By Melchor Acántara
The Dominican Republic is experiencing an unprecedented period of development driven by several sectors of the economy, most notably the housing boom (especially affordable housing). Increasingly, Dominicans with limited incomes are able to afford decent housing. Others, while unable to purchase a home, deserve access to quality housing at affordable prices through the rental market. On the other hand, many Dominicans are choosing to invest in housing over other, once more common, options such as fixed-term deposits in commercial banks or even investment funds. However, concerns about the current rental law are creating significant uncertainty that is impacting real estate investment for the rental market.
While a new rental law languishes in Congress , our real estate market is facing serious difficulties due to the low number of properties available for rent. Various sectors argue that this stems from the challenges landlords face with a rental law that is doubly detrimental to both tenants and owners. Tenants cannot guarantee a return on their investment, while landlords are unable to rent decent housing at an affordable price.
Investing in rental properties can represent a significant portion of the real estate market, even though current rental legislation does not give landlords easy options to enforce their rights against tenants who fail to pay or otherwise violate the contract.
Many legal systems are already seeking ways to impact their real estate markets by designing strategies that give property owners concrete options when enforcing their rights regarding a violated rental agreement. In this context, "express eviction" as a mechanism to guarantee the property rights established in all constitutions.
This express eviction consists of a special regime that allows the owner to evict the tenant in relatively short periods, encouraging investment in rental properties, thus achieving greater growth in the real estate sector while also achieving a decrease in rental prices given the greater market supply of housing units.
In the Dominican Republic, we have fairly expedited procedures for real estate foreclosures. Similarly, condominium law is quite strict when it comes to collecting overdue maintenance fees. It's striking that, in the case of rentals, there are no legal means for expedited eviction, even though rental payments are often earmarked for bank loans (whose non-payment could trigger a swift foreclosure) or maintenance fees (whose non-payment could lead to a rapid foreclosure process).
Legislation such as the Spanish one has contemplated express eviction since 2015 and since 2018 has also established it to govern illegal occupations, very common, by the way, in the Dominican Republic.
Peru has also joined this new trend and established procedures that guarantee both the property rights of the defaulting landlord and the rights of the defaulting tenant, setting clear procedures and conditions. Thus, regarding the form of the lease agreement, it has established that it must be executed through an authentic instrument, which may seem excessive, but this public document attests to the authenticity of the agreement and is more secure than the notarization of signatures. The higher costs will be offset by shorter timeframes.
Similarly, special clauses have been established: These are: (i) the clause of future acceptance by the tenant to return the property; (ii) the clause of express submission to the new law so that the notary can verify the grounds for eviction and the execution by the justice of the peace; and, (iii) the clause that states the number, type and currency of the bank account where the rent is paid (a fairly objective fact).
The grounds for eviction are limited in this legislation to the expiration of the contract and non-payment. The procedure is quite simple and consists of: (a) Request for notarial verification: When any of the grounds for eviction are met, the interested party goes to a notary, attaching the contract and the notarized letter demanding the tenant vacate the premises; (b) Notification to the tenant: The notary grants the tenant five business days to object, provided they can prove that the contract was renewed or extended with the same formalities as the original contract, which is a significant guarantee, or that payment was made to the account specified in the contract; and (c) Verification of the grounds for eviction and issuance of a record: If no objection is substantiated, the notary issues a record that serves as an enforceable title for eviction. With the documents obtained, the eviction is requested from the Justice of the Peace, who must verify their sufficiency within three business days; then, the Justice of the Peace orders the eviction of the tenant and any other occupants, and the forced entry if there is resistance. This order can be appealed without suspending the eviction. The judge may request police support.
The rapid economic development our island is experiencing warrants innovative laws that stimulate economic activity. This type of legislation would promote better housing options for renters at more affordable prices, as well as boost investment in the real estate sector. More and more nations are adopting these innovative proposals that are accelerating the pace of real estate activity. Hopefully, our legislators will rise to the challenge of the current circumstances and embrace this new regional trend, which is yielding excellent results elsewhere and could expand a window of opportunity for progress with considerable potential: the development of rental housing.
The author is:
Lawyer, finance expert, coordinator of the National Construction Observatory (ONIC).
