Real estate in Puerto Rico

See also Immovable and Real property.

Puerto Rico's real estate industry trails behind the long-established aphorism of triple-Ls. The island’s name (rich port), describes its contemporary multicultural marketing mix (or documented endowment) established thirty-three (33) years after the conclusion of the American Civil War.

Preamble

In 1935, United States President Franklin D. Roosevelt launched the Puerto Rican Reconstruction Administration, which provided agricultural development, public works, and electrification of the island. In 1948, a series of projects established manufacturing as the main industry. Since the Great Depression there has been external investment in capital-intensive industry such as petrochemicals, pharmaceuticals, and technology. With the signing of the North American Free Trade Agreement and the Dominican Republic–Central America Free Trade Agreement, Puerto Rico lost a trade advantage over some Latin American countries as the right to duty-free imports to the U.S. market were expanded. Puerto Rico is also subject to the minimum wage laws of the United States, which gives lower-wage countries such as Mexico and the Dominican Republic an economic advantage in real estate.

• Post-Foraker Act of 1900
• see also Blanton Winship as benchmark
• see also William D. Leahy as benchmark
• see also Rexford Tugwell as benchmark
• Operation Bootstrap of 1948
• see also African immigration to Puerto Rico
• see also Jewish immigration to Puerto Rico
• see also Dominican immigration to Puerto Rico
• see also Corsican immigration to Puerto Rico
• see also Irish immigration to Puerto Rico
• see also German immigration to Puerto Rico
• see also French immigration to Puerto Rico
• September Attacks of 2001
• see also Puerto Rico 2011 as benchmark

Foraker Act of 1900

The Foraker Act, officially the Organic Act of 1900, is a United States federal law that established civilian (limited popular) government on the island of Puerto Rico, which had been newly acquired by the United States as a result of the Spanish–American War. Section VII of the Foraker Act also established Puerto Rican citizenship. President William McKinley signed the act on April 12, 1900, two (2) years after the Treaty of Paris.

Governmental grants

Subsidies (or subsidios) - a sum of capital granted by the government to assist an industry or business, such is the case of Real Estate in Puerto Rico, under Article II of the LAW 47 (Ley 47) of June 26, 1987.

Bankhead–Jones Farm Tenant Act of 1937

The Bankhead-Jones Farm Tenant Act of 1937 (P.L. 75-210) authorized acquisition by the federal government of damaged lands to rehabilitate and use them for various purposes. Both the Forest Service and the Bureau of Land Management manage some Bankhead-Jones lands. Some Forest Service Bankhead-Jones lands are National Grasslands.

1. programa para la compra y mejoras de granjas.
2. préstamos de 40 años para agricultores.

Consolidated Farm and Rural Development Act of 1961

The Consolidated Farm and Rural Development Act of 1961 (P.L. 87-128) authorized a major expansion of USDA lending activities, which at the time were administered by Farmers Home Administration (FmHA), but now through the Farm Service Agency. The legislation was originally enacted as the Consolidated Farmers Home Administration Act of 1961. In 1972, this title was changed to the Consolidated Farm and Rural Development Act, and is often referred to as the Con Act.

1. préstamo para financiar la rehabilitación y facilidades de agua, alcantarillado, eliminación de desperdicios en areas rurales.
2. 1962 se extendió para proveer viviendas a bajo costo a envejecientes.

Consolidated Farm and Rural Development Act of 1972

The Consolidated Farm and Rural Development Act of 1972 or Con Act (P.L. 92-419) authorized a major expansion of USDA lending activities, which at the time were administered by Farmers Home Administration (FmHA). The legislation was originally enacted as the Consolidated Farmers Home Administration Act of 1961 (P.L. 87-128). The Con Act, as amended, currently serves as the authorizing statute for USDA’s agricultural and rural development lending programs. Titles in the Act include current authority for the following three (3) major (FSA) farm loan programs: farm ownership loans, farm operating loans and emergency disaster loans. Title III of the Con Act authorizes rural development loans and grants (7 U.S.C. 1921 et seq.) under the Rural Development Act of 1972 (P.L.92-419)

1. autorizó a la Farmers Home Administration (FmHA) a garantizar préstamos a instituciones hipotecarias para viviviendas, agricultura, comercio e industria rurales.

