Puerto Rico Real Estate Practices
Overview
In 1917, Puerto Rico became a United States territory and its people were granted citizenship. Puerto Rico became a commonwealth of the U.S. with its own constitution in 1952. Puerto Rico is a key shipping lane to the Panama Canal and San Juan is one of the biggest natural harbors in the Caribbean. A diverse industrial sector has surpassed agriculture as the primary catalyst of economic activity. Because of the mild year round climate, beautiful beaches and vast rain forests, the tourism industry is also a major source of income. Encouraged by duty-free access to the U.S. and by tax incentives, U.S. firms have invested heavily in Puerto Rico.
Real Estate Practices
Puerto Rico has six Boards of REALTORS® serving the island. According to the National Association of REALTORS®, there are over 1000 licensed REALTORS® (majority bi-lingual) in Puerto Rico and brokerage commissions are not regulated by any entity.
Acquisition costs for the seller include the real estate commission (unless otherwise negotiated at time of contract), 1% of the deed of sale and 1% for cancellation of the existing mortgage.
Property and ownership
Ownership records can be determined from the Office of Registry of Property. Recording is made in the Office of Registry of Property which covers immovable property (real estate) affected; and, if covered by more than one office, in all offices covering immovable property. The place of residence of the parties does not affect place of recording. Each immovable property is individually identified with a number. Puerto Rico uses the metes and bounds land description and a legal description of a specific parcel of real estate must be complete enough for an independent surveyor to locate and identify it.
Real property is a term unknown in Puerto Rico law except as the inaccurate translation of Spanish "immueble" (immovable). Dominion title (dominio) is roughly equivalent to fee simple, which is the maximum possible estate or right of ownership of real property, continuing forever.
Mortgages
Title to mortgaged property remains with the mortgagor. Mortgages are executed by deed and recorded. There are both primary and secondary mortgage markets. In the primary mortgage market, loans are originated and consist of lenders such as commercial banks, savings and loan associations and mutual savings banks. Mortgages are available to foreign buyers provided the buyer has qualified for a mortgage loan from a local bank.
Closing/Escrow
The real estate closing process is similar to that of the United States. A closing statement is used at the time of closing, which is a detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction. An escrow account is set up by the mortgage company to pay for taxes and insurance. Settlement typically takes 45 – 60 days.
Information courtesy of Tierra Del Sol and Reality Realty