What is the norm and formalities ? Building a villa

Hello everyone !

We have a quandary I would like to ask your professional opinion.

We have picked a site in a gated community in which to build a villa. We have been pre- approved for a loan from the bank there. However, the will not formally approve the loan until they appraise the villa that is not built yet.

According to our offer to purchase, down payment (30%) is to be placed in escrow with realtors lawyer there. The escrow will remain until the loan is approved  ( which formally, it has not been) or not approved which then the money would be sent back to me.

The quandary is- now the realtor and the developer wish for me to allow them the money in escrow with which to build the villa. And what happens if developer goes bankrupt during the build? What happens if bank revises loan requirements and when the villa is built,  we no longer qualify? Or, the villa does not appraise out to the asking price of the developer after it is built? Is this the norm in the DR? We would appreciate your thoughts.


Jim I have requested your post be put in its own thread.

Let's keep this thread for welcoming New members.  Thanks!

Hello everyone,

Just to inform you that a new thread has been created from the post of Jim on the Dominican Republic forum.

The original post is initially intended to "Leocorral" , he has been informed of the queries posted.

All the best,

DO NOT do anything until your loan is approved and this can take some time depending on the bank and circumstances.  Loans here are very difficult to get an a long process.  About 5 years ago we got a the very first home loan approved here for a gringo on a house they  were building.

Where are you building?  Who is the builder?  Have  you fully investigated both?  Are you going to be here for the build?  All questions you have to seriously answer and consider.

We worked in real estate here  and we built our villa so I know from experience what is involved.

Bob K

Thank you Bob,
We have been pre- approved through Scotiabank. They have stated that if it were an existing home, we would have the loan today. However, they require an appraisal on what would be the loan collateral minus our 30% down- which is the completed build. The realtor is Coldwell Banker, and the builder is the developer @ Ocean Village- Elias Suede. The realtors' lawyer is Yanilda de la Cruz.

We got an email from the realtor's agent who we have been dealing with, suggesting we give the down payment so the builder can build.

Our thoughts; along the lines of your thoughts- is for the build to be completed prior to exchanging monies.

We are comforted in knowing that our concerns are confirmed before we went any further.

I have emailed the real estate agent and the lawyer, stating the villa needs to be built first. And then we will give the down payment after FINAL and formal loan approval by Scotiabank. Again, thank you for the feedback.

Oh, by the way, due to the fact both of us are still working in the states, periodic visits is all that we can accomplish during the building of the villa which is an 8 month process. Thank you for your help.


What I meant was don't start the build until you have the loan.  However once the building is ready to start it is customary to put up 25%-33% before the building starts than other payments once certain criteria (amount built) are met (like walls up, roof on etc)

I know ocean village well, it is a development that as been going on for years (many times at a snails pace) and seems to be getting a bit more active.

You should also get your own lawyer to represent you not the builder.

You will find that "onsite" time is very important and try to time your visits at critical points of the build.  Having someone here keeping "eyes on" for you is also a good  idea.

Hope this helps.

Let me know if you have other questions or I can help in anyway.

Bob k

Thank you for the quick reply Bob,

Here is the quandary; the bank will not give formal approval of loan until they see the finished villa.  The builder wants the 30% to build the villa before the bank will give the loan....

so, what we are thinking, is we drop the new build and find a villa that is already built so that the bank can give immediate appraisal and immediate loan approval!? Thoughts on this would be appreciated.


That is one plan, and a good one. What about a home equity loan from back home or any other loan you can secure back home.  Interest rates should be better at home as well.

Most developers will also offer financing on new builds.

Bob K

We don't have enough equity in our home in the states.  Plus, the interest rate for such a loan is very close to the rate Scotiabank is offering.
As for the builder financing; at least through the building process; is what I have suggested to Coldwell Banker and their attorney just this past Friday evening. Since it is the weekend, I have not gotten a response yet. I would expect one on Monday. If they don't want to go that route, I am thinking of pulling offer from Ocean Village all together, and looking at villas that have been built already in other locations.


Update - Anyone wishing to finance a portion of their home with a bank - should verify with that bank whether the development/project is on the banks' "approved list". A portion of Ocean Village (Villas Marina) is not approved yet, so my purchasing/building is on hold until the developer completes the process.

Can anyone recommend a good real estate lawyer? I am not sure the realtors' lawyer has my best interests in mind. She says she does, but I am having to provide all the research.

