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Great lot located in the Brisas Suave development in Barrio Bajuras. Brisas Suave is a small gated development of only 11 lots. Walking distance to the beach and only half a mile to Jobos beach. This lot is located at the back of the development, towards the cliff. It is elevated and the lot is sloping. There are ocean views at the top of the lot and a 2 or 3 story house would take advantage of the view. The ...
Great investment opportunity! Newly renovated 6 unit apartment building with swimming pool, pool bathroom, patio and communal laundry area (description of each unit below). 2 parking areas with spaces for 12 cars in total. 12,000 square foot building on a lot of 600 square meters. Each unit has its own electric and water meter, plus an additional water meter for the common areas. All units are completely furn...
This is a rare listing for the ever popular Ramey Base. 5 bedroom, 2 bath home was originally a duplex but was converted into a spacious and airy single family home. The lot measures over 1,400 square meters (over 1/3 of an acre) which is huge for this neighborhood. There is plenty of room to add a pool and a garden. Due to the size of the lot and the location on the street, this house is well spaced out from...
Super spacious 5 bedroom, 4 bathroom home in the exclusive Villa Marin development located in the most convenient area of Road 110. On the ground floor the house has a formal dining room, large living room with lots of windows and doors leading to the back patio, kitchen with granite counters, laundry with granite counters and sink. This house has an amazing master suite that includes 3 rooms, 2 bathrooms and...
Cliff lot with spectacular view of the Atlantic ocean and Middles beach! This gently sloping lot measures 1000 square meters and is located in Mirador del Cielo, a gated neighborhood with upscale homes. This is a great opportunity as there are very few cliff lots left. Convenient location that is very close to the Isabela square, and only 7 minutes from famous Jobos beach. Easy access to Road #2 and shopping ...
This listing is for 2 homes in the Monte Santo community of Vieques that sit on 3/4 of an acre (3,778 square meters) of land. The homes are built entirely of concrete construction and each home is 3 bedrooms and 1 bathroom. The structures are in good condition, however, the interiors need work. They are being sold "as is". The lot is fenced and features mature mango trees and other fruit and shade trees. Plen...
Beautiful cliff lot features expansive views of Jobos beach and Bajuras below, and includes designs and plans for a modern architect designed home! Located in a nice quiet area in a small gated development. The development has 6 large lots, with only 2 extra large lots on the cliff (this being one of them). Rectangular shaped lot is flat, and measures almost 4000 square meters- almost an acre, or a little ove...
Unique and beautiful cliff property with expansive and unobstructed ocean views! This property has over an acre of land (4,400 square meters) with a large amount of cliff frontage. There are 3 wooden homes already on the property that are currently used as vacation rentals. The main house is a full 1 bedroom house and the other 2 are studio units. There is a boardwalk connecting the 3 units. Each of the house...
Real Estate in Puerto Rico
By Frank Lopez, Esq. – Real Estate Broker Lic. 9026 and Attorney/Notary Lic. 16724
The process for purchasing real estate in Puerto
Rico holds as many similarities as it does differences from what would be in
the mainland. It is understandable to feel a bit guarded when dealing with this
type of transaction in a new jurisdiction or country, even though we are part
of the United States. We are bound by an old Spanish civil law system which is
a remnant of when Puerto Rico was under Spain’s' flag. Our legal system is
civil law, based on a civil code which was written in 1931, as opposed to
Common Law which prevails in the mainland. Our civil code encompasses the
fields of contract, family, real property, and estate law. The subjects of
mortgage and notary law are specially enacted laws unto themselves. In any
particular purchase transaction you could see a combination of all these
fields, depending on the particularities of the property being transacted, and
the parties selling and purchasing said property.
