By Melchor Alcántara Damiron
Special for El Inmobiliario
In recent days, the situation of the WestSide Residences Punta Cana project and the engineer Joan González has come to light, following lawsuits filed by purchasers of the aforementioned project.
The case has generated concern and, as is often the case in situations of high economic sensitivity, has also given rise to interpretations that should be rigorously analyzed. The central point of the debate is determining whether failure to meet delivery deadlines for real estate units automatically constitutes fraud.
From a technical and legal perspective, the answer is quite simple, although, in short, the situation has taken a noteworthy turn. Fraud, generally speaking, involves prior intentional deception aimed at inducing a person to make a payment or transfer property under false pretenses. In other words, there must be intent: the deliberate will to defraud.
In the real estate sector, this typically occurs when a purported developer offers nonexistent projects, lacking the technical capacity or genuine intention to execute them, with the sole purpose of attracting investment from third parties. However, the case at hand presents substantially different elements.
The WestSide Residences Punta Cana project is not a fiction. On the contrary, according to available information, approximately 120 residential units have been delivered, demonstrating the existence of an unquestionably solid operational structure, significant material investment, and ongoing development with numerous deliveries certified even by the buyers themselves. This fact is key, as it contradicts the hypothesis of fraudulent activity.
What appears to be under discussion, rather, is a significant delay in the delivery of units to a small group of buyers who began their payment plans during the pandemic. This delay undoubtedly causes financial losses and legitimate claims from customers. However, in terms of legal classification, it tends to fall under the category of breach of contract or, at most, administrative or civil offenses, rather than criminal matters.
However, beyond this particular case, what is truly concerning is the precedent that could be set if a trend of criminalizing situations that, by their nature, fall under civil jurisdiction takes hold. In no area of commercial law can non-compliance be classified as a criminal offense.
In the post-pandemic period, multiple factors have directly impacted project execution schedules. Among the most relevant are:
-Sustained increase in material costs due to global inflationary pressures, which directly impacted the originally projected budgets.
-Congestion and increased cost of maritime freight due to logistical reasons.
-Delays in permitting processes, resulting from both institutional congestion and regulatory adjustments in different jurisdictions.
-Shortage of skilled labor, particularly in tourist hotspots like Punta Cana, where the demand for construction has exceeded the available labor supply amid a process of cleaning up illegal labor that has significantly affected the pace of construction, especially in that area.
These factors are not isolated or exclusive to a single developer. They have been extensively documented by various industry stakeholders and media outlets, impacting the timing of numerous real estate projects across the country.
In this context, it is crucial to warn about the systemic risk of overreaction to the law. If complaints (common and foreseeable in a long-term activity like construction) begin to be interpreted as evidence of criminal conduct without a rigorous assessment of intent, a domino effect with severe consequences could be generated:
- Disincentive to investment: Capital, especially institutional capital, is averse to legal uncertainty. The possibility of facing criminal proceedings for business-related contingencies increases perceived risk and reduces investment appetite.
- Paralysis in pre-sales: The real estate development model in the Dominican Republic relies heavily on pre-sales to foreigners and Dominicans living abroad as a financing mechanism. If developers face disproportionate criminal risks, they will tend to restrict this scheme, affecting the viability of new projects.
- Increased financing costs: Financial institutions adjust their rates based on risk. A climate of criminal prosecution increases the cost of credit, ultimately passing the burden on to the consumer.
- Market contraction: The combination of lower investment, fewer projects, and higher financial costs leads to a slowdown in the sector, with a direct impact on employment, economic growth, and urban development.
- Distortion of the role of the Public Prosecutor's Office: Although it is unquestionable that the Public Prosecutor's Office acts with the legitimate intention of protecting purchasers, an unjustified expansion of the criminal sphere towards essentially contractual conflicts can distort its function and saturate the system with cases that should be resolved in civil jurisdictions.
In practical terms, a “witch hunt” in the sector —understood as the indiscriminate persecution of developers for any breach of contract— would not only be unfair in cases where there is no malice, but could also trigger a collapse in real estate sales.
None of the above implies that delays should be minimized or, in any way, that purchasers should be left unprotected and deprived of efficient mechanisms to demand compliance, compensation, or even the termination of their contracts. The developer's responsibility to its customers is unquestionable. The effective protection of purchasers' rights is essential for confidence in the market. But such protection must be channeled through appropriate legal mechanisms, clearly differentiating between fraud and business risk. Therefore, it is vital to avoid the oversimplification that automatically equates delay with fraud, as this distorts the analysis and can generate disproportionate consequences.
Real estate development is, by its very nature, a risky activity dependent on numerous external variables. Buyers are aware of this. That's why they prefer to buy off-plan, as this risk represents savings in their pre-sale purchases. When these variables become misaligned, the effects are felt by both developers (who see their profits and on-time delivery eroded by time) and buyers (who suffer losses due to the long wait). The key lies in managing these risks with transparency, responsibility, and adherence to the law. It will be up to the authorities and the courts to determine specific responsibilities, but as an Observatory, we will strive to ensure that the debate is based on sound legal and technical criteria that guarantee the stability of the sector.
The balance between protecting the buyer and ensuring the legal security of the developer is not only desirable: it is essential for the sustainability of the Dominican real estate market.
The content and opinions expressed here are solely those of the author. Inmobiliario.do assumes no responsibility for these statements and does not consider them binding on its editorial view.
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