HUD

Special Program of 1974

Section Eight (8) of the Housing Act or (Ley de Vivienda del 1937)

1. un programa administrado por HUD.
2. subsidios de vivienda a familiares a bajos ingresos.
3. Plan Eight (8) of Puerto Rico
   1. subsidio para alquileres.
   2. rehabilitación de edificios.
   3. construcción de nuevas unidades para alquilar.
4. ayuda a constructores y urbanizadores hasta 15 años para edificios existentes; hasta 20 años para nuevos o rehabilitados.
5. los tenants califican de acuerdo con sus ingresos.
6. los ingresos del tenant no pueden ser mas del 80% del ingreso promedio del área.
7. los tenants tienen que pagar hasta 30% de los ingresos de la familia.

Urban Development Grants

Also known as UDAG as to Action, Urban Development Grants are managed by HUD also known as the United States Department of Housing and Urban Development. In 2006, The Village Voice called HUD New York City's worst landlord and the #1 worst in the United States. The criticism is based upon decrepit conditions of buildings and questionable eviction practices.(Condado)

Cross-Over Subsidies

Cover-over subsidies are annual payments from the U.S. government to the U.S. Virgin Islands and Puerto Rico out of federal excise taxes. When a bottle of rum is produced in either the Virgin Islands or Puerto Rico, and then sold in the United States, the federal excise tax on that bottle is returned to its place of production. Cover-over subsidies for U.S. island territories began in 1917. In 2008, the taxes generated about $371 million for Puerto Rico and $100 million for the Virgin Islands. In April 2009, Puerto Rico's congressional representative, Pedro Pierluisi, introduced a bill prohibiting territories from using more than 10 percent of their cover-over receipts for industry specific subsidies. This was as a result of increased competition to source distillery production between Puerto Rico and the U.S. Virgin Islands.

Zoning

Zoning (also known as zonificación in spanish speaking state-republics) is the customary practice (or conventional strategic procedure) of dividing a city, district or municipality with the sole intention (objective common goal) of project planning residential, commercial and industrial buildings, in reserved areas (or sectors) that float on the verge of social and multicultural transmutation. These reserved hotspots are predetermined for specified usage through systematical and schematic corporate policy for future political advantage and current economic benefit.

Rundown

Its Zoning purpose of empowering market growth and urban development is a governmental power established under Executive order in conjunction with the Legislative and Judicial branches of Puerto Rico. Both the Puerto Rico Planning Board (Junta de Planificación de Puerto Rico) and Rules and Permits Administration (Administración de Reglamentos y Permisos - ARPE) act as two (2) random variable agencies independent from each other to keep balances in check and delegate (1) economic planning (2) land use zoning and (3) case-by-case permitting in the city-state of Puerto Rico. Since the late 1900's, major townships have been taking over that role under their own jurisdiction: "no se compensa por restricciones o limitaciones que la zonificación imponga sobre las propiedades." The Puerto Rico Planning Board was created on May 12, 1942 during the Rexford Tugwell's administration under Law 213 which converged centralized governmental planning with a New Deal philosophy under one (1) American Flag. It was later reorganized by the Law 75 of June 24, 1975.

Law 77 of 1964

Law 77 of 1964 (also known as Ley Número 77 del 25 de Junio de 1964) regulates the business of Real Estate for companies headquartered inside Puerto Rico.

Antithesis

"Se reglamenta las transacciones realizadas en la isla por compañias dedicadas a la venta de Bienes Raices localizadas fuera de Puerto Rico" (Law 45 of 1980)

U.S. government involvement

The United States of America (U.S.) Department of Justice Antitrust Division announced the launch of a new web site in October 2007 to educate consumers and policymakers about the potential benefits that competition can bring to consumers of real estate brokerage services and the barriers that inhibit that competition. Among other findings, they report that certain new sales models can reduce consumer home sales costs by thousands of dollars. For example, in states that allow open competition, some buyer's brokers rebate up to two-thirds of their commission to the customer, and some seller's brokers offer limited-service packages that let sellers list their homes on the local multiple listing service (MLS) for as little as a few hundred dollars." The DOJ web site, Competition and Real Estate, includes a link to the real estate laws of each U.S. state and how they support or inhibit real estate brokerage competition.

Law 5 of 1973

Law Five (5) was enacted on April 23, 1973 to create DACO (Departamento de Asuntos del Consumidor) and establish its functions under one (1) organic law.

