DOMINICAN REPUBLIC Law and Practice Contributed by: Alfredo Guzmán Saladín, Fabio Guzmán Ariza and Julio Brea Guzmán, Guzmán Ariza
but with the caveat that plans must be executed by a licensed architect or engineer. 7.3 Management of Construction Risk Construction risk is usually managed contractu - ally through provisions and the establishment of penalties (agreed in the event of delays), perfor - mance bonds and insurance cover, among other things. The Dominican Civil Code establishes a warranty on structural and hidden damages in a property, enforceable against architects and contractors for up to ten years. In practice, this timeframe is usually limited by the parties. 7.4 Management of Schedule-Related Risk These types of risks are managed contractu - ally through provisions and the establishment of penalties in the event of delays; it is also com - mon to ask for a performance bond from the contractor issued in favour of the owner and/ or developer. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Owners or developers often require the contrac - tor performing the work to provide security in the form of monetary compensation through available financial tools, should they be unable to deliver the work on time or meet the quality standards for which they have been paid. These risks are usually managed contractually by means of warranties, indemnity provisions, retention provisions, penalties agreed in the event of delays, performance bonds and insur - ance cover, among other things. In addition, the Dominican Civil Code establishes a warranty covering structural and hidden dam -
ages in a property that is enforceable against architects and contractors for a period of up to ten years. In practice, this timeframe is usually limited by the parties. 7.6 Liens or Encumbrances in the Event of Non-payment According to Article 2103 of the Dominican Civil Code, architects and builders are able to register court-ordered liens in the event of non- payment after the construction in question has been delivered to the owner. Additionally, under Dominican law, contractors and/or designers are not permitted to register any liens or encum - brances in property from non-payment, but can sue the owner for breach of contract, and if the debt is recognised by the court, then they may proceed to register the lien or encumbrance in the property. For an owner to remove the lien or encumbrance, they must provide evidence of successful completion of the obligation to the land registry. 7.7 Requirements Before Use or Inhabitation In the Dominican Republic, a site certificate issued by the parties or by an independent engineer is usually required, certifying that the project has been finished and is ready to be delivered and inhabited. 8. Tax 8.1 VAT and Sales Tax There is no VAT or equivalent tax liability applica - ble to the sale or purchase of real estate. 8.2 Mitigation of Tax Liability Other than the exemptions mentioned above and the option of purchasing the shares of the holding company, there is no way of avoiding the
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