido.perdomo@codetel.net.do.
Spanish
School
iLang DR Institute
of Languages, Calle Proyector 11, Sosúa, Puerto Plata; tel. (809)571-1114;
fax (809)571-1113; website: www.iLangDR.com.
(There is also a branch of this school in Santo Domingo.)
Medical
Matters
Centro Medico
Bournigal, Antera Mota Street, Puerto Plata, Dominican Republic, PO Box
#25; tel. (809)586-2342 or (809)586-4140; fax (809)586-6104; e-mail: info@bournigal-hospital.com;
website: www.bournigal-hospital.com.
Builder
Arq. César
Auddy Geurrero, Serinar/Bávaro; tel (809)552-1845; e-mail: cesarauddy@hotmail.com. |
