PUERTO RICO Law and Practice Contributed by: Antonio Santos, Donald Hull and Paola Canino, Pietrantoni Mendez & Alvarez LLC
also recognised under Puerto Rican law, such as easements, usufructs, options, rights of first refusal and surface rights. 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 Reg - istry 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 benefitted by laws relat - ing to tax or other governmental incentives for the development and/or operation of such pro - jects. Residential properties may be subject to certain consumer protection laws and regula - tions, particularly if the transferor is the devel - oper of the residential project. Unless a given statute specifically excludes Puerto Rico from its application, federal laws – including the Truth-in- Lending Act, the Real Estate Settlement Proce - dures Act and other similar consumer protection 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. 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 on 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, environmen - tal assessments and structural condition reports as part of their due diligence. 2.5 Typical Representations and Warranties 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. In addition, statutory warranties that are broad - er in scope apply to the sale of residential real estate by its developer. Such broader warran - ties 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 obliged to correct. Remedies for breach of representations include rescission and damages.
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