Text by Guzmán Ariza & Asociados

Is it risky to buy real estate in the Dominican Republic? Many first time buyers ask this very question. Perhaps they have heard horror stories of crooked realtors, incompetent attorneys and disorganized government offices. A newspaper article sometime ago described the corruption in the Superior Land Court in Santo Domingo (pipes were clogged from files flushed down the toilets) and wondered how any property owner could sleep well at night. A visitor to the Registry of Titles in any of the major cities unfamiliar with the realities of the Third World will certainly be shocked at the open filing cabinets and the stacks of folders tied with strings covering the floors. This is the reality real estate lawyers work with every day.

In fact, the risk in buying real estate is very small, if you deal with a reputable realtor, a competent surveyor and a good real estate attorney: a combination not as difficult to achieve as some might think. For the moment, we will concentrate our efforts on the legal aspects of the property purchase, leaving the discussion of realtors and surveyors for a later date.

What makes a real estate attorney good? A good real estate attorney comes up with strategies and methods to neutralize the deficiencies in the system in order to protect his clients' interest. Mediocre or bad lawyers neglect to take any special protective measures and end up harming their clients. The difference may be illustrated analyzing 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's obligation in the title search is limited to requesting the certification. While in many 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 a thorough title search. 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 must 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 incorrect certification and should pay from her own pocket the party with the lien or mortgage who suffered harm because of his mistake. In the real world, Registrars are insolvent and therefore unable to compensate their victims.

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 any lawyer to do the work for her and will sign, at the end of our search and after a cursory review, the legal certification. The real estate lawyer must learn how to do his job amid the clutter. He or she must know in which drawer of which desk the Registrar keeps the latest notices of liens. Sometimes, he or she will go as far as to donate filing cabinets to keep the records of certain Parcels of interest to his or her 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. Yet 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.

To finish on a positive note, the Dominican Supreme Court and the Superior Land Court have initiated a complete study and overhaul of the land registry system under the auspices of several international organizations. Noticeable improvements have been made at the organizational level. Judges and Registrars are required to attend regular courses and seminars coordinated by the Supreme Court. Corruption has diminished considerably. Perhaps, sometime soon, getting a good attorney to assist you in a real estate deal won't be that important!

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