Real estate ownershipi Planning
All planning, land use and change of use matters are handled by the municipalities where the real estate is located, the Ministry of Tourism (in tourist areas) and the Ministry of Environment. The municipalities and the Ministry of Tourism establish the general rules regarding use (eg, residential, commercial, industrial, mixed, density, maximum height, etc). Any construction or development that may affect the environment must also be approved by the Ministry of Environment.
The Maritime Zone, a strip of land along all the Dominican coastline measuring 60 metres from the high tide mark, is public property (Law 305 of 23 May 1968), and, as such, cannot be sold or purchased. However, it is possible for owners of the adjoining property to build on the Maritime Zone with a special permit granted by Executive Order Decree by the President.ii Environment
Any real estate project, subdivision or infrastructure must apply for and obtain environmental approval from the Ministry of the Environment and Natural Resources, pursuant to General Law on the Environment and Natural Resources 64-00, which regulates environmental pollution, the generation and control of toxic and hazardous substances, and the treatment of domestic and municipal waste, among other matters. Environmental due diligence is highly advisable for purchases of undeveloped land, as well as off-plan property purchases.
Environmental Law 64-00 requires mandatory insurance for projects needing a permit from the Ministry of Environment.
Issues of environmental clean-ups in real estate transactions are still very rare in the Dominican Republic. So far, this has been a problem only in the mining sector. Therefore, there are no general covenants in use. Of course, the parties to a contract are free to insert mutually agreed terms regarding long-term environmental liability and indemnity issues.iii Tax
A conveyance tax must be paid before registering the purchase of real estate. The conveyance tax amounts to 3 per cent of the price of sale or the market value of the property as determined by the tax authorities, whichever is higher.
Also, a 1 per cent annual tax is assessed on real estate properties owned by individuals, based on the cumulative value of all the properties owned by each individual as appraised by government authorities. Properties are valued without taking into consideration any furniture or equipment to be found in them. For built lots, the 1 per cent is calculated only for values exceeding 7,138,384.80 Dominican pesos. The amount of the exemption is adjusted annually for inflation. For unbuilt lots, the 1 per cent tax is calculated on the actual appraised value without the exemption. The real estate tax is payable every year on or before 11 March, or in two equal instalments: 50 per cent on or before 11 March, and the remaining 50 per cent on or before 11 September.
The following properties are exempt from paying real estate tax: (1) farm properties; (2) homes whose owner is 65 years old or older, and has no other property in his or her name; and (3) properties owned by companies, which pay a separate tax on company assets.iv Finance and security
Mortgages (financing from third parties) and privileges (seller's financing) are the customary security interests. Both grant the lender a registered right on the property (collateral) that can be enforced in case of default through a foreclosure process. Holders of mortgages and privileges must go through a court-supervised foreclosure procedure to execute the mortgage; automatic defeasible conveyances in case of default are illegal.