COVID-19 Pandemic Impact On Real Estate Operations In The Dominican Republic

• Published date: 25 May 2021
• Subject Matter: Real Estate and Construction, Coronavirus (COVID-19), Construction & Planning, Real Estate, Litigation, Contracts and Force Majeure, Operational Impacts and Strategy
• Law Firm: Guzman Ariza Attorneys At Law
• Author: Guzman Ariza Attorneys At Law

As most of the productive sectors in the country, the Dominican Republic's real estate sector has not been able to escape the COVID-19 outbreak's impact. Amidst this new reality, it is indispensable to weigh in how this pandemic as well as the measures taken by the Dominican authorities to respond to it, will affect ongoing real estate transactions, whose normal course has been interrupted by the pandemic. The analysis of these transactions will always depend on the purchasing method and negotiation, and the effects on the negotiation terms that the state of emergency decreed by the Dominican state on March 19th 2020 and subsequent measures could have on them.

Obligations derived from any negotiations made prior to the date of the state of emergency's decree (March 19th 2020), could be influenced by the statement of emergency. However, if the negotiation had been closed after the declaration of the state of emergency, there would be no place to point out this situation as an excuse by either party to comply with their respective contractual obligations, because for a contracting party to benefit from force majeure based on the state of emergency and the measures taken afterwards, these events should have been unpredictable and unavoidable to them. It is evident that any closing, final or preliminary, executed after the beginning of the pandemic in the Dominican Republic or after the measures taken by the Dominican state in its response could never be considered as unpredictable for the purposes of this discussion.

In the following lines we will evaluate some typical real estate transactions that could have been affected by the current status, taking into account that each situation must be analyzed on a case-by-case basis in the event of disagreement between the parties, especially if the contracts contain clauses addressing the suspension or termination due to force majeure or any other external reason which may impact their agreements. Some of the most common cases include:

• Off-Plan purchases: This is the most affected case by the pandemic because, in the Dominican real estate market, developers are engaged not only in selling and marketing their properties, but also in constructing them. The property's construction involves a working timetable whose progress is completely stalled at this moment, due to the measures taken by the Dominican Republic's government, which limit all traffic and movement of people and have shut down operations of private...