The Dominican Republic has positioned itself as one of the most attractive destinations in the Caribbean for foreign investment. Areas such as Punta Cana, Cap Cana, Las Terrenas, Casa de Campo and Greater Santo Domingo receive constant capital inflows from U.S., Canadian, European and Latin American investors.
What many of these investors do not realize is that Dominican law, while allowing foreign ownership without significant restrictions, has peculiarities that can turn an attractive opportunity into a serious equity exposure if not navigated correctly.
Basic legal framework: what the law allows in foreign investment
In general terms, Dominican law allows foreign individuals and legal entities to acquire real estate under the same conditions as nationals. There is no percentage limit of foreign ownership, nor is a local partner required to own real estate. The Real Estate Registry Law 108-05 and the Constitution provide equal protection of property rights.
However, this legal openness does not mean the absence of risk. In fact, the ease of access creates a false sense of simplicity that leads many investors to overlook fundamental protections.
Risk 1: Purchasing structures without adequate legal vehicle
Many foreign investors purchase on a personal basis without considering the tax, estate and wealth protection implications. The creation of a Dominican corporation (SRL or SAS, according to Law 479-08) as a holding vehicle can offer significant advantages in terms of tax planning, estate separation and ease of future transfer.
Recommendation: Before defining the purchase structure, evaluate with specialized legal advice which is the optimal legal vehicle considering the origin of the capital, the tax residence of the investor, the intended use of the property and the exit strategy.
Risk 2: Insufficient due diligence due to trust in developer
In the market for new projects, many investors rely on the reputation of the developer and neglect independent verification of titles, building permits, environmental approvals and registration status. Projects that appear to be sound may have title problems in the base land, expired permits, or irregularities that are only discovered with an independent legal review.
Risk 3: Unanticipated tax implications
The purchase of real estate in the DR generates tax obligations that many investors are unaware of: transfer tax of 3% on the value of the property, Real Estate Wealth Tax (IPI) for properties that exceed the exempt threshold, and possible implications in the investor’s country of tax residence. In addition, Law 155-17 on Money Laundering imposes compliance obligations that apply to real estate transactions of a certain amount.
Risk 4: Contracts in English without optimized local validity
It is common for foreign investors to sign bilingual contracts where the English version is the one they actually negotiated and the Spanish version is a translation that no one reviewed in detail. In case of disputes, Dominican courts will apply local law and give priority to the Spanish version.
Recommendation: All contracts should be reviewed and negotiated in Spanish by an attorney with knowledge of applicable Dominican law, ensuring that the protections are drafted in the language that the court will interpret.
Investing safely requires specialized local advice
The real estate opportunity in the Dominican Republic is real. But the legal protection of that investment requires a lawyer who knows the system from the inside: the real estate jurisdiction, the registry practices, the fiscal reality and the risks that do not appear in the project brochure.
At Marinel Brea & Associates, we advise domestic and foreign investors with the same rigor that we would apply if the assets at stake were our own.
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