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A Fiduciaria is a trust company that acts as a reliable intermediary between buyers and developers. It ensures secure management of payments and legal documents, minimizing risks and promoting transparency. Buyers deposit funds into a trust account, and payments are released only when specific construction milestones are achieved. If a developer fails to complete the project, the invested funds remain protected.
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When buying real estate, you might come across the term Fiduciaria (trust company). But what does it mean, and why is it important for buyers? In this blog, we’ll explain how a Fiduciaria works and the benefits it offers to ensure a safe and transparent real estate purchase.
What is a Fiduciaria?
A Fiduciaria is a trust company that acts as a neutral intermediary between buyers and developers. It manages the financial and legal aspects of a real estate project to ensure that all parties' interests are protected.
Purpose of a Fiduciaria:
Ensure transparency and security in the property purchasing process.
Minimize risks for buyers.
How Does a Fiduciaria Work in Real Estate?
Creation of a Trust Account:
Once a buyer reserves a property, all payments are deposited into a trust account managed by the Fiduciaria.
This account is separate from the developer's funds.
Oversight of the Construction Process:
The Fiduciaria monitors the progress of the construction project.
Payments to the developer are only released when specific construction milestones are completed.
Protection of Buyer Funds:
If the developer becomes insolvent or the project is canceled, the buyer's money remains secure.
The Fiduciaria will organize a tender to find a new developer to complete the project if necessary.
Benefits for Buyers
Financial Security:
All payments are held in a trust account, minimizing the risk of fraud or misuse.
Legal Transparency:
The Fiduciaria ensures that all legal documents are accurate and complete.
Project Completion Guarantee:
If the original developer cannot complete the project, the Fiduciaria ensures either the project's completion or a refund of the buyer's money.
No Direct Payments to the Developer:
Buyers deposit their payments exclusively to the Fiduciaria, not directly to the developer.
What Should Buyers Pay Attention To?
Reputation of the Fiduciaria:
Research the trust company managing the project. Reputable companies operate transparently and have a solid track record.
Careful Contract Review:
Read the contract terms thoroughly, particularly regarding payment schedules, construction deadlines, and refund policies.
Work with a Real Estate Lawyer:
Have an experienced real estate lawyer review the contract to ensure your interests are fully protected.
Fiduciaria and Buyer Rights
In many countries, including the Dominican Republic, laws protect buyers involved in real estate projects managed by a Fiduciaria. These protections include:
Safeguards against financial losses.
Guarantees for project completion.
Transparent management of funds.
Conclusion
Working with a Fiduciaria when purchasing real estate provides buyers with a high level of security and transparency. It ensures that your money is protected and that the project is completed as agreed. If you're considering buying property, check if the project is managed by a Fiduciaria—it's a crucial step to safeguard your investment.
Have questions about buying property or working with a Fiduciaria? Contact us, and we’ll be happy to assist!
CIRCULAR LETTER: CCI-REG-202400006. Clarifications on trust companies and trusts that require registration with the SB and the treatment applicable to admissible guarantees
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