It’s the beginning of December, and all around North America and Europe, the temperature is dropping. Perfect time for a Road Trip to Playa Grande.
Thankfully, we don’t live in either of those places, we live in The Dominican Republic.
That gives us year round options for things to do, and after a visitor came in on Saturday, we decided to put some gas in the truck and head East to Playa Rogelio for lunch and Playa Grande for a swim.
Playa Rogelio, not the most prominently known beach in the area, is located about 1 hour drive from Sosua. There is no signage on the highway, and it’s honestly only through having visited the beach on horse riding excursions over 15 years ago, that later on I remembered about it.
Fast forward to 2020 and there is now a quaint row of restaurants and bars, right on the beach, that serve a variety of seafood, meat and international dishes, along with cold drinks. Our favorite spot to visit is called “Carolina Restaurant” where I have been visiting for almost 3 years now. There is a kitchen side bar and several cana covered kiosks with chairs and benches, pretty much all with amazing ocean views.
So this is not a food blog, but I had to take some pictures of the 4 meals we ordered, as they were all fresh, fantastic and mind-blowingly affordable.
So our order of Lagonstinos (baby lobster), Lambi a la criolla (creole style conch), fried chicken and a whole 2lb fried fish, was both fresh and delicious. Including sides of plantain, sweet potato, chips, rice and beans and salads and a few waters and sodas, the bill only came to RD$2,000 – which is at the current exchange rate only US$35.
The view here as mentioned earlier, pretty amazing…below are some images of the beach itself.
So after we finished our meal we made way to Playa Grande, a 30 minute drive or so, through to the eastern side of Rio San Juan. Now you have probably heard of this place before as it has been subject in recent years to heavy investment from international development groups. As a result, around 9 years ago the beach vendors were moved from one end of the beach to the opposite side. New entrance, kiosks, bars, gift shops and bathrooms were built.
Lavish villas and hotel rooms have been constructed around the golf course and on parts of the beach, and prices allegedly start at the US$1,000 per night mark. Various famous people have reportedly vacationed there in recent years. As we mention, beaches in The Dominican Republic are public and weather you decide to use the Playa Grande facilities or bring your own chairs and food/drink – it’s up to you and your access is guaranteed.
Playa Grande is a perfect beach for walking – it is over 1km long. So back to part II of today’s road trip, a few dips in the ocean and a couple of cold beers with a view to die for.
Then back in the car, and a drive back home before dark. Lovely day was had by all. It’s a road trip we have taken many a client/friend on, and it’s worth it when you want to go and see places new.
Read about more North Coast beaches here in our lifestyle section…
The Process and Laws around Buying Property In The DR.
Introduction:
All property transactions within the Dominican Republic are governed by Law No: 108-5 which has been in place since 2007. To own a property, you must have a Certificate of Title, which is issued by the Title Registry Office. To follow is a guideline of the complete process to keep you informed and properly prepared.
Initial Stages:
Firstly, the process is a little different here in The Dominican Republic. In some countries the practice is to submit a written tender which normally comes from the buyer to the seller, after which the seller formally replies accepting the bid. Here in The Dominican Republic, a written agreement is reached between the buyer and the seller regarding the price, along with a good faith deposit, typically U$500-1,000. If the bid for the property is accepted, the buying process can move forward. If for any reason the bid is rejected, the good faith payment is returned to the buyer. From this point, a binding “Promise of Sale” document is prepared by a lawyer or Public Notary, which is then signed by both parties.
It is always recommended that the buyer retains a lawyer before signing any documents or making a deposit. Due diligence can proceed through the lawyer before preparing and signing the Promise of Sale document, alternatively, the Promise of Sale document can be prepared and signed but with a clause that conditions the purchase of the property subject to due diligence.
The Promise of Sale Document
Important: The promise of sale document is recognized as a formal document and is binding between both parties and agreed and signed in the presence of a Public Notary. The Promise of Sale document is extremely important as it should contain a very detailed description of the complete transaction in its entirety, and should outline the following:
Full names and details if the parties concerned, including spouses.
