Why Talk To a Lawyer Before Purchasing Property in Puerto Rico

April 26, 2017 Leave a comment

Hello!

Nice to know you are watching and reading this. Today I am providing you some information on why and how it is useful to talk to a lawyer BEFORE purchasing property in Puerto Rico specifically.

I hope this is useful to you and share it with more and more people that could use the information.

Hope you have a fantastic day and week!

Truly yours,

Santiago Lampón


Why talk to a Lawyer before purchasing property in Puerto Rico – Transcript

Hello my name is Santiago Lampón. I am a lawyer and a notary here in Puerto Rico and I welcome you to this episode of Puerto Rico Legal Video Blog. I am going to cover why you should engage or contact a real estate lawyer before performing your real estate transaction in Puerto Rico.

That before is what I want to clarify. I want to give you a few ideas of why it is important that you do. The before that I mean is, that you have the agreement, you discuss the terms of the agreement with your seller. A broker may be involved but you have an understanding of the kind of deal you want to do, what the purchase price is, what the property is and then you are going to receive a draft of what is normally called a purchase and sales agreement though it is really an option agreement and at that point in time you should have your lawyer review that document. It is going to be prepared by a broker, if there is a broker involved. It may be prepared by the sellers’ lawyer, but there are some items that you should be aware of and you have to make sure yourself with the help of a lawyer that they are included in your contract and I will give you an idea.

The way contracts are drafted and the contents of the contract in Puerto Rico is different, markedly different than to many of the states in the United States, Canada and some other areas. We are more similar to Spain. Louisiana could be an exception but the idea is a contract that you are applying for financing, lets say you need to get financing done to have that contract, that actual closing happen. There is a specific clause that has to be included in that agreement or the agreement is null and void. If the closing is good but it is not correctly drafted you may not receive the adequate notice of which are your rights in the event that you don’t have that finance approved or even if you have it approved what are your duties in order to push the closing forward and that has to be included in the contract. You also have the right if a broker is involved to an inspection of the property performed by someone who is licensed to do that inspection. But you could also plead that right even if a broker is not involved but the difference is: is it included? Is it not included? Does it make it null and ineffective? Or does it make it a valid contract even though it is not in there? There are a few complexities but once you get through them with the help of your lawyer you will be ok.

Again my name is Santiago Lampón. I am a lawyer and notary in Puerto Rico. If you have any questions, send me an email to the address that appears on the screen or give me a phone call or you can write your questions in this page. I hope you have a great day and I am looking forward to seeing you again here in Puerto Rico Legal Video Blog.

Categories: puerto rico

State Insurance Fund – A Potential Liability Part 2

April 24, 2017 Leave a comment

Hello!

I hope you had an incredible weekend.

As I promised, here is part 2 on State Insurance Fund, so you can have more information on this subject. I hope you have a great week.

Yours,

Santiago Lampón

State Insurance Fund – A Potential Liability Part 2

Hello my name is Santiago Lampón, I am lawyer and notary in Puerto Rico and welcome to Puerto Rico Legal Video Blog. This is part 2 of a 2-part series regarding workmen comp in the real estate environment. What this means is that you are the owner of a given property here in Puerto Rico and you hire an outside firm or builder or company to do some kind of work on your property. I used as an example in the previous video a builder but it refers to anything.

You need to watch the first video because otherwise what I am going to give you now is going to be incomplete. Now let’s say you have someone coming in to your property to perform work and that someone has the workmen comp state certificate. By the way it is FONDO del seguro del estado, It is going to appear in the screen before. The short is the FSE.

Let’s say you have the FSE coverage, the workmen comp state coverage and your builder (which is the example that I have been using) has the coverage as well. The next question is, is the kind of work that you are performing in your property included in that workmen comp. In other words, did you tell the FSE, that what that guy is going to do, is report it to them, so that they can charge you the adequate premium for that work.

Let say you are building a pool and the guy walks in to build the pool. But you report or for whatever reason the category selected is: “Oh, is going to do windows” and an employee has an accident you are not covered. He is not covered either but you are not covered. See the thing is that what we are looking at protecting here is you as a property owner. The FSE is going to look at whether the guy, his boss, has workmen comp. If he does, fine. Now they are going to look at you as a property own if you have workmen comp, if you do, fine, if you don’t you are in problems.

