By Ana María Ramos
elinmobiliariodo@gmail.com
SANTO DOMINGO– In the real estate business, as in all others, scams are not absent. And since housing is a common aspiration for people, as one of the human rights recognized by the United Nations (UN), which states that it is the basis of stability and security for individuals and families, the proliferation of criminal acts against buyers seeking their longed-for home is a latent possibility.
In the Dominican Republic, the high-profile cases of real estate scams have been due, among other reasons, to the growth of the sector, which in recent years has broken historical averages.
The National Survey of Economic Activity (ENAE) 2023, construction sector, published in May of this year by the National Statistics Office (ONE), found that the construction sector experienced significant growth in the economic indicators analyzed, with a gross production value reaching RD$116,480.44 million in 2021 and RD$143,108.23 million in 2022, representing an increase of 22.9%.
Joselina Taveras. (External source).
The need for all parties involved in the purchase and sale of a property to be properly informed is obvious given a possibility that, although minimal, remains in the air, threatening real estate development and the multiple investments that are currently taking place in the country.
Reducing real estate scams is an essential tool for the real estate business to continue thriving in the Dominican Republic, because it is one of the key activities of the country's economy and the one that has registered the greatest evolution in recent times, said lawyer and specialist in the prevention of money laundering Joselina Taveras, while participating in the panel "the legal step by step of a safe sale", at III Expo Foro CENI, held on May 2 of this year.
“The law provides structure to one of the country's key economic activities; the construction sector is crucial because it has evolved the most in recent times. From an anti-money laundering perspective, entering the real estate market requires a safeguard: due diligence,” the specialist explained.
Luz del Alba Rodríguez, lawyer and surveyor, advises buyers of homes and properties to consult with the Association of Housing Builders and Developers (Acoprovi) and confirm if the construction company is a member of the entity.
Luz del Alba Rodríguez. (External source).
“Fraud in real estate projects can take many forms: the sale of non-existent properties or off-plan sales, fraud in contracts through the alteration of a document or the falsification of signatures, scams involving the rental of properties that are not physically available through applications and social networks, and deceptive promotion exaggerating the characteristics of real estate developments,” he argues.
He adds that they are often presented as irresistible opportunities, generating immediate interest that minimizes the importance of due diligence or legal research for a successful negotiation.
Rodríguez argues that the correct drafting of a contract, along with legal research, not only facilitates conflict management, but also guarantees greater legal security in real estate transactions.
According to Reyna Echenique, a real estate law specialist, there are three key players involved in the transaction: seller, product, and buyer. “But for that product to be viable and for it to be consumed, it must begin with the legitimacy of the property. When we start, we have to investigate where the funds come from, who we are selling to, and how we learn to refine a project to deliver a quality product to our clients,” she emphasized, addressing real estate agents at the CENI Expo Forum.
He explained that it's advisable to have the building permits. "When we receive a project, we ask questions to get a complete picture. We need to create a file, ask if the title is in their name, and follow up to ensure the client has that legal security.".
Good practices
In April of this year, Acoprovi signed an agreement with 5 of the country's leading construction and real estate entities, with the aim of strengthening the industry and providing greater security to buyers and investors.
In that regard, on May 2, a delegation from the entity traveled to New York, United States, and met with Consul Eligio Jáquez to launch the strategy by providing information, protocols, and legal procedures to inform the Dominican diaspora residing there and investors about best practices for buying a home in the Dominican Republic.
7 keys to avoiding real estate scams when buying off-plan properties
By Reyna Echenique
(Originally published in Forbes Dominican Republic)
1. Verify ownership and legality of the property. Confirm that the seller is the legal owner by checking the title certificate and any hidden liens. If they don't provide you with the correct documents, be suspicious.
2. Check licenses and permits with the city council. Verify the validity of building permits, the company's reputation, and its legality. This helps avoid fraudulent developers.
Reyna Echenique. (External source).
3. Hire a real estate lawyer to review the documentation and advise you throughout the process. They will identify any problems or unfair terms in the contracts.
4. Be wary of very low prices. They may conceal problems with the property or the fact that it doesn't actually belong to the seller.
5. Avoid cash payments. Deposit into verified bank accounts and demand receipts.
6. Purchase title insurance. It protects you against project bankruptcy or irregularities.
7. Verify the real estate agent's credentials. Ensure they are a member of the Association of Real Estate Agents and Companies (AEI) to guarantee ethical and reliable advice.
Investing in off-plan properties requires precautions and appropriate legal and technical advice. This will ensure a safe purchase and prevent you from falling victim to scams in the real estate sector.