Legal description of the property to be purchased
The price and terms of payment
Any default clause as required
Date of delivery of the property
Confirmation of due diligence, done or pending
Representation / references form the seller with clauses to cover misrepresentation
That the seller is obliged to sign the Deed of Sale once the final payment is made and the transaction complete
Important: The promise of sale document is of extreme importance and must be prepared professionally and include every aspect of the transaction. As such it is important to have a team around you that you can rely on and not only trust, but that speak, read and write Spanish fluently.
Important Points to remember
Never pay money over for a deposit without the correct legal advice or documentation. Generally this happens when a developer is requesting funds in advance to build new property and happens more often than you can imagine. Always get the correct legal advice and direction from a source you can trust.
Make sure you know who you’re doing business with, and that the seller has a clear and clean title for the property you wish to purchase and that he is the owner. All of this can be covered easily with good legal advice from a reputable lawyer and broker.
Funds can be held in Escrow so that the appropriate amounts can be paid to the seller at the appropriate juncture and in accordance with your “Promise of Sale Agreement”. FYI, an Escrow account is an account with funds held by a third party as agreed by the buyer and seller.
When making a cash purchase, a “Deed of Sale” or “Contrato de Venta” can be used instead of preparing a “Promise of Sale” agreement. This is a more simple and cheaper process, but is still a binding document that needs to be signed in the presence of a Public Notary, and always with your lawyer and broker on hand.
Determination and Payment of Transfer and Registry Taxes:
Initiated when the deed of sale document is taken to the Internal Revenue Office and a request is made to appraise the property. Once an inspector has been appointed, the sellers tax records are verified and the property will be appraised and assessed and the property tax applied accordingly. This can take a few days or even weeks depending on the availability of an inspector.
Filing at the Registry of Title:
This stage is completed once the taxes have been paid with supporting documentation, which along with The Deed of Sale and The Certificate of Title (from the seller) can now be deposited at the Title Registry Office. The sale is then registered and a new Certificate of Title is now issued in the name of the buyer. Again this can take either a few days or a few months and is subject to the bureaucracy of the office you are using.
The Importance of Doing Your Due Diligence
Some lawyers and realtors can be anything but diligent which is why the recurring message throughout this article is for you to have confidence and trust in the people around you, we cannot stress this enough. Sometimes deals will be rushed through or pressured because someone is looking for a pay day. DO NOT BE HURRIED INTO ANYTHING! To follow is your due diligence checklist.
Due Diligence Checklist
You will need a copy of The Certificate of Title for the property from the seller.
A copy of the official property survey or deslinde. The new Property Registry Law states that the sale of properties without a government approved plot survey or deslinde cannot be recorded at The Title Registry Office. There are a couple of exceptions to this rule which we would be more than happy to go through with you as necessary.
A copy of the sellers ID card or cedula (and spouse if applicable), or passport.
A copy of the receipt showing the last property tax payment or IPI. If the property is exempt from tax, a verification certificate would be required along with certification from The Inland Revenue Office that the seller is up to date with his / her taxes.
When Buying a Property that is a Corporation
You will need a complete copy of the corporate documentation including up to date.registration at the Mercantile Registry and the resolution which authorizes the sale.
Certification from the Inland Revenue Office to show that the corporation is up to date with it’s tax obligations.
When Buying a Condominium
You’ll need a copy of the condominium declaration.
A copy of the condominium rules and regulations.
A copy of the official / approved construction plans.
Certification from the condominium administration to show that all dues / payments are up to date.
Copies of the minutes from the last three condominium meetings.
When Buying a House
An inventory of contents / furniture / furnishings
Copies of utilities contracts to show that everything is up to date and in the sellers name.
Once the above is in order, the following check list will need to be adhered to and completed by your lawyer.
Lawyer – Check List
Title Search – You’ll need certification from The Registry Office to verify the status of the property, the owner and to make sure there are no mortgages, liens or anything else that might affect smooth transition of the purchase of the property.
Survey – You’ll need an independent surveyor to verify that everything coincides with the property itself against the survey shown by the seller. This may not always be applicable in sub divisions. Basically what you’re doing here is ensuring what you see with your eyes, coincides with the relevant legal paperwork. Always do your due diligence!
Possession – Your lawyer needs to check that the seller is in full possession of a property. Tenants or squatters on the property can be troublesome and costly to evict.
