A donation is the transfer of property without exchange of money, i.e. free of charge. In the case of "immovable property", such as a house, building, flat or farm, a deed is required. This deed must be signed by both parties: the donor and the recipient. If either of the parties is outside Puerto Rico, they may appear by means of a Power of Attorney.
The deed is a legal paper document, made by an attorney-notary, in which all the clauses required by law are included. It is somewhat more complete than a simple affidavit. On the other hand, if the transaction involves any exchange of money or property, then it would be a sale.
1. Title Study
The initial step in the transfer of real estate is for the lawyer to verify the title in the Property Registry. This can be done through what is called a "title search", a document that is usually prepared by a title searcher. It is important to emphasise that only those persons who are already registered will be able to transfer the property.
If one of the owners is deceased, then the property must have been transferred to the heirs beforehand, which can take several months. For more information on this matter, please go to our link on Transfer of Inheritance.
The title search will also show any encumbrances on the property, such as a mortgage. If the mortgage has been paid off, it is important that prior to the donation what is known as the Cancellation of Mortgage has been carried out and registered in the Property Registry.
2. Treasury Department
In the case of donations, it is compulsory for the lawyer to process a Form de Donaciones with the Puerto Rico Treasury Department. This is done to verify that no taxes are owed to the government of Puerto Rico prior to the donation. In addition, at the end of the donation, the lawyer-notary must submit to the Treasury Department what is known as the "Form Informative on Transfer of Real Estate".
3. Property Registry
All transfers of real estate must be filed with the Property Registry. This process is carried out by the lawyer and involves the payment of a fee which is calculated on the basis of the market value of the property. In order to calculate this amount, the parties must inform the lawyer of the estimated value of the property, which in our case can be indicated in the form at the bottom of this page.
4. Transfer to CRIM
Any change of ownership must be registered with the Municipal Revenue Collection Centre (CRIM). This obligation is usually carried out by the same lawyer. If the recipient of the donation will live in the property as if it were his or her principal residence, then the Tax Exoneration Application must be submitted instead.
Also, if the purchaser wishes to live in the property as their primary residence, they can take advantage of this and designate it with Home Insurance protection.
The transfer of a real estate property is a matter that tends to be tedious due to the importance it entails. However, at Abogado Notario Online we take care of the whole process in the most comfortable and easy way. To get an estimate, please fill in the contact form below.