DOMINICAN REPUBLIC Law and Practice Contributed by: Alfredo Guzmán Saladín, Fabio Guzmán Ariza and Julio Brea Guzmán, Guzmán Ariza
number. These are merely formal requirements that can easily be fulfilled.
through a foreclosure process before the compe - tent civil and commercial court of first instance. Dominican trust law offers the possibility of set - ting up real estate security trusts. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders A foreign lender does not need specific authori - sation to do business in the Dominican Republic. To register a mortgage in its favour, the foreign lender should obtain a local tax number. Once this tax number has been obtained, the lender is no longer subject to the general withholding tax - es established for payments sent abroad (28% in general, or 10% for interest paid to foreign financial institutions). The lender will be taxed as a permanent establishment, under the same conditions as a Dominican entity. Regarding required documents and registration taxes, the same rules that apply for local lenders apply to foreign lenders, as follows. Mortgages are created by contract between the owner and the lender, or by a tripartite agree - ment between the seller, the buyer and the lend- ing institution. The contract is authenticated by a Dominican notary and then registered at the Registry of Title after payment of the 2% mort - gage tax. The registration of a security interest is perfect - ed by filing the documentation at the Registry of Title in the jurisdiction where the property is located. The documents required for filing a mortgage are: • a mortgage contract; • an original of the certificate of title of the bor - rower; • a mortgage tax receipt; and
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
In general, Dominican law does not distinguish between commercial and residential properties; the same rules apply for both. However, regard - ing ownership, properties held by commercial entities are taxed differently from those owned by individuals. Financing sources are mixed, depending on the type of investment. For example, major infra - structure financing is obtained through foreign banks and financial institutions, while real estate developments in the tourism sector have been more dependent on local banks, most of which have entire departments catering to the real estate-tourism industry. There are major financial institutions, publicly traded funds and private investors with inter - ests in the country, as it is the largest recipient of foreign direct investment (FDI) in the region. 3.2 Typical Security Created by Commercial Investors Mortgages (financing from third parties) and privileges (seller’s financing) are the customary security interests. Both grant the lender a reg - istered right on the property (collateral) that can be enforced in the event of default through a foreclosure process, not an automatic defeasible conveyance in the event of default. In both cases (mortgages and privileges), in the event of default, the enforcement is made
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