PUERTO RICO Law and Practice Contributed by: Antonio Santos, Donald Hull and Paola Canino, Pietrantoni Mendez & Alvarez LLC
6.23 Remedies/Damages for Breach There are no statutory limitations on damages in the event of a tenant’s breach and termination of a lease. The most common type of security offered by tenants under commercial leases in Puerto Rico is a security deposit. If the tenant fails to perform a monetary obli - gation, the landlord may use the deposit to satisfy the tenant’s unpaid obligation in accordance with the terms of the lease agreement. 7. Construction 7.1 Common Structures Used to Price Construction Projects The most common types of contractual arrangements in Puerto Rico between the owner of a construction project and the contractor are: • “stipulated sum”, in which the basis of payment is a fixed price; and • “cost plus”, in which the basis of payment is the cost of the work plus a fee for the contractor. Under the “cost plus” arrangement, the contractor’s fee can be a fixed amount or alternatively a percent - age of the cost of the project. “Cost plus” contracts sometimes provide for a guaranteed maximum price, such that the amount to be paid by the owner of the project to the contractor never exceeds a predeter - mined amount. 7.2 Assigning Responsibility for the Design and Construction of a Project A variety of methods are commonly used in Puerto Rico for assigning responsibility for the design, con - struction and administration of a project. Design, which is the initial step, must always be undertaken by one or more architects who are licensed in Puerto Rico. The construction of the project itself may be arranged under a single contract with a licensed gen - eral contractor or under a number of separate con - tracts with specialised contractors whose work is co- ordinated by the project architect or a construction manager. Finally, the design and construction func - tions may also be combined under a single approach commonly known as “design-build”, where the owner of the project contracts with a single entity that pro -
Notarial tariff In addition, the Notarial Law mandates the payment of a notarial tariff to be calculated on the basis of the stat - ed amount of the transaction (eg, the purchase price or the amount of the mortgage). For transactions with stated amounts not exceeding USD10,000, the appli - cable notarial tariff is USD150. With regard to transac - tions with stated amounts between USD10,000 and USD5 million, the parties may negotiate the notarial tariff, but in no event may the tariff be greater than 1% of the transaction amount or less than 0.5% of the transaction amount. For transactions with stated amounts of more than USD5 million, the parties are free to negotiate the notarial tariff but the tariff in those cases will never be less than USD25,000. 6.21 Forced Eviction Under Puerto Rico law, a tenant may be evicted pur - suant to a summary judicial proceeding if an event of default has occurred under the lease agreement. The proceeding requires that a hearing be held within ten days after the date on which the eviction suit is filed with the court by the landlord. Thereafter, the judge must issue a ruling within ten days after the date of such hearing. In practice, however, the eviction process may actually take longer than the foregoing periods set forth in the statute. This is particularly so with regard to the evic - tion of residential tenants that are insolvent families, which requires that notice of the judicial order be given to the Department of Family and can only occur after 20 days from the date of such notice. Furthermore, in such cases, a representative of the Department of the Family must be joined as a necessary party to the eviction proceeding. 6.22 Termination by a Third Party A lease may be terminated by a governmental author - ity in Puerto Rico, using its powers of condemnation and expropriation, as a result of the taking of the leased property for a public purpose. However, the government must always pay just compensation to the affected parties, which is often the subject of liti - gation, making the length of the entire process uncer - tain and unpredictable.
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