In Sosua I strongly recommend Jesus Garcia Tallaj jgtallaj[at]

Thank you very much.

I'm building in villas marinas we may soon be neighbors

Hi dinosinc; what lot number are you on? We are supposed to be lot #10. If I may ask; are you financing? If so, are you running into any of the problems that we are?

We will be neighbors, we are lot 9 I'm here now doing a construction site reciew/vacation We are not fiancing so it's a non issue for us
Hope things work out for you

Thank you .We hope so as well. Where are you from? We are in Panama City, Florida. Laura Girotti (neighbor on your other side is the real estate agent we have been dealing with).

How is the construction going? Are you planning on periodic visits? What is your experience so far?

We are from Toronto now living in Calgary AB, We are dealing directly with the developer and it has been good, they have been very easy to work with, we made a ton of changes to the floor plan and lot and most of it has been done via email and phone calls. I get progress photos every couple of days etc.  We will next come down in December and and then in Feb/March to close

Outstanding. The information about your dealings with the developer is very helpful. We were scheduled to chose materials and sign formal contract at the end of January. Not sure now as we have to wait for the developer to complete documentation with Scotiabank in order to become an "approved development". I understand that that pretty much means that they do the equivalent of title searches for liens; law suites etc.... but, Iwill need to wait for this to be completed. So, our schedule for returning is up in the air. How many times have you been to the DR? When you close in Feb/Mar, is that the completion of construction? What are your thoughts of quality of construction materials (plumbing, electrical, concrete, etc...?

Well everything takes time here I'm sure it will all work out, as for construction well all I can say is its different not what I'm used too I did look at the mechanics and it seems to be correct venting and slope etc the  electrics look good I plan to bring a circuit tester  on closing to make sure everything is wired and grounded correctly. We should be done construction in Jan/Feb and then be back in March, we are in no hurry
If you have any other questions feel free to PM me

Thank you for the information. I meant to ask - did you have A/C installed?

Yes we will be installing AC in all three bedrooms and will add a rough in for main area for future install

We will have a 2 bedroom model. We are having them rough in both bedrooms and the main living area. If you don't mind; may I ask about how much I need to budget to finalize the installation? I appreciate the info. Like I said; you are the first owner I have had the opportunity to speak with. A lot of questions over the last 4 months (since we first signed the Purchase Agreement).

I sent you a PM

Hi Precision Engineer,

we moved to Cabarete 5 years ago and purchased a property immediately (cash deal).

Everything ended up OK but I would recommend that anyone planning to relocate and build their
"dream house" first rent for about a year to get familiar with local situation.

I agree with Bobs advice and it is great that you already "ran into" your future neighbor. As Bob said you must get your own lawyer. I used Jeanette Garcia in Cabarete, a very sharp lady.

I am concerned about your plans to use local financing. The building cost is probably in US$ while the  loan is probably in pesos and limited to 5 years or so.

If you cannot pay it all back in 5 years I would not take the loan. When I moved here the 36 pesos gave you one US$. Now, 5 years later you need 46 pesos for every $.  This is the reason that the interest rate at Scotia bank is only comparable to US rates if you take a pesos loan, not for a $ loan.

My heartbreaking advice to you is: If you do not have enough equity in the USA to pay for your house in the DR in cash do not build a new house. In the end, by the time you move in, it will have cost you much more than they tell you now.

Good luck, live here is wonderful.


Hi Walter,

Thank you for your comment. It is appreciated. As for the loan, we are offered 6% for 25 yrs (US dollars). An equity loan in the U.S. gets in the neighborhood of 7%-9%. The intent is/was to purchase now, and in 5 years when we early retire and sell out house - take the net profit of our house and pay off the mortgage. Any yes, we have heeded several responses and hired another lawyer.... More to come. And again, thank you to any and all who care to comment.

Dear Precision Engineer. There is some options to begin the negotiation. You could sing what is called "promise of sale", a document where you and the buyer establish the land to secure it to you but with the intention of the sale once the building is done to request loan from the bank. In case of having some problems they will have to repay you and pay damages.

Also the other option specially for lands and buildings is trust. Now with the new law of trusts many of construction are regulated according trust law. In this case there will be more secure and guarantee for construction and the money and the land will be in a trust not real state company .