Summary

Ley Número 5 del 1973 was a transfer of power from (one side to the other end) to enforce the new Organic Law under one common denominator during the Ferré Administration: simplicity.

Nuestra Ley Orgánica Número 5 del 1973, mejor conocida como la Ley Cinco de MiL Novecientos Setenta y Tres, es creada para establecer las funciones, poderes y facultades del Departamento de Asuntos del Consumidor bajo las siglas de (daco); para transferirle las funciones y poderes de la Administración de Servicios al Consumidor creada por la Ley Número 148 del 27 de Junio de 1968; para transferirle las funciones de la Junta Reguladora de Credito que establece la Ley Número 68 del 19 de Junio de 1964; para tranferirle las funciones del Secretario de Hacienda con respecto a la Ley Número 143 del 27 de Junio de 1968; para constituir al Secretario del Departamento de Asuntos del Consumidor miembro de la Junta Espacial que establece la Ley Número 77 del 25 de Junio de 1964; para eliminar la actual Administración de Servicios al Consumidor; y para asignar Nuevos Fondos a la Ley Orgánica.

–Ley 5–

Our Statutory law Number 5 of the 1973, better well-known one like Law Five of Thousands Nine hundred Seventy and Three, is created to establish the functions, powers and faculties of the Department of Subjects of the Consumer under the abbreviations of (daco); in order to transfer the functions and powers to him of the Administration of Services to the Consumer created by the Law Number 148 of the 27 of June of 1968; in order to transfer the functions to him of the Regulating Meeting of Credit that establishes the Law Number 68 of the 19 of June of 1964; in order to tranferir the functions to him of the Secretary of Property with respect to the Law Number 143 of the 27 of June of 1968; in order to constitute the Secretary of the Department of Subjects of the Consuming member of the Space Meeting that establishes the Law Number 77 of the 25 of June of 1964; in order to eliminate the present Administration of Services the Consumer; and to assign New Bottoms to the Statutory law. .

–Law 5–

HOME of 1990

HOME is a program established under (Title II) also known as HOME Investment Partnerships Program of the Cranston-Gonzalez Act of 1990 (or Ley de Vivienda del 1990).

Abstract

This program provides (1) liquid assets (fondos) in the form of cash (equivalent numbers); and (2) special guidelines in order for the government (gobiernos estatales y municipales) to design proprietary strategies that takes care of the necessities and problems lying in housing (problemas de vivienda) areas as defined on the Comprehensive Housing Affordability Strategies also known as (CHAS) approved by the Federal Department of Housing (Departamento de Vivienda Federal) in 1990.

Law 10 of 1994

Law 10 of 1994 (also known as Ley Número 10 del 26 de Abril de 1994) was established to regulate the business profession of Real Estate Specialists for the Real Estate Industry of Puerto Rico.

Summary

The law countermands Law 139 (also known as Ley Número 139 del 14 de Junio de 1980) and Law 145 (also known as Ley Número 145 del 18 de Junio de 1980)

Ley Num. 139

"Se reglamenta el ejercicio de la profesión de corredor de Bienes Raices en Puerto Rico y se crea la Junta Examinadora de Corredores de Bienes Raices"

Ley Num. 145

"Se reglamenta las transacciones realizadas en la isla por compañias dedicadas a la venta de Bienes Raices localizadas fuera de Puerto Rico"

Book of Ethics

Rule of Ethics (also known as Reglamento de Ética) is a regulation to implement Law 10 of April 26, 1994: "la ley para reglamentar el negocio de bienes raices y la profesión de corredor, vendedor y compañias de Bienes Raices en Puerto Rico."

• Law 10 Amendment - Ley law 118 - September 26 (2005)
• Law 10 Amendment - Ley law 93 - May 16 (2006)

Organic law (to be amended on 2011)

Reglamento de Venta de Propiedades localizadas DENTRO y FUERA de Puerto Rico (6 de junio de 2003) - (escrow after thirty (30) days of license)

Law Five (5) DACO (Ley Número 5 del 1973) also known as Ley Orgánica del Departamento de Asuntos del Consumidor (or the Organic Law) clearly states the strict prohibition of real estate false advertising in commercial spaces including but not limited to wallscapes, newspapers, magazines, digital media and visual promotional street marketing material: Articles 6A-6J-6K and 19.

