Introductions To The Legal Framework: Ownership Of Real Estate

• Published date: 25 May 2021
• Subject Matter: Environment, Real Estate and Construction, Tax, Environmental Law, Real Estate, Landlord & Tenant - Leases, Tax Authorities
• Law Firm: Guzman Ariza Attorneys At Law
• Author: Guzman Ariza Attorneys At Law

Under Dominican law, there are several types of ownership of real estate. The most common is absolute property, similar to the common law concept of freehold, which grants the titleholders, according to Article 51 of the Constitution, the right to enjoy, make use of and dispose of their properties.

Other types of ownership of real estate recognized under Dominican law are (1) co-ownership under Condominium Law 5038 of 1958, by which two or more co-owners share the ownership of a residential or commercial property or both, each enjoying full rights over their own units and shared rights over common areas; and (2) indivision, whereby several co-owners jointly exercise the same right of full ownership over the same property considered as a whole.

Dominican law recognises other types of rights over real estate, such as usufruct, which grants the holder the legal right to use and benefit from property owned by a third party; 'use' or 'habitation', which grants the holder the right to use or live in a property owned by a third party; servitude, by which a property is subject to a specified use or enjoyment by another; right of passage, which grants the owner of an enclosed property without access to a public road the right to transit through an adjoining property; and administrative concessions granted by the government over public land that cannot be privately owned, such as the subsoil, coastline and riverside areas.

ii System of registration

Since 1920, the Dominican Republic has employed the Torrens system for real estate registration purposes. This system was developed in Australia in the 19th century and is now widely used in many countries. In the Torrens title system, a register of land holdings is maintained by the government, which guarantees an indefeasible title to the properties included in the register. Land ownership is transferred through registration of title instead of using deeds. The registrar has a duty to ensure that only legally valid changes are made to the register. Any interest affecting or limiting the ownership rights of the registered owner, such as mortgages, easements, liens, etc., must also be registered. Interest in real estate (property, mortgages, privileges, etc.) is only valid and enforceable against third parties upon registration at the office where the register is located (called 'Registry of Titles' in the Dominican Republic). Once registered, the system guarantees title and priority on a first come, first served basis.

In the Torrens system a third party, acting in good faith, can rely on the information in the land register as to the ownership of a property and the other rights and interests that may affect it. In a property purchase, the buyer is not required to look beyond the record in the register. In contrast, in the common law system a vendor cannot transfer to a purchaser a greater interest than he or she owns, and the seller's title is as good or as defective as the weakest link in the chain of title, which necessitates a chain-of-title investigation at the record office.

As in most jurisdictions under the Torrens system, there are still some parcels of land in the Dominican Republic that are unregistered. However, most properties in the country, and 100 per cent of commercial properties, fall under the registered category. Unregistered property is governed by the French 'ministerial' system, whereby deeds affecting real estate are filed at a specific register that only serves as a recorder of documents, without any type of guarantee.

ii Choice of law

The Dominican Civil Code mandates that all matters concerning real estate in the Dominican Republic are subject only to local law, no matter who owns the property (a Dominican or a foreign individual or entity) or the place where the contract was signed. This is a rule of public policy that cannot be amended or waived by the contracting parties. If a transaction involves properties from another jurisdiction as well, then the part of the transaction that refers to the Dominican real estate must be governed by Dominican law; hence, all closing...