Fractionals In the Dominican Republic

AnonTraveler · #1 09-01-2008, 11:48 AM

I do not believe there is a set legal structure for fractional ownership in the Dominican Republic, but I could be wrong. I know you can create a company and have each owner have the equitable fraction of the ownership. That's the easy part (e.g. ownership).

The question, though, is how a fractional property is controlled, managed and profits are distributed. Is it possible there are condo law variations which can be used to create a fractional ownership? Or are there legal frameworks I am not familiar with to help legally create and operate a fractional ownership?

Fabio J. Guzman · #2 09-03-2008, 01:34 PM

No, there are not.

AnonTraveler · #3 09-04-2008, 12:58 PM

But I take it there is no legal reason why someone could not create a fractionalized investment property. Is there?

Fabio J. Guzman · #4 09-08-2008, 04:30 PM

The problem is in the relationship between the holders, and how one holder is protected in relation to the rest or the title holder, or the entity holding the title. There is no easy solution contractually.

What is needed is specific legislation for time-sharing, etc. as it exists in other countries.

AnonTraveler · #5 09-08-2008, 11:08 PM

True, I can see that. So the temporary solution appears to be:

1. Have the DR property owned by a DR corporation
2. Have the DR corporation owned by a US corporation
3. Have the US corporation (which has excellent fractional laws) define the relationship between the holders.

Starwood worked very closely with the Bahamian government to help bring in what are basically the US fractional laws to that government. I wonder if someone 'large' like that can lead the way here?

rubio_higuey · #6 09-09-2008, 03:38 AM

Most resorts in Bavaro sell timeshare in one way or another... and they have been doing that for ages. They either don't see a need for DR timeshare laws or they found a comfortable way around it. Either way, they have been and are selling timeshares/fractional ownerships.

Maybe Leonel's friend who wants to build 150 cabanas near Jarabacoa and wants to sell timeshare at 100KUS push the law...

bart6 · #7 09-09-2008, 02:51 PM

the way i have seen it done all of the rules are put in the corporate bylaws and thus each party has the spelled rights, so many weeeks, right to buy others out, and there rights are based upon the number of shares which they hold.

i have seen some documents which seemed to work pretty well

AnonTraveler · #8 09-09-2008, 03:11 PM

Quote:

Originally Posted by rubio_higuey

Most resorts in Bavaro sell timeshare in one way or another... and they have been doing that for ages. They either don't see a need for DR timeshare laws or they found a comfortable way around it. Either way, they have been and are selling timeshares/fractional ownerships.

Maybe Leonel's friend who wants to build 150 cabanas near Jarabacoa and wants to sell timeshare at 100KUS push the law...

There is a huge difference between time share and fractionalization. So it is much easier to establish laws. Time share owners do not actually own anything other than time, which is somewhat meaningless. Fractional owners actually own a deeded title to their portion of the property so they enjoy the asset appreciation.

The rub in the DR is that the property ownership laws do not currently allow for more than one entity (or individual) to own a single property deeded specifically to them and unencumbered by any other titles to the same property. So the answer is to have a corporation hold the title while the corporation is held by another company operating under the laws of a country that does have fractional laws.

...at least I think so (I'm not a lawyer, only an investor).

AnonTraveler · #9 09-09-2008, 03:15 PM

Quote:

Originally Posted by bart6

the way i have seen it done all of the rules are put in the corporate bylaws and thus each party has the spelled rights, so many weeeks, right to buy others out, and there rights are based upon the number of shares which they hold.

i have seen some documents which seemed to work pretty well

I agree that this is a reasonable solution should all parties be acting reasonably. The issue surfaces, I believe, when one of the parties does not act reasonably.

For example, a fractional owner also owes his/her fractional portion of the maintenance fees. If s/he does not pay those maintenance fees, for whatever reason, the other owners have no real recourse by property law. They have recourse by civil law, of course.

But if you want to torture yourselves just try and get a Dominican court to actually listen to and understand a civil lawsuit. It is virtually impossible, IMHO. And even if a civil lawsuit is found in your favor there is almost no way to force the other party to comply with the terms of the court. It's really a very, very bad system to rely upon.

STEVE G. · #10 09-10-2008, 11:48 AM

Quote:

Originally Posted by rubio_higuey

Most resorts in Bavaro sell timeshare in one way or another... and they have been doing that for ages. They either don't see a need for DR timeshare laws or they found a comfortable way around it. Either way, they have been and are selling timeshares/fractional ownerships.

Maybe Leonel's friend who wants to build 150 cabanas near Jarabacoa and wants to sell timeshare at 100KUS push the law...

What is sold in DR is ''right to use'' ( floating / fixed week or points ) based on a contract only , not a property title .