A seemingly convenient practice can turn into a legal nightmare
when death, illness, or family conflicts disrupt the process. The
risks are often overlooked until it's too late.
As a real estate attorney, I can attest that buying properties in the name of third parties is one of the most dangerous in the Dominican real estate market. What many consider a "clever trick" can turn into the most expensive legal nightmare of your life.
The reasons always sound convincing: "I'm getting a divorce," "I want to avoid paying the IPI (Property Tax)," "I'd rather it not be in my name." But this supposed strategy can have civil, inheritance, and even criminal consequences.
When death rewrites the rules
Let's imagine a realistic scenario. Juan decides to invest in an apartment off-plan, but registers it in his brother-in-law's name to "protect himself." The project progresses, Juan pays each installment on time, but before the delivery, his brother-in-law passes away. Automatically, the property under construction becomes part of the deceased's estate. In other words, the heirs now have rights to the property, even if Juan can prove that the funds came from his own pocket.
And here the storm begins. The actual buyer faces the harsh reality of Dominican real estate law: what matters is not who paid, but whose name the contract, and subsequently the title, is in. The estate doesn't distinguish whether the money came from Juan or someone else; what matters is that the contract is in the deceased's name.
The legal labyrinth
What can the actual buyer do in this scenario? There are several options, although all are complex:
- Action in simulation: Alleging that the contract in the name of the third party was fictitious and that he is the true purchaser. It requires solid evidence, usually written, and is a long and expensive process.
- Claim for unjust enrichment: Seeking a refund of the invested money. The problem: this route does not guarantee keeping the property, only recovering the initial investment.
- Agreement with the heirs: Attempting to have the heirs of the deceased third party relinquish their rights in your favor. Although feasible, reaching a consensus is difficult and usually involves exhausting negotiations.
What does the case law say?
The Supreme Court of Justice, in its ruling SCJ-PS-23-1546 (July 28, 2023), established a key criterion:
“When the simulation of a contract is alleged, the proof par excellence is the counter-document, as a written document that reflects the true agreement hidden behind the apparent act«.
In other words, witnesses or verbal allegations are not enough: the courts require compelling documentary evidence—receipts, transfers, previous contracts, correspondence—that demonstrates the true intention of the parties.
Dominican legal doctrine concurs. “Simulation in Dominican Legal and Social Practice” explains:
“Simulation can be absolute, when a non-existent contract is pretended to exist, or relative, when the true nature of the agreement is hidden. In both cases, the law requires written proof to demonstrate the real intention of the parties.”.
Beyond the civil sphere: criminal risk due to money laundering
The analysis doesn't end with civil or registry matters. Buying properties in the name of third parties can trigger red flags under Law 155-17. This law considers the real estate sector as a Non-Financial Obligated Entity.
The mere act of registering a property in the name of a third party can be interpreted as concealing the real ownership, especially if the apparent owner lacks justifiable economic capacity.
Law 155-17 penalizes not only those who launder money, but also those who lend their name to such activities. Even if the funds originate from legal activities, a poorly structured purchase can have serious consequences.
The risk no one considers: marital property
Imagine you're getting a divorce but technically still married. You decide to "protect" a $500,000 investment by buying an apartment in your brother's name. The problem: you're using money that legally belongs to the marital community.
The consequences can be devastating: Your spouse can sue both you and your brother for fraudulent disposal of marital property. The typical outcome includes the transaction being declared null and void, the property reverting to the marital estate, and additional charges for concealing assets that worsen your position in the divorce.
The questions that can save millions
If you are considering buying on behalf of a third party:
Whathappens if the owner dies tomorrow? Do you have documentation to protect your investment from their heirs?
What happens if she gets divorced, gets sick, or changes her mind?
Can this structure be interpreted as concealment under Law 155-17?
If you can't answer with absolute certainty and solid documentation, you're not making a smart investment. You're gambling your assets on someone else's fate.
When the titan falls, your legacy falls too
What seems like a smart move today could become the most costly mistake of your real estate career tomorrow. I've seen investors lose properties and money, face criminal investigations, and destroy family relationships because of poorly designed structures.
There is no substitute for legal certainty. In real estate, transparency and appropriate legal structures will always be the best strategy.
Your next step is vital: If you already own properties in the names of third parties, immediately assess your risk exposure with specialized legal advice. If you are considering this structure, invest in real preventative protection.
Your financial future shouldn't depend on someone else remaining healthy, alive, and well-intentioned indefinitely. Because life, as we've seen, has other plans.
The opinions expressed in this article are the sole responsibility of its author.
