Trust Funds Guide
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Trust Funds (Fideicomisos) in Dominican Republic Real Estate
A comprehensive guide to understanding and utilizing real estate trust funds (fideicomisos) as a secure investment framework in the Dominican Republic.
Introduction to Fideicomisos
Executive Summary
The real estate fideicomiso (trust fund) represents the gold standard for mitigating risks in Dominican Republic real estate investments. It creates a "separate patrimony" that provides superior asset protection compared to traditional purchase methods.
What is a Fideicomiso?
A fideicomiso is a juridical act where one or more persons (fideicomitente/settlor) transfer ownership of assets to a legally authorized entity (fiduciario/trustee) to form a separate, autonomous estate for the benefit of designated beneficiaries (fideicomisario).
Fideicomitente
The settlor who transfers assets into the trust
Fiduciario
The regulated trustee who manages the trust assets
Fideicomisario
The beneficiary who receives the trust benefits
Legal Framework
Law 189-11: Foundation of Modern Trusts
Enacted in 2011, this law established the legal framework for fideicomisos with the dual purpose of developing the mortgage market and creating secure investment vehicles for real estate development.
Selecting a Trustee (Fiduciario)
Regulated Monopoly
Only entities supervised by the Superintendency of Banks can serve as trustees, ensuring high standards of financial stability and regulatory oversight.
Risk Protection & Benefits
Dominican Real Estate Market Risks
The Dominican market presents specific risks including title fraud, developer non-performance, unregulated agents, and the critical importance of proper "deslinde" documentation.
Investment Structure Comparison
Direct Purchase
Escrow Purchase
Fideicomiso Purchase
Best Practices & Contractual Scrutiny
Critical Contract Clauses
The effectiveness of a fideicomiso depends entirely on the specific terms written into the trust agreement. Investors must actively participate in structuring the deal terms.
Conclusion & Strategic Recommendations
Final Assessment
The real estate fideicomiso represents the most robust legal instrument available for foreign investors in the Dominican Republic, providing comprehensive risk mitigation that directly addresses the market's most acute vulnerabilities.
Final Checklist for Astute Investors
Strategic Alignment
Define investment objective to select appropriate fideicomiso type
Engage Expert Counsel
Retain reputable Dominican legal counsel with fideicomiso experience
Execute Comprehensive Due Diligence
Verify property title, deslinde, permits, and developer track record
Vet the Trustee
Independent evaluation of proposed fiduciary institution
Scrutinize the Contract
Negotiate specific milestones, default remedies, and reporting requirements
Maintain Financial Discipline
Never remit funds directly to developers - only through trust accounts