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REAL ESTATE TRANSACTIONS IN AMERICAN DOLLARS
The Constitution of the Dominican Republic establishes the Dominican Peso (RD $) as an official currency. This rule works for the MOST of economic transactions. Then comes the inevitable question: “Why the real estate is in US dollars if the official currency is the Dominican Peso?”
To answer this question, we must go back to 2003, when the country experienced one of its most severe crises: the economy shrank by 1.3%, inflation was 42.6% and currency devaluation was greater than 100%. This phenomenon punished the economy in general but one of the hardest hit was the real estate sector, which is why the latter adopted a “temporary” solution: fix the transactions in US dollars in transactions that exceed $ 100,000 for the sale and $ 800 for monthly, about rent. The “temporary” has spanned over ten years and at the moment there is no minimum sample will reverse the measure; by contrast, sectors such as banking and finance have expanded their service offerings to transactions in this currency.
The normal concern if there is any alternative to this situation arises considering that the income of the majority of potential buyers and / or tenants is in Dominican pesos. Over time the following alternatives have emerged:
- Make payment in Dominican pesos based on the selling rate of the day when payment is made. This rate is obtained from the average offering three (3) commercial banks (usually Banco Popular is used).
- Set a limit for the rate of change during the term of the contract; usually two (2) points are set above the rate in force at the time of signature.
However, it is important to note that these options are only alternatives that may arise during the negotiation but that will be owner’s decision.
I am Myriam Parra and if you liked this article you can follow me on my social media networks as @livinginsantodomingo and contact me through +1 (829) 560-1280.
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