Employees – Any employees with any related work history to the property such as gardeners or housekeepers should be paid their legal severance prior to closing to avoid this becoming the new owners legal responsibility.
Utilities – Your lawyer should double check that all utility bills are paid and up to date, i.e. power, water, cable T.V., Internet & telephone.
Taxes, Legal Fees and General Expenses on Property Transfers
All taxes must be paid and up to date before the purchase is registered at the Title Registry office. Taxes to be paid on the conveyance of the property are normally 3% of the government appraised value. Additional minor expenses can be incurred to cover certified checks, sundry stamps and tips if necessary. Taxes are paid on the official market value of the property determined by government authorities, not on the purchase price agreed between the buyer and the seller.
Generally the tax paid for real estate transactions is between 1 – 1.5% of the gross sale price. Tax breaks are given to properties worth more than a million dollars, and also to properties with a value of U$150,000 or less.
There is an annual tax payment of 1% cumulative to the government assessed value of all property or properties owned by an individual not including furnishings. Real estate tax is due on or before March 11th or with prior agreement, can be paid in two separate installments, the first on March 11th, with the second due on or before September 11th.
Properties with a government assessed value of less than 7,710,158.20 DOP (approximately U$150,000) are exempt with the amount adjusted annually for inflation.
Exemption from Real Estate Tax
Farm Properties
Homes where the owner is 65 years or older and where the owner owns only one property
Properties that are owned by companies in a corporation where a separate tax is applicable on the companies assets.
The Purchase of Real Estate by Foreigners
There are no restrictions on foreigners purchasing real estate at this time in the Dominican Republic other than the Title registry Office keeping a record of any such purchases.
Inheritance of Real Estate by Foreigners
At this time in The Dominican Republic, there are no restrictions on foreigners inheriting titles to real estate / property. The payment of tax applicable to the inheritance of property has recently been reduced to 3% of the appraised value of the property.
Here in the Dominican Republic there is a law known as “forced heirship” which states that part of the inheritance goes to certain heirs by law, unless a will / testament is made stating otherwise.
Although most of what is written here is common sense, and would be applied with almost any kind of significant purchase through life, sometimes we forget the basics. So use them as reminders on how your investment can be better and in the end do more for you. Our team at DR Property Guys swear by these pointers and will guide you through these steps personally.
Create solid value in your assessment
A property is ultimately worth what the next person is willing to pay for it. That being said there are some properties listed at inflated asking prices, there are also some real deals (almost steals), and then those that are priced just about right. For most non-native buyers, it’s their first experience at buying real estate in The Dominican Republic, and things here can sometimes be quite different to “back home”. Ultimately it’s up to you, the buyer to put a number out there that you are willing to pay, but here are some quick examples of added value that you may not be aware of.
Property Hack # 1.
Elements such as, Mature fruit trees, which instantly provide you with fruit, new ones take time. Views of the ocean or mountains, you would be surprised how much you may end up enjoying them when sitting down on your terrace enjoying a quiet drink. Privacy, can your neighbor see into your yard or is the property located next to a walking path? Does the property come with an energy saving product such as pre-installed solar power or a solar powered water heater? The air conditioners, are they energy efficient or do they pull lots of kws? You get the point, there’s lots to be seen when considering the value of a property.
Property Hack #2.
Property replacement cost comparison. Quite simple to do within a gated development for example, as most properties are built around set models or floor plans. They normally come with a standard sizes lot, and anything above that is paid for extra, in the case of an apartment or condo, it’s almost always the case of 2, 3 or 4 different floor plans within the building. Some properties will have had upgrades made to them, which should be taken into consideration. For property outside of a gated community, it’s good to know the average price per m2 to build new, there are generally 3 quality standards to chose from, all three offer different types of wood finish, ceramics, kitchen/counter tops etc. Add in the cost of plans and permits. It is common that builders deliver new properties after the deadline, take that into consideration too, as a new build will not start making rental income until it’s finished, furnished and road tested.
Property Hack # 3.
Rental Income history. If part of a rental program or privately rented or managed, it shouldn’t be too hard to see what kind of rental history a property has. Take into consideration that a successfully rented property with high occupancy, track record and existing client base, should command a higher asking price for sale. Expect different rates for daily, weekly and monthly rentals. Also expenses or outgoings may change according to the rental periods. It is not possible to ascertain a rental income history of a property where the owner has lived there full time.
