DOMINICAN REPUBLIC Law and Practice Contributed by: Alfredo Guzmán Saladín, Fabio Guzmán Ariza and Julio Brea Guzmán, Guzmán Ariza
6.19 Right to Terminate a Lease The circumstances in which leases are usually terminated by the landlord and/or the tenant are: • reaching of the term of the agreement without renewal; • by the initiation of an eviction proceeding by the landlord in the event that the tenant fails to comply with payment obligations; • mutual consent among the parties; • the destruction of the leased property; • in the event the tenant uses the property for a different function than agreed upon in the lease agreement, and only in the event that such situation negatively affects the landlord; • in the event that the tenant subleases the property in whole or part if the lease agree - ment expressly prohibits subleasing; and • if the tenant performs modifications to the property. Usually, termination terms provide that the non- compliant party is forced to pay a penalty for the early termination. Furthermore, compensa - tion for termination must be contractually agreed by the parties. 6.20 Registration Requirements At the start of the lease agreement, the tenant pays a security deposit, usually equivalent to two months’ rent, to guarantee the fulfilment of its obligations. This amount is to be returned by the landlord once the property is received at the end or termination of the lease. The landlord has the obligation to deposit this money, with a copy of the lease agreement and other documentation, at the Agricultural Bank. Legal fees and other applicable fees are usually paid by each party.
the same rules apply for both. However, proper - ties held by commercial entities are taxed differ - ently from those owned by individuals. Leases to entities are subject to value-added tax and leases for residential purposes are sub - ject to a 10% withholding tax that is credited towards the landlord’s annual income tax. 6.16 Effect of the Tenant’s Insolvency Insolvency can be included as a default clause allowing the landlord to terminate the lease. This said, under Law 141-15, if the tenants initiate an insolvency process, they cannot be evicted from the property during the process, nor can the property be seized. The owner is then assigned by a judge a position in the range of creditors. 6.17 Right to Occupy After Termination or Expiry of a Lease Upon termination of the lease agreement, the tenant should leave the property and return it to the landlord in the same condition as it was origi - nally received. If the tenant does not vacate the property upon expiry, and the landlord does not object to the tenant’s occupancy and continues to receive the rent payment without complaint, the lease agreement is considered effectively renewed but as an oral lease, not a written one, to which different rules apply in terms of eviction prior notice. 6.18 Right to Assign a Leasehold Interest Most leases provide that any subletting or assignment is subject to obtaining the landlord’s prior consent. Landlords do not have to provide a reason for refusing an assignment or a sub - lease. Where there is a legal reorganisation or transfer/sale of the tenant, there are no effects as long as the tenant remains the same legal entity.
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