Buying Property in Puerto Rico
Once you have identified the property you are interested in, our first step will be to submit a written offer on your behalf. Typically the offer is a one-page document outlining the price and any specific conditions the purchaser may have. Once the seller accepts and parties are satisfied with the conditions, a formal Option to Buy Contract is issued for review and signature.
Offer and Contract
A standard Purchase and Sales Contract or 'Option' Contract if you are obtaining bank financing, will include the complete terms agreed upon by both parties, as well as the agreed-upon closing date.
With your signature of the Contract, you will be asked to provide a good faith deposit. The typical rule of thumb is 5% - 10% of the purchase price and this will secure the contract until closing, taking the property off the market until contingencies are met.
Escrow agents in Puerto Rico are in most cases the seller's agent and are required by law to have a non-interest bearing escrow account, for such purposes.
Due Diligence Period
Closing dates are usually between 30 to 60 days. During this time, there will be a title search and the seller must provide up to date statements on HOA fees, maintenance fees and property taxes.
Notary and Closing
Because Puerto Rico's real estate law is based to a large extent on the civil law of Spain, the process will differ from that of the U.S. mainland.
In Puerto Rico, public deeds for the purchase and sale of a property must be prepared by a Notary and executed by the parties before the Notary. No Digital signatures accepted. A Notary (not to be confused with a Notary Public as referred to on the US mainland) is an attorney at law licensed by the government of Puerto Rico specializing in real estate matters and who possesses the power to clear title and register the deed among other things. Puerto Rico Notarial Law imposes the obligation on the Notary to authorize only valid and recordable titles.
After the closing, your attorney continues the process to register the transaction with the Property Registry, which decides which transactions can go in and which are rejected.
A typical transaction time may vary, but if extra time is needed due to process, the Notary will issue a time extension, in order to satisfy all requirements necessary to close.
Closing Costs and Fees
The seller usually pays for the notary´s fees and real estate broker´s commission. It is mandatory that a notary prepares the sale and purchase deed. The maximum allowable notary fee is 1% of the property value for the first US$500,000 plus 0.5% of the amount in excess of $500,000. Each party pays for their own lawyer.
The buyer pays for title insurance, title search and stamps on the deed. Additional costs may include appraisal and inspection fees. You can get detailed information on all fees and costs before the closing.
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