I found it, here it is.
Buying Property in the D.R. Fabio J. Guzman -- Saturday, 5 December 1998, at 6:40 p.m.
Earlier this week a message was posted on this board asking if buying real estate in the Dominican Republic was risky. I expressed my opinion that the risk was small if the persons involved in the transaction (developer and real estate attorney) were reputable. "JC", a frequent participant in the conversations on this board, posted a newspaper article describing the corruption in the Superior Land Court in Santo Domingo (pipes were clogged from files flushed down the toilets) and wondering rightly how my statement could be correct under those conditions. JC's point is a valid one and deserves a thorough answer.
Nobody denies the corruption and lack of organization of Dominican courts in general, and the Superior Land Court and Land Registries in particular. A visitor unfamiliar with these places will certainly be shocked at the open filing cabinets and the stacks of folders tied with strings covering the floors. The Third World is here for sure. This is the reality we as real estate lawyers work with every day.
How should we react to the surrounding chaos? Good lawyers come up with strategies and methods to neutralize the disorder in the system in order to protect their clients' interest. Mediocre or bad lawyers neglect to take any special protective measures and end up harming their clients. I will illustrate my point examining an important aspect of every real estate transaction: the title search.
In theory, a title search under Dominican real estate law should be an easy undertaking. You go to the Registrar of Titles in the jurisdiction where the property is located, show her (in Puerto Plata, it's usually a lady) the correct Parcel and Cadastral District numbers, and ask for a certification describing the status of the property. The Registrar will then search the appropriate registry books and files and upon finishing her task will issue, under her signature and responsibility, the required certification detailing all the liens and charges, if any, encumbering the property. An attorney'_ obligation in the title search is limited to requesting the certification. In other countries, the title search is done by an attorney who then issues a legal opinion. In the Dominican Republic the search is by law the responsibility of the Registrar who as a government officer will attest to and certify the condition of the property in question.
In the real world, the overworked and underpaid Registrar of Titles has neither the time nor the staff required to do complete title searches. As a result, many certifications stating that a certain property is free and clear are incorrect and the buyer doing a transaction will find himself later with a lien or mortgage on his property. It is true that as a purchaser of good faith the buyer will not be legally responsible for the lien. However, he will have to go to Court to lift it and this may entail expensive litigation (maybe against a bank with deep pockets) and time. In theory, the Registrar is legally responsible for the erroneous certification and should pay from her own pocket the party with the lien or mortgage who was damaged by his mistake. In the real world, Registrars are insolvent and therefore unable to compensate their victims.
Obviously under these circumstances any conscientious lawyer will do the title search himself, going to the registry and spending the hours or days required to do a thorough job. The Registrar is usually more than happy to allow us do the work for her and will sign, at the end of our search, the legal certification. We have learned how to do our job amidst the clutter. Practice makes perfect. We know in which drawer of which desk the Registrar keeps the latest notices of liens. Sometimes we go as far as to donate filing cabinets to keep the records of certain Parcels of interest to our clients.
Unbelievable as it may seem, many attorneys don't even take the trouble of asking the Registrar for a certification, much less inspecting the Registry themselves. It is a sad truth that the standard of practice in the legal profession in the Dominican Republic is very uneven. We do have many reputable law firms with good track records in dealing with foreign clients. But we also have many attorneys who are inept if not crooked. You cannot just assume that the average lawyer is competent to do even a simple real estate purchase. Do your homework, consult with your Embassy or your attorney back home (he'll check legal directories), get recommendations from previous buyers, and you will end up with a qualified attorney who will make sure things go right. Personally, I have handled numerous real estate transactions in my 18 years of practice in the field without any problems.
To finish on a positive note, I must add that the Dominican Supreme Court designated in 1997 has been doing a great job of cleaning up the judiciary and establishing a modicum of order in the system. New judges have already been chosen for most courts. In the Superior Land Court, every judge but one was removed in October. The new presiding judge has taken drastic action to stop corruption, firing crooked employees and pretty much closing the Court until January 1999 to assess the situation. The newspaper article quoted by JC was precisely a result of the ongoing cleanup.