Regulations of 1997

The four (4) dalet regulations of April 3, 1997 established under the Roselló Administration:

• NO 5568 - Reglamento de Cursos
• NO 5569 - Reglamento de Procedimiento Adjudicativo
• NO 5570 - Reglamento de Licencias
• NO 5571 - Reglamento de Ética

Horizontal Property Law (Godreau)

Horizontal Law of 2003

Ley Núm. 104 de 25 de junio de 1958, Efectiva 90 días después y según enmendada. Esta Ley Núm. 104 de 25 de junio de 1958, quedó vigente nuevamente por la ley Núm. 43 del 21 de mayo de 1996 al revocar la Ley Núm. 153 del 11 de agosto de 1995 que la había revocado. Esta última quedó completamente nula al ser revocada. La Ley Núm. 103 de 5 de abril de 2003 enmendó casi la totalidad de los artículos de la ley. Michel J. Godreau

the Horizontal Property Law (also known as Ley de Propiedad Horizontal or Ley de Condominios) was approved on April 5, 2003 under Law Ley 103 established on the 4th of July of 2003.

Article eleven (11)

1. Collective Constituents
   1. The Flight: the right to elevate (or blowup space)
   2. The Structure: the surrounding walls, roof top ceilings, passageway corridors, downward spiral staircases, underlying galleries and entry/departure channels of the foundation.
   3. The Locale: the central installations for utility overhauls including electricity, lightning, gas, cold and hot water, refrigeration, water reservoir (tanks, cisterns + pumps) and air conditioning artifacts for thermal comfort.
   4. The Elevator: the necessity to enjoy the living habitat of every single apartment.
   5. The Green Area: the natural resources required by the community in order to fulfill its joyful experience of existence.
   6. The 5th Element: cualquier otro elemento que fuere indispensable para el adecuado disfrute de los apartamientos en el inmueble.
2. Communal Constituents
   1. Terra firma (earth grounds), basement cellar, open space field, rooftop deck, patio, terrace, courtyard and garden.
   2. Destination areas for the doorman in duty at the atrium, lobby or reception area of the building.
   3. Destination areas for perpendicular parking.
   4. Recreational areas which exceed the requirements of urban planning laws.

Real estate mortgages

In recent years, many economists have recognized that the lack of effective real estate laws can be a significant barrier to investment in many developing countries. In most societies, rich and poor, a significant fraction of the total wealth is in the form of land and buildings. In most advanced economies, the main source of capital used by individuals and small companies to purchase and improve land and buildings is mortgage loans (or other instruments). These are loans for which the real property itself constitutes collateral. Banks are willing to make such loans at favorable rates in large part because, if the borrower does not make payments, the lender can foreclose by filing a court action which allows them to take back the property and sell it to get their money back. For investors, profitability can be enhanced by using an off plan or pre-construction strategy to purchase at a lower price which is often the case in the pre-construction phase of development. But in many developing countries there is no effective means by which a lender could foreclose, so the mortgage loan industry, as such, either does not exist at all or is only available to members of privileged social classes.

dba trade

the Immovable Property Release Process or Physical Property Release Stage during any real estate transaction involving the length of time legally required by the Real Estate Specialist in order to validate and fully enact the basis of performance of one (1) common Buy-sell agreement between two (2) outgoing parties herein represented under one (1) preeminent program.

world Zoning breakthrough

On June 29, 2010, the Governor of Puerto Rico signs a sweeping unconventional bill transfering thirty (30) installations to municipalities with the objective of providing postmodern art space, avant-garde security and cutting-edge Head Start centers with contemporary health amenities for communities. According to Luis Fortuño, the municipalities receiving the properties are Barceloneta, Caguas, Cidra, Comerío, Guayama, Gurabo, Humacao, Juncos, Lajas, Lares, Morovis, Naguabo, Peñuelas, Ponce, Salinas, San Lorenzo, San Sebastián, Yabucoa and Yauco. He also transferred the administration of the Yabucoa Diagnostic and Treatment Center to that municipality. According to the new law, the municipal authority should cede its jurisdiction, in case of jurisdictional conflict, to the state authority in order to limit the violations of municipal laws from police action. This world evolutionary breakthrough, a platform promise for a new generation, will mark a new era in the history of municipal autonomy which represents a concrete contribution by the government to seek solutions to prevent crime in Puerto Rico.

