PUERTO RICO Law and Practice Contributed by: Antonio Santos, Donald Hull and Paola Canino, Pietrantoni Mendez & Alvarez LLC
2.3 Effecting Lawful and Proper Transfer of Title Lawful and proper transfers of title to real estate in Puerto Rico are effected by a public deed executed – in person – before a notary public. Although recordation is technically not required in order to effect a valid transfer of title to real property, it is customary ‒ and recommended ‒ for transfers of title to be recorded in the Registry of Property of Puer - to Rico because of the protections that recordation confers on the parties. Title insurance is common in Puerto Rico in commercial and most residential trans - actions. 2.4 Real Estate Due Diligence As part of their due diligence, buyers of real estate in Puerto Rico typically search government records to determine the status of title, real property taxes, zoning and land use, flooding and environmental con - ditions. It is not uncommon for buyers to also per - form an on-site physical inspection of the property and to include the preparation of surveys, soil studies, environmental assessments and structural condition reports as part of their due diligence. 2.5 Typical Representations and Warranties Representations regarding title, property tax status, environmental conditions, pending or threatened con - demnation or litigation proceedings, leases and other third-party occupancies, and structural conditions are most typical in commercial purchase-sale trans - actions of real property in Puerto Rico. Depending on the relative bargaining strength of the parties, some of these representations are sometimes qualified by the “knowledge” of the seller. Unless waived by express agreement of the parties, Puerto Rico laws provide statutory warranties in the sale of real estate that cover title and hidden defects in the property being transferred. In addition, statutory warranties that are broader in scope apply to the sale of residential real estate by its developer. Such broader warranties cover non-critical construction defects that a seller of real property, in the absence of an agreement to the contrary, would not otherwise necessarily be obliged to correct. Rem -
administered through a fully electronic and traceable system. Equally significant is the proposed shift of responsi - bility to accredited private professionals for certain permitting determinations, transferring expertise and accountability from government bureaucracy to a regulated professional sector. These reforms aspire to reposition Puerto Rico as a predictable, transparent and competitive environment for real estate and infra - structure investment, while preserving environmental, historical and due process protections. The fee simple estate, leasehold estate and mortgage rights are the principal categories of property rights that can be acquired under Puerto Rican law. Other real property rights are also recognised under Puerto Rican law, such as easements, usufructs, options, rights of first refusal and surface rights. 2.2 Laws Applicable to Transfer of Title Transfers of title to real estate are mainly governed by the Civil Code, the Real Property Registry Act and the Notarial Law. Special laws such as the Condominium Act, the Condohotel Act and the Timeshare Act may also be applicable, depending on the type of property in question. Transfers of title to hotel and industrial projects are generally not subject to special laws, but such trans - fers may be benefitted by laws relating to tax or other governmental incentives for the development and/or operation of such projects. Residential properties may be subject to certain consumer protection laws and regulations, particularly if the transferor is the devel - oper of the residential project. Unless a given statute specifically excludes Puerto Rico from its application, federal laws ‒ including the Truth-in-Lending Act, the Real Estate Settlement Procedures Act and other sim - ilar consumer protection laws ‒ may apply to transfers of title in Puerto Rico. 2. Sale and Purchase 2.1 Categories of Property Rights
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