Property Hack #4.
Growth potential. It is safe to say, a good % of buyers are looking for “deals” but they aren’t as readily available as some may think. The real estate market in The Dominican Republic can be considered a very safe one, due to the lack of financing provided to foreigners by local banks, it is slim to none. Therefore without the pressure of a bank foreclosing on the property, the need to drop price drastically is avoided. Are you looking at a new build on the last available lot in the community? Are new phases being planned? Is this property being sold under market value due to the owners health, personal or financial situation? Is the purchase you are going to make be affected in a positive manner by these plans? In the end, good, intelligent local knowledge is priceless.
Property Hack #5.
Property inspection. It is not unheard of for buyers to hire private contractors or even handymen to do inspections on properties to see if there are any hidden issues that perhaps you cannot see immediately. Hiring a local trades person to check the roof, sewer lines or electrical for a small fee may well prepare you for the necessary investment to fix any issues, ahead of time. Also, hiring a surveyor to check the property lines or boundaries (not necessary in the case of an apartment/condo) is the most surefire way of making sure there will be no arguments with your neighbor over who’s mango tree that is!
Property Hack #6.
Legal fees and taxes. Be sure to know what you will be liable for in the realm of legal fees and property taxes at the time of making a real estate purchase. Sometimes referred to as closing costs, these will largely include the lawyers fee for doing a title search, contract(s), handling of funds etc and property transfer tax. Although some properties enjoy a tax free title transfer (due to tourism certificate law), this is not the norm. Why you may ask? Well the law regarding this covers only the first initial transfer and the permit for the developers to obtain was costly and time consuming, so although it exists, is in few and far between places. All other real estate transactions are subject to a 3% appraised value 1 time tax, the appraised value may be higher or lower than the actual paid value, but generally is 50% of the real paid value. There is yearly property tax to consider, depending on the value of the property, currently anything registered under 7,710,158.20 DOP (about $150,000) is exempt of annual taxes. There are several ways to avoid this yearly tax altogether, buying as a couple is one way and corporate ownership is another.
Property Hack # 7.
Owner finance – As of 3rd quarter 2018, an extremely popular way to finance your real estate purchase. The average owner finance offering is 50% down, balance payable over 2-5 years at between 6 and 10% interest, 20 year amortization with balloon payment may apply. Find out from your agent if the owner is willing to hold a mortgage for you. Certainly in the higher priced properties, it is more and more common. It is worth mentioning though that the interest rates will always be higher than if you re-financed your existing property back home, and purchased here outright in cash.
BONUS Property Hacks:
How to add value to your property after purchase – 3 quick hacks to instantly add value after the purchase.
1 – Sprucing the place up – you would be surprised at how much a change of paint color can make a difference to the feel of a property, and the price to do so here in The DR is considerably less than in the USA, CAN or UK. Modernizing the drapery, installing new pictures in the living room, adding little bits “here and there” are economical and fast ways to immediately add value to your new property. It is fair to say, that you may be shown places that are almost perfect as they are and may not require such efforts.
2 – Lower monthly running costs – adding a timer to your pool pump, changing old air conditioners to new “inverter” style units, changing out the old fridge/freezer for a more energy efficient model, setting up a sprinkler system, installing an on demand water heater, or just throwing out that old heirloom electric water cooler are just some ways of lowering your monthly running costs. Do you really need 6 day per week maid service or would 3 days per week be sufficient? Same for pool and garden service, does the property merit a full time gardener or could it all be done with 2-3 days per week service?
3 – Increase rental returns through niche markets – catering for certain groups or individuals can have positive effects in the long term. Specially when these people tell their friends with the same interests that your property was perfect for them! It has proven to work time and time again, word of mouth referral among niche markets is probably the most cost effective and powerful way to increase your rental occupancy.
Ultimately, trust and confidence in your broker and legal team are of utmost importance when either buying or selling a property in The Dominican Republic. Rest assured Dr Property Guys are here to steer you in the right direction and to make the whole process as painless and as seamless as possible.
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