Digital application of 2010

Urban Kibbutz (digital) is the driving force application for real estate in Puerto Rico.

Protocol

Urban Kibbutz is a sophisticated digital network composed of micro-channels and innovative virtual spaces that empowers other countries mirror Puerto Rico's new business protocol (for next new markets) by promoting inspiration, evolution, sustainability and responsibility to the artistry of building brands for the retail, hotel, restaurant and entertainment industries. The metaphysical moniker of a nonlinear kibbutz was conceived and formulated by Jules Florencio Cortázar during the process of writing Hopscotch between 1961 and 1963. Urban Kibbutz also connotes a social gathering (of profound cosmopolitan revival) influenced by public art exhibitions, alternative lifestyle events, experimental media paraphernalia, urban beach festivals and downtown music extravaganza.

• dba: digital brand assets extricated from prevalent physical properties within the zoning of a predetermined area
• urkibs: used to launch viral security measures targeting particular sectors within districts or municipalities

Year 10

Although the economy has been stagnant over the past three (3) years, it has not been as hard hit by the sub-prime mortgage crisis as in some parts of the United States. The hundred million St. Regis Bahia Beach Resort will be one of the few new resorts to open this year amid all the prepossessing financing from local institutions because Puerto Rico, unlike the U.S. government, subsidizes its hotel industry. According to the Latin America Weekly Outlook of Scotiabank Group, the island's economy has experienced a dramatic turnaround after three (3) years of uninterrupted economic decline. This nascent recovery is being supported by an ambitious and aggressive fiscal plan implemented by Puerto Rico's government backed by the fiscal stabilization package established last year in the United States.

Fortuño

Recent evidence developments continue to support the February 2010 estimation of a 2.5% economic expansion during FY2011, representing the first (1st) yearly expansion in five (5) years. According to the new Governor of Puerto Rico, Luis Fortuño, the island's republic estate will be a competitor in the world of high luxury with the construction of a six-star hotel after closing a $231 million construction-financing agreement that turns the Dorado Beach Resort into a Ritz-Carlton Reserve. The hotel is expected to be completed by 2012.

Value

According to The Economist, "developed economies'" assets at the end of 2002 were the following:

• Residential property: $48 trillion;
• Commercial property: $14 trillion;
• Equities: $20 trillion;
• Government bonds: $20 trillion;
• Corporate bonds: $13 trillion;
• Total: $115 trillion.

That makes real estate assets 54% and financial assets 46% of total stocks, bonds, and real estate assets. Assets not counted here are bank deposits, insurance "reserve" assets, natural resources, and human assets. It is not clear if all debt and equity investments are counted in the categories equities and bond.

Resolution

The real estate businesses in Mexico and Central America are different from the way that they are conducted in the United States. Some similarities include a variety of legal formalities (with professionals such as real estate agents generally employed to assist the buyer); taxes need to be paid (but typically less than those in U.S.); legal paperwork will ensure title; and a neutral party such as a title company will handle documentation and money in order to make the smooth exchange between the parties. Increasingly, U.S. title companies are doing work for U.S. buyers in Mexico and Central America. Prices are often much cheaper than most areas of the U.S., but in many locations, prices of houses and lots are as expensive as the U.S., one example being Mexico City. U.S. banks have begun to give home loans for properties in Mexico, but, so far, not for other Latin American countries.

One important difference from the United States is that each country has rules regarding where foreigners can buy. For example, in Mexico, foreigners cannot buy land or homes within 50 km of the coast or 100 km from a border unless they hold title in a Mexican Corporation or a Fideicomiso (a Mexican trust). In Honduras, however, they may buy beach front property directly in their name. There are different rules regarding certain types of property: ejidal land– communally held farm property– can only be sold after a lengthy entitlement process, but that does not prevent them from being offered for sale. In Costa Rica, real estate agents do not need a license to operate, but the transfer of property requires a lawyer.

Trivia

Some people have claimed that the word real in this sense is descended (like French royal and Spanish real) from the Latin word for 'king'. In the feudal system (which has left many traces in the common law) the king was the owner of all land, and everyone who occupied land paid him rent directly or indirectly (through lords who in turn paid the king), in cash, goods or services (including military service). Property tax, paid to the state, can be seen as a relic of that system, as is the term fee simple. However, this derivation of real is a misconception.

Further reading

• Residential Real Estate