The Property Registry and Preparing for a
Transfer of Ownership
The recordation of title is performed at a
regional registry, under a new electronic platform called Karibe. This
process would be somewhat analogous to recording a title in City Hall or the
County Clerk office in most States. This system has been digitalized recently
but there are still many provisions that are archaic yet legally prevailing,
and there is still considerable human intervention in the process. Once a
property is initially registered in the property registry, any change of
ownership is then recorded on marginal notes. These books or records have a
legal description of the property as well as any easements that affect the property
such as power lines crossing over it, public water lines going underneath, etc.
They will also show if there are liens on the property, such as IRS liens, or a
legal judgement against the property owner. Most importantly, it will let you
know if you are buying from an actual property owner or if the property is
still in the name of a deceased party in case of inheritance. The same would
apply for when sellers were married upon the purchase of the property being
transacted, but have since divorced. It is always recommended to perform
a title search prior to closing a purchase. It is also highly recommended when
purchasing a property directly from a seller in absence of the intervention of
a licensed real estate broker, especially if seller requires an earnest money
deposit and said monies are not deposited in an escrow account. This is one of
the major advantages of transacting a real estate transaction through a
licensed real estate broker.
After agreeing to purchase a particular property
by signing what is locally known as an “Option to Purchase” agreement, but
could be identified under several other titles with the same content or legal
effect, a title search should be ordered. The contract that our office
typically prepares will state that the sale is subject to clean and
transmissible title. Should there be a problem with the title, it may be able
to be resolved prior to closing. If the problem cannot be resolved or if it
just simply takes too long to resolve, then the buyer will have the option of
withdrawing from the contract without any penalty whatsoever.
An inquiry of the property tax status will also
be conducted prior to closing. If there are back taxes outstanding, that amount
will be withheld from seller’s proceeds and paid directly to the municipal
property tax collector. The buyer is not held responsible for any back taxes
that may be owed and this stipulation should be on the purchase deed signed at
Title insurance may be purchased as a
discretionary option when purchasing on a cash basis. If a purchase involves
financing, the bank automatically will require it and issue its own policy. The
buyer may shop elsewhere for his own title insurance policy but should be
prepared to provide a copy of the prepaid policy to the lender prior to
The Closing Process
Once all due diligence has been done by the
closing notary, we move to closing. It is important to know that in Puerto
Rico, a notary is an attorney who specializes in contract, mortgage, real
property and estate law. To receive the title of notary, an additional license
is required. This is not the same as a notary public in the mainland. The
closing notary is typically chosen by the seller. However, this person
represents the state of Puerto Rico, and does not represent either the buyer or
All legal documents which convey title from one
party to another are done by way of a public instrument or deed. This document
is signed on the same calendar day before an authorized notary and within the
jurisdiction of Puerto Rico. If it is not possible for all parties to be
present at the closing, a power of attorney can be assigned. This is a legal
process that must be started well before the date of the closing.
The buyer has the option of hiring a personal
attorney for document review purposes. Should you decide to hire an outside
attorney, you should make sure that the attorney you hire has experience and
knowledge in these matters.
Information Included in
an Option to Purchase Agreement (or Buy / Sell Contract)
The average Option to Purchase contract
will contain the following information:
1) Names of seller and buyer, marital status and place of
residence as well as the method of identification used for contract
purposes (typically a driver’s license or passport).
2) Description of the property, the legal description of the
property as shown on the deed, and a list of inventory included in the sale,
such as furnishings or appliances.
3) Property tax ID number, also known as the catastro number.
4) The agreed upon sales price.
5) The amount of the earnest deposit. This amount will go into
the listing broker’s escrow account. Typically this amount will be between
3%-5% of the sales price, and will be applied to the sales price at the
closing. The listing broker’s escrow account is a government registered
non-interest bearing account. The earnest money will remain in the escrow
account until the date of the closing.
6) Term to close. This will typically be anywhere between 30-60
days in the case of a financed sale. Cash sales have the capability of closing
much more quickly, if agreed upon by the seller and buyer.
Note: As of this date (May of 2021), financed
sales are taking an average of 45-120 days to close. This is due to the
Covid-19 pandemic as well as a surge in home sales and refinancing due to the
current low interest rates.
