PUERTO RICO Law and Practice Contributed by: Antonio J Santos and Donald E Hull, Pietrantoni Mendez & Alvarez LLC
2. Sale and Purchase 2.1 Categories of Property Rights
new procedures that were implemented during the COVID-19 pandemic remain in effect. Although recordation is technically not required in order to effect a valid transfer of title to real property, it is customary – and recommended – that transfers of title be recorded in the Reg - istry of Property of Puerto Rico because of the protections that recordation confers to the par - ties. Title insurance is common in Puerto Rico in commercial and most residential transactions. 2.4 Real Estate Due Diligence As a part of their due diligence, buyers of real estate in Puerto Rico typically search govern - ment records to determine the status of title, real property taxes, zoning and land use, flooding, and environmental conditions. It is not uncom - mon for buyers to also perform an on-site physi - cal inspection of the property and to include the preparation of surveys, soil studies, environ - mental assessments, and structural condition Representations regarding title, property tax status, environmental conditions, pending or threatened condemnation or litigation proceed - ings, leases and other third-party occupancies, and structural conditions are most typical in commercial purchase–sale transactions of real property in Puerto Rico. Sometimes, depending on the relative bargaining strength of the parties, some of these representations are 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. Additionally, stat - utory warranties that are broader in scope apply to the sale of residential real estate by its devel- reports as part of their due diligence. 2.5 Typical Representations and Warranties
The fee simple estate, leasehold estate, and mortgage rights are the principal categories of property rights that can be acquired under Puer - to Rican law. Other real property rights, such as easements, usufructs, options, rights of first refusal, and surface rights are also recognised under Puerto Rican law. 2.2 Laws Applicable to Transfer of Title Transfers of title to real estate are mainly gov - erned by the Civil Code, the Real Property Regis - try 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 transfers may be benefited 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, par - ticularly if the transferor is the developer of the residential project. The authors note that, 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 similar consumer pro - tection laws – may apply to transfers of title in Puerto Rico. 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 before a notary public. Deeds need to be executed in person before a notary public. No
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