Dominican Real Estate Trusts Explained

What is a Dominican real estate trust?

The real estate trust (Spanish: fideicomiso inmobiliario) is a Dominican legal structure regulated by Law 189-11, which allows legally separating buyers' funds from the real estate developer's accounts.

Concretely: when you pay a deposit for your condo, you don't pay it to the developer, but to an authorized trustee (bank or authorized financial institution) that holds these funds in trust until their release under strict conditions.

The 4 fundamental principles

1. Total patrimonial separation

Trust funds are not part of the developer's patrimony. If they go bankrupt, their creditors cannot seize buyers' funds. This is the #1 guarantee.

2. Conditional release

The trustee only releases funds to the developer according to precise milestones:

• Foundations completed → release X% of funds
• Structure completed → release Y% of funds
• Interior work completed → release Z% of funds
• Delivery → release balance

Each release requires independent certification by an authorized engineer who attests actual progress.

3. Complete traceability

Each fund movement is recorded and accessible to buyers (minimum quarterly report).

4. Return possible

If the project doesn't start or is cancelled, your funds are returned by the trustee, minus real expenses incurred (generally 2-5% max).

Who are authorized trustees?

Only certain institutions can act as trustees in DR:

• Fiduciaria Reservas (Banreservas subsidiary, public bank)
• Fiduciaria Popular (Banco Popular Dominicano)
• Fiduciaria BHD León
• Fiduciaria Scotiabank
• Other trustees authorized by Superintendencia de Bancos

The setup process

1. Sign trust contract before notary (buyer, developer, trustee)
2. Open trust account dedicated to the project
3. Registration at Dominican Public Trust Registry
4. Deposit payment directly to trust account (not to developer)
5. Issue participation certificate in the trust

What the trust protects · Concretely

Scenario 1 · Developer goes bankrupt

Without trust: your funds are lost, you become an ordinary creditor in bankruptcy (typical 5-20% recovery).

With trust: your funds are intact, protected by the trustee. They continue being paid according to milestones or are returned if the project is cancelled.

Scenario 2 · Major construction delay

Without trust: you are suspended in the developer's good faith.

With trust: the trustee refuses to release next tranches while progress is not certified. Developer is forced to catch up.

Scenario 3 · Fund misappropriation

Without trust: paid funds can be used for other projects, old debt repayment, etc.

With trust: impossible. Funds can only be used to build your specific project.

Trust cost · How much does it cost?

• Setup fees: 0.5-1% of purchase price (one-time)
• Annual management fees: 0.3-0.5% per year during construction
• Dissolution fees at delivery: 0.2-0.3%

Typical total: 1.5-2% of price. It's the price of total peace of mind.

Trust vs Escrow

Some developers propose an escrow instead of a trust. Major differences:

• Escrow: sequestered account managed by a third party (lawyer, bank). Less legally regulated, fewer guarantees.
• Trust: regulated by Law 189-11, with obligation of authorized trustee, Superintendencia de Bancos controls.

The trust offers superior guarantees, it's the HELIOS RD standard.

How to verify the trust really exists?

Before signing, demand:

1. Trust contract with registration number at Public Trust Registry
2. Name of trustee and its legal capacity (authorized bank)
3. Trust account specific to the project (not in developer's name)
4. Initial progress report
5. Participation certificate in your name after payment

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