Make sure you look at this for whatever services are going to be rendered inside your property since you are a real estate property owner, which is why you are watching this video. My name is Santiago Lampón, a lawyer and a notary in Puerto Rico and I thank you for watching. Please send me any question you might have by email or post them on this page. Have a great day.

Categories: Uncategorized

State Insurance Fund – A Potential Liabiity (Part 1 of 2)

April 19, 2017 Leave a comment

Hello!

I hope you are having a fantastic week. I leave you with useful information when dealing with workmen compensation.

There is a second part for this video. I will post it very soon.

Truly yours,

Santiago Lampón

State Insurance Fund – A Potential Liability (Part 1 of 2)

Hello, my name is Santiago Lampón. I am a lawyer and a notary in Puerto Rico ad welcome to this episode of Puerto Rico Legal Video blog. If you have any questions about the information that I am going to discuss just send me an email and the address will appear on the screen or you can post a message on here.

I am going to cover workmen compensation in Puerto Rico. I want you before I get into it, I want you to take the subject what you know about workmen comp and throw it out of the way, completely and let’s start from scratch about how it works here in Puerto Rico. I brought with me a drawing board not because it is too complicated but because I wanted to make sure I communicated in a way that it is understandable. So, let’s use the drawing board. I am going to communicate this from the perspective of someone who owns a property in Puerto Rico and is going to have to work performed in that property. The first individual I am going to include here is the property owner. I am just going to say prop owner. That’s the first layer of ownership. Below the property owner you have a builder. One arrow down you see a builder. Of course, the builder will go to the employee of the builder. You have the property owner, the builder and the employee of the builder. This is the guy, this is the individual that we are going to protect him or her but we are also protecting against. So, you are the owner and you have workmen compensation because your insurance agent told you are converable with compensation.

You bring in the builder, the builder is going to build the pool, redo the roof, whatever. The builder brings in employees and one of those employees has an accident. Fell from a stair, step on nail, whatever. Your first thought probably would be he is the employee of the builder, that’s the builder’s problem. Number 2, I have insurance. Now those things normally true, but we are in Puerto Rico, in Puerto Rico we have a state mandated workmen compensation fund. Now I have a general understanding when dealing with the government or the government people. I am the underdog and that’s life. Not how I really feel or think but that’s what I look at. Why am I the underdog? That simple puts me in the position of being a little bit more prepared.

What is the solution? If you are a property owner you must make sure of two things, number 1, that you have the state workmen compensation package. They are right, there is a workmen compensation insurance run, owned, controlled, by the state. Number 2, that your builder, contractor, builder, a repair man, whosoever is going to come to your property to work or come work for you has workmen compensation self-worker. If you do, and this builder doesn’t, that employee can sue you directly. As a matter of fact, the government, workmen compensation fund is going to sue you to recover for what they must pay to that employee for medical care, etc., because it is a good package. The workmen comp program works very well for the employee. It is there to protect the employee. The employee, not the employer, not the owner or whatever. So, you must make sure that anybody that comes to your property to perform work under contract with you that they have workmen compensation and you want them to prove it. Its not enough: “yeah, yeah I have it.” Where is your workmen comp certificate? Show it.

Now there is another piece of information that you need to know but I a going to cover that in the next video in this subject. So again, my name is Santiago Lampón, I am a lawyer and a notary in Puerto Rico. I deal mostly with real estate issues, that’s why I’m referring to workmen comp in the real estate environment. If you have any questions you can send me an email or post them on this page and I want to wish that you have a great day.

Categories: Uncategorized

Establishing Residence in Puerto Rico – Problems and Solutions

April 12, 2017 Leave a comment

Good morning!!

So I continue to give you data that you can use in your life. Here is some data about residency in Puerto Rico that you can take into account.

I hope you are having a great week! Continue to do so!

Truly yours,

Santiago Lampón

Establishing Residence in Puerto Rico – Problems and Solutions – Transcript

Hello my name is Santiago Lampón. I am a lawyer and notary in Puerto Rico and welcome to this episode of Puerto Rico Legal Video Blog. Residents, not residents, of Puerto Rico? First of all the mere fact that you purchase a real estate property in Puerto Rico does not make you a resident of Puerto Rico.

