For quite a long time, renting properties in the Dominican Republic, either for business or residential use, has been quite a headache for property owners as a result of the outdated regulations that are currently in place.. Today, we pretend to draft and execute a lease agreement, based on Trujillo’s (Dominican dictator between 1930 and 1961) government legislation (Law No. 4314 dated October 22, 1955), but due to the legal advances in our country mainly in real estate legislation, the application of said law is practically impossible.
According to our legislation on property leasing for commercial use, owners can request, depending on the term of the lease, one, two or three months of deposit (when the term of the agreement is for 1, 2, or 3 years respectively). This amount must be deposited in the Banco Agrícola of the Dominican Republic in order to secure the funds to be returned to the tenant once the lease agreement has terminated. If the owner does not comply with the 15 day deadline after receiving such amount, the owner shall pay an additional 10% of the deposit, for every month after the deadline.
Nevertheless, if the property will be leased for residential use, the owner can only request one month of deposit, regardless the term of the agreement.
On the other hand, and in the event the owner refuses to receive monthly payments for any reason, tenants must deposit such amount in the Banco Agricola in order to avoid any liability.
Regardless of what the law establishes, owners are requesting a 2 to 3 month deposit for properties leased for residential use, without taking into consideration the term of the agreement. This is where we ask ourselves what is being done to enforce such law?
Based on the most important articles of the leasing law, it is evident that its application negatively affects property owners. The law establishes that if the tenant fails to comply with the monthly lease payments the owner can request the devolution of the initial deposit after notifying the tenant and granting him a period of 10 day to confirm if there will be no objection with returning the money. If the tenant does not agree with the devolution of the deposit, the Bank will only provide the deposit to the owner after a decree has been issued by the competent Court.
In addition, the owner will also be at a disadvantage is he/she wished to terminate the lease agreement before the date established in the contract. This is why owners frequently ask themselves how can I terminate a lease agreement before it expires? Or, what can I do if the tenant does not want to leave the property? Unfortunately, this is the most difficult part, since Decree No.4807 on Leasing and Eviction protects tenants after San Zenon hurricane attacked our island in order to avoid abuses and eviction of tenants. But why is this decree is still in force?
The above mentioned Decree establishes the reasons a lease agreement can be terminated prior to the date established in the contract, those which are: lack of payment; if the property is used for different purposes than those established in the agreement; if the tenant modifies or makes changes in the property without prior authorization; when the property requires reconstruction or renovation or if the same will be occupied by the owner or its family for a period of at least two years.
But, where is the term of the agreement? Does this mean that when leasing agreements end, owners cannot get a hold of their property immediately? Our Supreme Court of Justice has considered these questions establishing the unconstitutionality of Article 3 of the Decree on leasing and eviction, which does not establish the term period as a reason for ending the agreement.
It is true that through the years owners have abused with constantly increasing renting prices and they have not complied with their obligations of paying for necessary renovations, but the truth is that we need to review and amend our legislation for leasing properties, since others take advantage of gaps in our law and its protectionist characteristics refusing to leave the rented properties, not allowing owners to freely dispose of what they own. We understand that the solution will be either to correctly apply the existing laws or modernize and amend such laws to benefit both the owner and tenant.