7) Any contingencies that are agreed upon. A contingency is a
clause which allows the contract to be terminated without penalty. An example
of some typical contingencies include: subject to clean and transmissible
title, property appraisal price, clean survey, home inspection, etc.
8) Distribution of closing costs.
Typically the buyer pays for the title search
and tax certifications (a statement to show there are no back taxes
outstanding). The buyer pays for all expenses related to the financing process,
including loan origination and discount fees, credit report, survey and
appraisal. There will also be some incidental stamps on the purchase deed that
will be of minimal cost.
The sellers normally pay the expenses for the
notary fees related to the preparation of the purchase deed and some government
stamps which are calculated on the basis of the amount of the transaction. All
expenses for the cancellation of any existing liens or mortgages, are to the
seller, unless negotiated otherwise. Typically the notary fee will be .50% to
1.0% of the sales price, or .50 x new mortgage constituted by buyer or the
cancellation of the existing mortgage (seller). The seller is also responsible
for the broker’s commission in most cases.
Once the closing has concluded, you should make
sure to receive from the lender:
Copy of your appraisal
Copy of your title
Copy of your land
survey, in the case of a home sale
Copy of your property
tax certification (known as CRIM certification), with zero balance. Should the
statement show a pending balance, make sure the arrears have been withheld from
the seller’s proceeds and are shown on the Closing Disclosure. You my also request
a copy of the check to the CRIM the lender prepares at closing
Copy of the Home Owners
certification with zero balance, or evidence of withholding as with the
Copy of the purchase
deed signed at closing, which you will need to switch your utility services in
Copy of utility bills
with account numbers
The author of this article is an attorney
and notary and practices mostly real estate law. He has been a licensed real
estate broker since 2001 with F. L. Realty, and previously was a loan
originator with Banco Popular for 2 years and a mortgage broker for 5 years.
Paradise: The 1,2,3’s of Real Estate Lending in Puerto Rico
One of the most frequently asked questions by our clients who wish
to purchase real estate in Puerto Rico is whether they should limit themselves
to buying a property on a cash basis, either by refinancing existing properties
back in the mainland or any other source, or venturing into the local mortgage
lending jungle. Although it may seem a daunting challenge at first glance, the
truth of the matter is that with a minimum of due diligence performed by a
buyer, it will soon seem like a very plausible option.
Puerto Rican mortgage lending falls under the domain of the
United States Department of Housing and Urban Development (HUD), the Federal
agency responsible for national policy and programs that address America's
housing needs, improving and developing the nation's communities, and enforcing
fair housing laws. For this reason, many of the products available for clients
seeking to secure a loan on our island will seem very familiar to anyone who
has secured a loan in the continental United States of America.
Types of Loans
Agencies such as the Veterans
Administration, which guarantees their loans (commonly known as
V.A. Loans) up to 100% of the sales price of the property, should it fall
within their lending criteria of course, are readily available to former
armed forces and some Federally employed personnel who have a valid
Certificate of Eligibility in place.
Federal Housing Administration loans (commonly known as
F.H.A loans) are also available within our jurisdiction. The reason why FHA
loans are so popular is because borrowers that use them are able to take
advantage of benefits and protections unavailable with most traditional
mortgage loans. Loans through the FHA are insured by the agency, so lenders
tend to be more lenient in their approval criteria. The lending loan to values
are also very high topping out at ninety seven percent (97%) of the sales price
or appraisal value, whichever is the lesser of the two. This allows buyers to
come in to the transaction with a very small down payment, making the purchase
Buyers must keep in mind that these types of loans are available
only for purchase of existing homes that are destined for primary residence
use, so second home usage will not apply for this lending product. In our area,
the only condominium which qualifies for either VA or FHA loans is Isabela
Beach Court, located in the area known as Villa Pesquera, located in the
municipality of Isabela, Puerto Rico. Most homes within our area should
qualify for either program, depending on condition, location and configuration,
as well as construction materials used for their edification.
