New Legal Question Regarding Real-estate

EncoreFun · #1 03-02-2006, 11:12 AM

To the point, when making a purchase of a Condominium Unit within a respected Development in Bavaro. Legal Question regarding new Construction of a Condo that is 50% finished.

This was sent to me from an American Attorney who is well versed in business dealings in the DR.

"Stewart will probably want to guarantee/insure title from the date of final payment backward. In the US, title insurance covers from the actual date of the deed/title recording, backward, which also coincides with final payment. As we have discussed, your title/deed transfer will be occurring some time after all the $$ has been paid. I would want title certified/insured from the actual date the deed is transferred into your name...period. You should make that quite clear to Stewart during your next conversation."

Through my research I have discovered from the time I actually receive the keys to my Condominium it could(probably) take 3 years before I actually receive title to my Condominium. For example once ALL of the units are sold the Condominium will go into "Subdivision". Titles will not be available until after this process. Furthermore I dont believe that subdivision happens until at least 80% of the units are sold ( 24 units )

My question is what legal avenue do I have to protect myself from the Seller of the Condominium project from Mortgages, liens, or other instruments of loan against the Condominium, once I have paid all of my money. It appears to me that Title Insurance only protects me from the time I "pay" for the Condo backwards.

What's to stop the Developer from Legally using the property to secure further loans in the potential 3 year waiting period it takes for me to receive actual title. I have been told that it is wise to "Hold Back" a percentage of the final payment to the Developer until I have received the actual title, but this is only about 5 or 10 percent of the actual purchase price. However I do not see anything in a Dominican Real estate Contract that stops the developer from using the property to secure loans. It appears legally that the Seller/Developer holds all of the Rights. Even though I have paid I own nothing until title is issued in my name, even after I am handed over the Keys to the Condo. What protection do I have if the Seller/Developer cannot deliver good title. What happens if the developer runs into Construction Problems and cant finish ( unlikely with this project ).

Is there a "Legal Clause" I can add to the Sales Agreement that offers me Protection. I should mention that this type of purchase would be illegal in the USA or Canada. The buyer is protected.

Thanks in advance.

HOWMAR · #2 03-02-2006, 11:22 AM

This may be a major reason for the large discount in "preconstruction prices" vs. completed projects.

Robert · #3 03-02-2006, 11:35 AM

I can't answer your question, but if it's any help, Palma Real have a very good name in the market.

Can I ask you why you decided to buy at Palma Real and how you heard about the project? Feel free to email or send a private message (PM). Thanks, Robert.

Mirador · #4 03-02-2006, 11:59 AM

Many people have been defrauded this way, and the court system in obtaining redress for the victims. One of the more recent case, covered by the media, is that of the company represented by Augusto Menéndez, promotor of the artificial island Novo Mundo Siglo XXI. Mr Menéndez company sold individual residential plots in a development by the name of Ciudad Internacional in Avenida Las Américas, Santo Domingo, and after the sale, used the title to the land as collateral obtain a US$15 million loan from Banco Progreso. He defaulted, and the bank forclosed on the buyers of the individual plots, who lost their money. Mr. Menendez has pulled this same modus operandi from Argentina to Miami...

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Ken · #5 03-02-2006, 01:00 PM

You don't mention a Dominican attorney. I hope you have a good one and are not relying on the attorney for the project. Fabio Guzman, the attorney who answers questions is this section, has an office in Punta Cana and is opening one in La Romana. They have a reputation for protecting the interests of their clients. If you don't yet have a Dominican attorney you are sure you can trust, the Guzman office would be a good choice. Here is the link to their website http://www.drlawyer.com/

EncoreFun · #6 03-02-2006, 06:31 PM

Yes Ken I have an attorney- I'm seeking out other legal opinions and hoping to hear from a DR attorney or Professional for specific ways of minimizing risk. Furthermore; I'm trying to investigate if "addendums to agreements" are possible. I've seen several copies of "Conditional Sales Agreements" from the DR, and almost all are the same- they are standard templates with slight modifications.

Ken · #7 03-02-2006, 09:53 PM

Quote:

Originally Posted by EncoreFun

Yes Ken I have an attorney- I'm seeking out other legal opinions and hoping to hear from a DR attorney or Professional for specific ways of minimizing risk. Furthermore; I'm trying to investigate if "addendums to agreements" are possible. I've seen several copies of "Conditional Sales Agreements" from the DR, and almost all are the same- they are standard templates with slight modifications.

I meant do you have a Dominican attorney. If you are buying property here, I think you should either have a Dominican attorney or the attorney you are relying on should arrange with a Dominican attorney to assist him on matters of Dominican law. The latter is a common practice.

Denmay565 · #8 03-03-2006, 09:49 AM

The American attorney raises a valid point. In the US, the monies and deed are transferred on the same date but if that is not the case in the DR on a new condo construction project, you would need to have the title policy amended to state that the policy extends to the period the deed is actually issued. Has anyone else run into this as an issue? How did your attorney address this concern? Perhaps Mr. Guzman can weigh in on this.

HOWMAR · #9 03-03-2006, 09:52 AM

Quote:

Originally Posted by Denmay565

The American attorney raises a valid point. In the US, the monies and deed are transferred on the same date but if that is not the case in the DR on a new condo construction project, you would need to have the title policy amended to state that the policy extends to the period the deed is actually issued. Has anyone else run into this as an issue? How did your attorney address this concern? Perhaps Mr. Guzman can weigh in on this.

How can you expect a title company to guarantee the future? They are guaranteeing clear title up to the issue date (transfer of funds), but have no control of the title after that date.

EncoreFun · #10 03-03-2006, 01:31 PM

That's the exactly the problem Howmar. Title Companies are not going to insure into the future. They will do a 'Final Search' on title handover. But what 'legal instrument' is there to protect the buyer in the 3 year waiting period to receive title in New Construction Cases. One option is to pay the Seller a small down payment up front and pay the balance on Title handover. But I haven't found a developer that will even agree to these types of terms, and I can understand that. But it doesn't help me as a buyer.
It's a crap shoot. This is why I am searching for some type of other Security, which I don't think exists. Even a developer with the best intentions who plans to deliver Good title can run into problems and screw you legally by mortgaging the property. It's the Wild West over there! The entire DR Real-estate system needs an overhaul and provide security to buyers.