Second, the fact that you spent long vacations in Puerto Rico, whatever you want to call long, a month, couple of months, a month and a half does not make you a necessarily a resident in Puerto Rico. Maybe you open a bank account, because you want to have accessibilities to some funds. That doesn’t make you, necessarily, a resident of Puerto Rico. Once you are talking about putting money here in a bank account in Puerto Rico here we go.

Residence means many things, but the important thing is what does it mean to you. Really? No. What does it mean to the government of Puerto Rico. Give you an example. You own a property in Puerto Rico. You rent for vacation purposes that property in Puerto Rico. You open a bank account in a local bank and you deposit those funds there. Are you a resident in Puerto Rico? No, but you are conducting business in Puerto Rico. So you must rightly have a tax issue. Tax liability has nothing to do with being a resident or not.

Lets reverse the subject here. Let’s say you want to become a resident in Puerto Rico. Why? There are some benefits for some people who are not residents of Puerto Rico at any given time and who decide to become residents of Puerto Rico. You know what? Then you have to find out which are the benefits and which are the specifics requirements for those benefits, because some laws that are going to give you tax benefits like the famous act 20 and act 22, carry with it a list of requirements, you have to this, you have to this. And then you qualify for the benefits of the law. One of them is become a resident and the law says which are the specific requirements for you to become a resident. It all depends on which is your purpose. Why do you want to spend time in Puerto Rico, besides running away from the cold weather.

Again my name is Santiago Lampón. I am a lawyer and notary in Puerto Rico. Thanks for watching this episode. If you have any questions you can send me an email, the address will appear open the screen or you can give me a phone call or just post the question on this page. Again I thank you for watching. I hope you enjoy it and I hope you have a great day.

Categories: Uncategorized

Before a closing in Puerto Rico – What do you need to look at?

April 10, 2017 Leave a comment

Good morning!
And I am back with more information to be useful to you!

I hope you had a great weekend and that this week is very productive! Here is some data about closings in Puerto Rico that you need to look at.

Enjoy!

ML,

Santiago Lampón

Before a closing in Puerto Rico – What do you need to look at? – Transcript

Hello my name is Santiago Lampón I am a lawyer and notary in Puerto Rico and welcome to this episode of Puerto Rico Legal Video Blog. I am going to give you a list, its going to be a complete list, I am going to be giving you what you should be discussing with your lawyer or what you should be looking at, when you are doing a closing for a real estate property in Puerto Rico.

So pay attention and by the way some of these subjects I have already covered on this blog, so you may want to watch some of the other videos I have on this. When you are going to purchase a property in Puerto Rico, obviously, you are going to take a look at the title. That may seem obvious but you want to make sure you discuss it. Is the title OK? Are there any encumbrances? Are they any liens? Are there any restrictions? I’ll give you an example; if you are purchasing a property in a residential area: What are the restrictions that apply to that area? That’s all covered in the title. Yes you have some residential properties with some restrictions and no they are not necessarily what you call legal restrictions. It could be that when the area was created many years ago, somebody signed a contract limiting the use of the property or the use of the area.

One of the items that people on this blog watch a lot and ask questions about, a lot, are taxes. Meaning property taxes. Property taxes are a big issue in Puerto Rico. Are they assessed? Is the property correctly assessed? Not only assessed, not only appraised but has it been correctly appraised. When was the last appraisal done? Did the heirs (if the heirs are present) change the name of the person who appears as the owner of the property at the property tax authority which in Puerto Rico is: CRIM, that’s how you know it. CRIM.

Mortgages. It is common that properties have mortgages, half paid begin cancelled. Will they be cancelled when you are doing the closing? How are they going to be cancelled? That’s one of the items. Another thing you are going to look at maybe is insurance, title insurance, property insurance. This is not necessarily a legal subject but I will give you an example. Some people purchase the properly from someone. Not an entity, someone, an individual. Then they said I am going to rent it, I am going to lease it because I can make money out of it. Then when they go for the insurance they go for personal insurance because personal insurance is cheaper, its less money and they rent the property because this is a residential area.

