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Mortgages
Real Estate Financing in Mexico,
Latin America and the Caribbean
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Buying Real Estate in Puerto Rico
Legalities and OwnershipBuying real estate in Puerto Rico is not much
different than buying real estate in most of US states. Many of the procedures
are similar because Puerto Rico is a Commonwealth of the United States. U.S.
citizens are allowed to purchase property in Puerto Rico.
For buying a
property, an initial deposit is usually needed and it can vary form deal-to-deal
depending upon the terms negotiated between the seller and the buyer. However,
usually an amount to the tune of 5% of the total purchase price is required to
be deposited at the time of signing and submitting the contract. The deposit can
be a lesser amount if the remaining balance is payable through mortgage
funds.
The basic steps involved in purchasing and registering a real
estate in Puerto Rico are:
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Locating a property of choice. |
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Sign a public deed for the purchase of the property. This deed must be
prepared by the notary and be executed by the parties before the notary. This is
mandatory because a notary is an attorney authorized and licensed by the
government of the Commonwealth of Puerto Rico to certify and attest the legality
of the public deeds executed in his or her presence, the identity of both the
seller and the buyer, and the municipality in which the public deed was
executed. |
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Property title report: Obtain the property title report at the Property
Registry (Registro de la Propiedad in Spanish). The report will show
the status of the property at the time of the last registry. It provides details
such as the owner, mortgages etc. and will also indicate if the property is free
from all encumbrances. |
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Property tax certificate: This certificate is to be taken from the Municipal Revenue Collection
Center (CRIM). This certificate ensures that there are no outstanding
property taxes to be paid. |
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Title commitment for title insurance: This is required in order to obtain
title insurance. Title insurance policies are designed to cover the borrower if
there is any kind of fraud in the sale of the property. |
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Preparing and executing the purchase and sale deed: This is the most
important step. The notary prepares the deed of purchase and sale, which is to
be executed in his or her presence by both parties. It is the notary who
certifies the legality of the transaction, the identity of the two parties (i.e.
name, age, place of residence, profession, marital status). In case of
authorized representatives, the notary certifies the personal details of the
representative. If needed the notary will also prepare a ‘corporate resolution’
authorizing the representatives of the corporation to appear on the
deed. |
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Purchasing internal revenue stamps and registry of property filling
vouchers: The internal revenue stamps are required to be canceled on the
original deed (título de propiedad in Spanish) of purchase and sale as
well as for the first certified copy of the deed. The notary keeps the original
deed whereas the first certified copy of the deed is filed in the Registry of
Property. Filling vouchers of the Registry of Property are to be purchased
before applying for registration. |
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File the sale and purchase deed at the Registry of Property. |
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File the notice of sale with the Treasury Department. |
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File the notice of change of ownership with CRIM. |
Financial MattersProperty tax in Puerto Rico amounts to approximately
1.5 % of the property value. This amount is typically a prepaid and placed in
escrow within the closing costs which consist of several components such as fees
payable to government entities, registration fees, appraisal, loan document
processing fee, if the property is to be funded through a loan.
The
costs involved in the various steps of purchasing and registering the property
include $100 for obtaining the property title report, $50 for the property tax
certificate, $300 for the corporate resolution, $100 for filing the deed at the
Registry of Property, $20 for filing the notice of sale with the Treasury
Department, $20 for filing the notice of change of ownership with the CRIM.
In addition to the above charges, the notary fee is 1% of the property
value for properties worth up to $500,000 plus 0.5% of any excess over $500,000.
This fee can be negotiated.
The cost involved in the procurement of the
internal revenue stamps for the original copy is $55 (plus 0.1% of the property
value) and for the certified copy is $27.50 (plus 0.05% of property value). The
cost of procuring filling vouchers is $10.5 (plus 0.4% of property value).
Other Important IssuesThe internal revenue stamps and the Registry of
Property filling vouchers are acquired by the lawyers/notaries electronically.
Property in Puerto Rico when purchased by married couples is considered
a “joint venture with right of survivorship.” This means that if one spouse
dies, the surviving spouse automatically inherits the property.
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