Please do not hesitate to contact me any further questions. I hope this info help everybody.


Thank you for the advise. The "promise of sale" will be implemented into this effort. Thank you for that idea.

I have a question as to how the trusts work there. If we go with the "new build", do I put money into trust that covers my total down payment pending approval of bank? As it stands; unofficially, we will have (4) payments to equal the total down payment (based on % complete criteria that will be written into the official contract). We have no legal contract as of yet since the development needs to complete the banks' approval process first.

If you can get a fixed rate 6% mortgage for 25 years and there is no prepayment penalty
you got a great deal.

It is however still 50% higher than the rates you would pay if you refinance your home in the US
and pay 4%.

Of course you may not have enough equity in your US property to go that route.

Good luck


Hi Walter, That is correct - not enough equity in U.S. house based on the refinance option of up to 90%. However, in 5 years; we will have enough equity to pay off the mortgage. We got a great rate at the bank due to outstanding credit; debt to income ratio, etc...  And yes, the interest is 133% of what you get in the U.S, and that will drive us to pay it off in 5 years. Thank you fir the input. It is appreciated.


Good morning everyone,

It has been awhile since I posted anything; but think it may help others as they look at moving to the DR. The following is the present status of our attempt to have a villa built in SOV.

We signed a "Purchase Offer" seven moths ago with the following provisions;

1) we gain financing through ScotiaBank
2) Final closing/contract signing would be no later than January 2017.

During this time; we were personally pre-approved for the loan from ScotiaBank. 6% for 25 years (financing 70% of a new build - villa).

During the process, Scotiabank management informed us that "Villas Marinas" (part of SOV) was not on the banks' "Approved Project List" and that they could not finance anybody there until the developer submitted the required documentation.

From what I understand - is that the home office in Canada took over the process of reviewing Villas Marinas project. After 6 months; the bank has decided NOT to allow Villas Marinas onto their "Approved List" for reasons unknown to me.

The developer tried to get us approval at another local bank. We were approved but at a different interest rate over a shorter period of time causing an increase of $300.00 month more out of my pocket.

This has taken us out of our comfort zone and having lived up to our "obligations" per the Purchase Agreement; have decided to retrieve our $10,000.00 placed in escrow w/Yanilda de La Cruz and Coldwell Banker (Amber Coast Realty) with the intention of finding a home in the DR elsewhere.

As of this morning, Yanilda de La Cruz and Coldwell Banker have decided to continue to hold my escrow (for an unknown reason).

At the suggestion of the Planner here - we have previously hired Jesus Tellaj as our lawyer - who so far has been very professional and proactive. I have not heard from him this morning regarding the delay of repaying my escrow money. We are  beginning to understand why so many people here have said to pay cash.....We would like to keep you all informed as we go forward with this.

Wow!! I hope everything works out for the best for you keep us posted...
looks like we wont be next door neighbors

Hi Paul - yes.... this has disappointed us tremendously. Especially Bonnie...... We truly wish you the best!

Thanks for the update, keep us posted!

Thanks, all the best Jim

Wow, thanks for the update.  Having worked real estate here in the past I feel your pain. It is not a new story but a repetitive sad one. Hopefully you will get it worked out.

Bob K

Good morning!

As of this morning; the escrow has been returned with the help of Jesus Garcia Tellaj. We now are back to square 1 (with a little more education at least). Here in the states; one can get financed for new construction (even before it is built) by going to lenders that are familiar with the builder. This was what we thought we would see in the DR; but, it is not the case. Further research states that only 1% of closings have a mortgage in the DR (more education)!!
The 2nd lesson; the lawyer referred/assigned to us by Coldwell Banker (a recognized realty name in the U.S.); Yanilda de La CRuz - who is a personable lady - does not work/represent the buyer as we were led to believe. She/the lawyer assigned by any realty; represents the interest of the realty company. This too - is a lesson learned. Anyone looking for realty needs to HIRE THEIR OWN LAWYER!  Jesus Garcia Tallaj did a lot of the leg work in our absence which put us at ease. I will continue to use him (and recommend him to anyone else) in our realty endeavors in the DR. Again, Thank you to Planner for referring us to him! I Hope you all have a great day!


Glad it worked out.  You have a lesson learned with out too much  blood loss :)

Bob K

Hey Jim

Glad to hear you got your deposit money back, I'm going to PM with some info

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