Massiel Martínez Marte
Special for El Inmobiliario
Over the years, in everything related to real estate sales, and very specifically when it comes to residential or tourist projects, I am consulted in my role as a lawyer about the legality of withholding the payment made for separating the property in case of withdrawing from the continuation of the purchase, a possible fact when buying a property.
The reality is that nothing in life is set in stone. However, according to Articles 1147, 1149, and 1150 of the Dominican Civil Code, it could be understood that these types of situations are covered and even legalized within our legal system.
The reason is that, as established in Article 1147 of the Dominican Civil Code, it is clearly stated that if one of the parties fails to fulfill its obligations, the debtor (in this case, the buyer) may be ordered to pay damages. These damages may be for breach of contract or for delay in fulfilling the obligation.
In other words, when you hand over a sum of money to reserve a property and then decide not to proceed with the purchase, the seller or the construction company can retain that money as a form of compensation for the losses they have suffered due to your withdrawal.
Article 1149 of the same code states that the amount of damages must be proportional to the losses suffered by the seller and the profits of which they have been deprived. This principle is fundamental, as it allows the affected party to recover what they have lost due to the other party's breach of contract. In this context, the money paid to reserve the property is considered compensation for those losses.
Massiel Martinez Marte. (External source).
However, there is a situation we must consider and pay due attention to : what happens if the contract or receipt doesn't mention it? Ideally, this type of penalty should be stipulated in a written contract signed by both parties. Article 1150 of the Civil Code establishes that the debtor cannot be liable for more damages than those stipulated at the time of signing the contract, unless there was bad faith.
Therefore, it is essential that any agreement involving money, especially when buying property, be well-documented and agreed upon in writing. No one should be ordered to pay sums of money they have not consented to unless it stems from a court decision.
Finally, and equally important, since these situations can lead to legal disputes and financial losses, it is essential to seek the advice of a real estate lawyer. An expert in the field can review contracts, advise you on the potential implications of not proceeding with the purchase, and guide you in making informed decisions, thus avoiding unpleasant surprises.
Other relevant legal provisions:
Law 108-05 on Real Estate Registration also plays a crucial role, especially regarding sellers' rights over properties. This law reinforces the principle that any real estate transaction must be properly documented and allows sellers to withhold payments as a form of protection against potential defaults.
Case law and recent cases:
On several occasions, the Supreme Court of Justice has upheld rulings recognizing the right of sellers to retain deposits paid for properties as compensation for economic losses resulting from breach of contract. This includes damages caused by advertising expenses, the loss of other potential buyers, and other factors. For example, jurisprudence in cases such as Ruling SCJ-TS-23-0388, dated April 28, 2023, has been key in establishing precedents on how Dominican courts apply the rules regarding the retention of funds paid for property reservations and compensation for damages in cases of breach of contract.
Conclusion:
Before paying any money to reserve a property, make sure you have a clear contract that specifies the penalties for breach of contract. And if you have any doubts, don't hesitate to seek the help of a lawyer specializing in real estate law to protect your rights and your investment.
The author is: Lawyer and Broker Owner of DOMUS RD.
