LEASES

March 2023

In the Dominican Republic, leases are agreed by contract, no specific permits or licenses are required for the rental of commercial spaces.

In view of its nature, it can be structured in written or verbal form, although a written contract is highly recommended.

For its existence, it is required: a) consent of the parties, b) their legal capacity to contract, c) the existence of a certain object, and d) a lawful cause, which does not contravene the law, nor the rules of public order nor the good manners.

What are the obligations of the tenant?

The tenant of a space has the following general obligations (in addition to others that may be agreed by mutual agreement between the contracting parties):

  • Use the rented thing as a good parent,
  • Pay the agreed price,
  • Return the property in the same conditions in which it was received,
  • Be liable for damages and losses suffered by the property during its possession, unless they are not attributable to the tenant, including cases of fire except in cases of force majeure,
  • Be responsible for deterioration and losses that occur because of the people for whom they are responsible in the rented property.

In the local market there are different options for leasing spaces: there are representative offices through the same firm, commercial premises per se, and shared spaces.

  • The automatic renewal of lease agreements is customary in the absence of opposition from the landlord.
  • Landlord generally stipulates an annual increase in the agreed lease fee (ranges between 5% and 10% of the immediately previous fee), but there isn’t a fixed amount or percentage.
  • Likewise, tenants are required to make an advance payment as a deposit equivalent to a sum between one (1) to three (3) lease installments.
  • The preservation of the right to the point or goodwill (added value to premises) is a key element that must be contractually agreed, since the law does not establish the right of exploitation in favor of any of the specific parties.

Applicable tax on commercial leases:

  • The tenant must pay a value equivalent to 18% of the lease fee for the Tax on the Transfer of Industrialized Goods and Services (ITBIS) for the rental service.
  • The responsibility of entering said payment to the tax administration falls on the owner of the property.