There are other products also available such as Rural Development loans,
which carry many limitations and are better tailored for lower income
applicants and more rurally located properties.
Other lending products available are loans backed by Fannie Mae and Freddie Mac, both of
which were created by U.S. Congress. These products are known as Conventional loans,
which can be used for second home properties. Their typical loan to value is
Eighty percent (80%), even though combined with Private mortgage insurance, a
buyer may be able to secure up to ninety five percent (95%) loan to value
financing for a purchase. This can prove a more costly option, but more often
than not, it is the most popular one with our stateside buyers for Second home
Another product available to buyers are Non-Conforming loans, which
are offered by every mortgage bank on the island. These loans are essentially
ones that do not conform to standardized lending parameters established by
government backed loans (such as FHA, Fannie Mae, etc.), be it due to credit
issues, condition, or destiny of the property as far as usage (commercial or
investment property, among other circumstances). The loan to values are
typically lower, and interest rates and closing costs are slightly higher,
making this a more expensive “out of pocket” alternative.
A lesser known, but extremely convenient product, especially for
land, mixed material construction or wooden homes, is the available lending
products offered by locally privately owned Cooperatives. These
banks are owned by stockholders who are required to become members in order to
qualify for their products by way of purchasing a nominal amount of stock with
the institution. These banks are under the supervision of the Corporation for
the Supervision for Insurance of Cooperatives in Puerto Rico (COSEC). They have
their own particular lending criteria which is analogous to lending parameters
for most federally insured loan products, but in some instances can be somewhat
more flexible or creative in how they grant approval for loans. We highly
recommend these institutions when a client is requiring land financing, as
their loan to values are up to eighty five percent (85%) with very low interest
rates and terms up to twenty five (25) years for repayment. They also offer
very convenient products for land and construction financing in tandem. We
highly recommend the Cooperativa de Credito de Ahorro de Isabela as well as the
Cooperativa de Rincón.
Types of Lenders
Lenders in Puerto Rico can be grouped into three (3) basic
There are the primary lenders, which have the ability to
originate, process, approve and close their own loans. Among these you may find
Banco Popular de Puerto Rico, First Mortgage, and Scotiabank. In our opinion,
applying for a loan with this type of lender may prove more convenient as they
often have a wider array of products available to borrowers, have more
locations throughout the island as well as the tendency to be more
technologically inclined. The possible downside of using these lenders are that
service can at times be impersonal and very bureaucratic, due to their employee
hierarchy and large volume of business.
The second tier of lenders are those which have the capacity
to originate, process and close mortgage loans, but who do
not have the capability to approve them. These institutions offer very
similar products to the primary lenders, but are slower in their approval time
as they depend on the approval of a primary lender who will eventually approve
and fund the loan. The service side of a loan application with these lenders is
typically better than with the larger banks, and rates are almost identical in
most cases. The downside, as mentioned, is the length of time required for
approval, as well as the criteria imposed by the primary for said approval,
which could be stricter than usual given the fact that the loan was originated
and documented by a secondary lender. RF Mortgage and SunWest are examples of
The third category of lenders are Cooperatives, which we have
already discussed previously in this article.
It is always recommended that you become well acquainted with the
array of mortgage products readily available to you either online, in
newspapers or with your Real Estate professional prior to engaging on the
search for your desired property on our beautiful island. This will maximize
your opportunities of eventual approval, as well as refine your property search
criteria considerably and make it a more efficient and enjoyable
Feel free to contact us at F.L. Realty for any questions you may
have in regards to financing, property search or legal aspects of buying your
dream property in La Isla del Encanto.
About F. L. Realty
Long term rentals
Vacation rental management
Real Estate Financing Consulting
Real Estate Attorney and Closing Notary
General Legal and Notary Services
Frank Lopez- Real Estate Broker, Attorney
Kelda Goerte- Real Estate Salesperson