PUERTO RICO Law and Practice Contributed by: Antonio Santos, Donald Hull and Paola Canino, Pietrantoni Mendez & Alvarez LLC
1. General 1.1 Main Sources of Law The main sources of real estate law in Puerto Rico are: • the Civil Code; • the Real Property Registry Act; • the Notarial Law; and • Supreme Court of Puerto Rico jurisprudence. 1.2 Main Market Trends and Deals The real estate market in Puerto Rico has demonstrat - ed considerable strength during the past year, driven in significant part by increased investment in hospital - ity projects and the continued construction of housing units financed with Community Development Block Grant (CDBG) funds allocated by the US federal gov - ernment. Notwithstanding persistent inflationary pres - sures and uncertainty arising from evolving US trade and tariff policies, the volume of new development activity on the Island has remained strong, reflecting sustained investor confidence in Puerto Rico’s real estate sector. The demand for luxury residential properties contin - ued to show sustained growth, driven in significant part by Puerto Rico’s tax incentives legislation (includ - ing the incentives available under Act 60-2019), which continues to attract affluent investors and entrepre - neurs seeking to relocate to the Island. The short-term vacation rental sector has also continued to expand, with new and rehabilitated properties entering the market in response to strong tourism demand. The development of new affordable housing remains a critical priority for the local government, particularly considering the ongoing housing shortage on the Island. Community Development Block Grant (CDBG) funds allocated to Puerto Rico by the US federal gov - ernment, together with federal tax credit allocations and other federal programmes, have continued to support the financing of affordable housing projects. However, uncertainty regarding the future availability and levels of federal funding has introduced additional challenges for developers and lenders operating in this sector.
Several significant hospitality and mixed-use projects remain in the development pipeline on the Island, sup - ported in part by Puerto Rico’s tourism incentives leg - islation. However, the feasibility and timing of these projects continue to be influenced by construction cost escalation and the broader economic uncertainty stemming from US fiscal and trade policy develop - ments. 1.3 Proposals for Reform The government of Puerto Rico has made the trans - formation of the Island’s land use and permitting sys - tem a centrepiece of its legislative agenda, with two companion bills currently pending before the Puerto Rico Legislature: • Senate Bill No 1173, filed on 6 April 2026, propos - es what would be known as the “Law to Simplify Puerto Rico’s Permitting System” ( Ley para Simpli- ficar el Sistema de Permisos de Puerto Rico ); and • Senate Bill No 1183, filed on 8 April 2026, propos - es the creation of a new comprehensive “Planning and Permitting Code” ( Código de Planificación y Permisos ). At their core, both measures represent a fundamental philosophical shift in how government relates to real estate development and private investment – moving away from a model in which the state acts as a gate - keeper that must affirmatively approve activity before it can begin, toward one in which clear, objective rules define what is permissible and the private sector may act immediately upon compliance with those rules, with government oversight focused on post-author - isation enforcement rather than front-end approval. This conceptual reorientation seeks to address the perception that Puerto Rico is a difficult jurisdiction in which to obtain development permits. The two bills propose to replace the existing patch - work of overlapping agencies, conflicting statutes and unpredictable administrative processes with a single, coherent and digitally integrated regulatory architec - ture. Rather than navigating multiple bodies with over - lapping jurisdiction, developers would interact with a unified framework governed by uniform standards, consolidated into a single regulatory instrument and
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