PUERTO RICO Law and Practice Contributed by: Antonio J Santos and Donald E Hull, Pietrantoni Mendez & Alvarez LLC
oper. 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 obligated to correct. Remedies for breach of representations include rescission and damages. 2.6 Important Areas of Law for Investors Purchasers of real estate in Puerto Rico should always consider the tax consequences of their investment and the type of investment vehicle that is utilised. It is also important to consider the impact of environmental laws if contamina - tion is present or suspected. In the case of new construction and development, it is essential to account for possible land use and zoning restric - tions affecting the real property. 2.7 Soil Pollution or Environmental Contamination Under environmental laws applicable in Puerto Rico, if the buyer is unable to establish that the contamination is not attributable to its action or inaction, then the buyer may be held liable for environmental pollution or contamination of real property. Therefore, it is important that the buyer establish a baseline of the environmental condition of the property prior to acquiring the real estate assets by undertaking a thorough environmental assessment of the property con - ducted by a qualified expert. It is significant to note that, in addition to local environmental laws, US federal environmental laws and regulations are also applicable in Puerto Rico. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law Real property in Puerto Rico is classified by the Puerto Rico Planning Board (or, in certain cases, by the autonomous municipalities) under public - ly available land use and zoning classifications, which establish the different uses that are per -
mitted to be given to the property. Under certain circumstances, project-specific variances may be granted by the relevant permitting authorities after following established procedures (which, among other things, may require public hear - ings). 2.9 Condemnation, Expropriation or Compulsory Purchase Public taking or condemnation of private proper - ty is possible in Puerto Rico for public purposes. The process requires the government to estab - lish the value of the property as just compensa - tion for the taking by means of an independent appraisal. Upon depositing the corresponding amount with the expropriations court, title is automatically transferred to the condemnation authority. However, the property owner has the right to contest the valuation in a judicial pro - ceeding and – if successful – to recover a higher value if accepted by the court. 2.10 Taxes Applicable to a Transaction Stamp taxes, recording fees and notarial fees are typically applicable in a transaction for the purchase and sale of real property in an asset deal. Unless the parties reach a different agree - ment, the transferor of real property will typically pay the stamp taxes with regard to the original of the deed of purchase and sale, and the trans - feree will pay the stamp taxes with regard to the certified copy of the deed and the applicable recording fees. Stamp taxes and recording fees are not appli - cable in the case of a transaction for the total or partial transfer of shares or other equity interests in a property-owning entity. Additionally, a partial exemption for stamp taxes and recording fees may be available in the case of tourism develop - ment projects.
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