SANTO DOMINGO.- This week the Chamber of Deputies approved the Public Trust bill in its first reading, after several weeks of the issue remaining on the national public agenda among sectors for and against it.
The term "trust" is not commonly used. Its technical terminology limits the number of people who can understand its scope.
It was created by Law 189-11, of July 22, 2011, on “Development of the Mortgage Market and Trusts in the Dominican Republic.” Real estate agents frequently hear the question, “Is it through a trust?” from people interested in purchasing a property.
"To become familiar with the concept of a Public Trust, it is essential to understand the foundation of this broad structure, which holds considerable promise. Below, we provide information on this topic in anticipation of future articles we will be publishing on the different types of trusts," highlighted expert Roberto Carlos Jorge, Trust Manager at Fiduciaria Forwol SA, with practical experience since the beginning of the law's implementation, whom El Inmobiliario consulted on the subject.
Let's define Trust?
It is the act by which one or more persons called trustors, transfer property rights to the trustee (administrator of the money or assets), for the constitution of a separate and autonomous estate.
How does the trust administration operate?
It is a structure regulated and supervised by the authorized bodies of the State, in this case, the Superintendency of Banks and the General Directorate of Internal Taxes, where an autonomous, separate patrimony is constituted, including individual accounting management, thus being an unseizable legal figure.
Unseizable?
By establishing a separate estate, the trust assets may not be seized or attached, except for obligations or damages caused in the execution of the trust. Art. 9, Law 189-11.
Let's list the types of trusts
Estate planning, real estate investment and development, guarantee, cultural, philanthropic and educational; and public offering of securities and products.
Let's talk about the real estate investment and development trust
Article 58 of Law 198-11 defines these as independent assets managed by an administrative or fiduciary entity, on behalf of and at the risk of the trustees, whose primary objective is investment in real estate projects in different phases of design and construction.
What is the role of the trustee?
To manage the assets that make up the project, whether it is the land where it will be built, improvements that are incorporated and the resources contributed for the development, through the project promoter and originated through the acquirers as beneficiaries of the Trust.
What are the stages covered by the Trust?
Structuring the project, signing the constitutive act (trustee and promoter), registration of the contract in the Chamber of Commerce, application for the RNC in the General Directorate of Internal Taxes (DGII), opening of a bank account by the trustee and operation of the trust during its validity.
Let's list the steps involved in a trust project
First comes the land acquisition, where the business model is defined—whether it's a contribution or a sale. Second involves marketing or pre-sale, where state permits are obtained, conditions are met, buyers are connected, and payment is collected; and additional resources are secured, whether through bank financing or private investment.
In cycle three, resources are allocated, suppliers are paid, a guarantee certificate is issued, purchase and sale contracts are prepared, financing resources are disbursed, and the title is transferred upon completion of the work and the total amount of the property unit is paid off.
¿Can any adult be an investor in a trust?
Yes, but prior to its inclusion in the trust, it must be vetted to comply with the procedures of Law 155-17, against Money Laundering.