You know what. If you some of your guests have it claimed maybe the insurance will not cover, because you should have taken another type of insurance, commercial insurance. Just discuss it with your lawyer or discuss it with your insurance agent. These are some of the items. They are actually more things that need to be covered. That would be another chapter and another episode. Again my name is Santiago Lampón; I am a layer and a notary in Puerto Rico. If you have any questions you can send them by email and my email address will appear on the screen or you can give me a phone call or you can post them on this page and I can get to them as fast as I can. I hope you have a great day.

Categories: puerto rico

Revisions to Puerto Rico Sales Tax “IVU”

March 15, 2017 Leave a comment

Good morning!

I hope you are having a great week start! i hope this video can be of big help and give you more understanding on Puerto Rico sales tax.

Keep having an amazing week!

Truly yours,

Santiago Lampón

Revisions to Puerto Rico Sales Tax “IVU”

Hello, my name is Santiago Lampón; I am a lawyer and notary in Puerto Rico and welcome to Puerto Rico Legal Video Blog. I am going to cover in this episode an issue, which is of upmost importance for individuals who own real estate property in Puerto Rico, and they rent it out who have some business use for the property. Not only is it your second home but you have a business activity that you hold, you perform these set of things to this property.

Now what I want you to get out of this video is an area of concern, this is an alert and you should after you listen to what I am going to say speak to your accountant, you CPA or your tax lawyer to go over the concerns or the barriers that I am alerting you about, in this video.

Recently new taxes have been lead across the board for doing business in Puerto Rico. The one that I am going to discuss is the sales tax. In Spanish, it’s IVU, we call it the IVU, but I’m just going to use the translation sales name. Up to now you go into a store, you purchase a hundred-dollar item and you would be taxed 7% sales tax, so you will pay 107 dollars. And up to now business to business B to B have been exempted mostly from paying the sale tax. I say mostly because when I purchase my office materials from a store I didn’t pay a sales tax. Now there is a category of items that are now covered, which you say it is covered so I’m going to pay 7% more, that’s fine. the way the payment is made to the Puerto Rico treasury department is what concerns me and I want to communicate to you so that you can check.

As a matter of fact, today I discussed it with an accountant and he told me that he didn’t know that. Please look it up because this is new. It was approved 11 days ago, at the time of the release of this video and a lot of people are still going over it and I have been going over it. I still have a more to read. You have a house, you rent a house as a business and you have a pool maintenance guy, you have a painter, you have the guy who mows the lawn and there is a category called repairs. Now it is interesting because repair may be maintenance but maintenance is not necessarily repair so here comes the first concern that I have to specifically use the word repair.

Let’s say you are going to repair the leaking roof. (You rent the property, you need to repair.) That comes under repairs and that transaction happens to be taxable under the amendments to the quote that were performed 11 days ago, which is June 30 of 2015. Let’s says there is a 7% tax on that, if my reading is correct. So, you would say I pay the guy for the repairs; the guy is responsible for sending that money to the Puerto Rico treasury department. That sounds logical but that’s not the way it is. It is a self-imposed tax for business-to-business obligations. So, if somebody comes to your property to repair something, you are to number one self-impose the tax (yeah, you, yourself) and number two you are the one liable to make that payment to the Puerto Rico treasury.

At the end of the year there is a monthly payment that you must make. If you fail to file the form and make a payment you are subject to interest, penalties and you can even be fined. At the end of the year you have this profit and loss and expense, any kind of barrier that may fall under repair that you did not you, yourself, self-impose, you, yourself, the sales tax – the IVU on it – then you are liable to pay that money.

I have never seen that before, I discuss it with an accountant today and he was like: Really? I was like: really, that’s how it reads. I want to make sure that you who are watching this video and listening to me, if you have a real estate and you use it for business purposes, make sure that you consult this little issue with your CPA or tax lawyer. As a matter of fact, have them watch this video; my email is on the screen, they can write to me. If someone out there believes I am misreading this, I want to know. I was going to say so far so good but no, so far so bad. Make sure you understand this and you become fully knowledgeable on this as I obtain more information I will release it to therefore who subscribe to my blogs. Again, my name is Santiago Lampón, a lawyer and a notary in Puerto Rico. Send me any questions you may have in my email address or you can post them on this page. Have a good day.

Veronica Rodriguez
verorodriguez89@hotmail.com

Categories: Uncategorized

Property Taxes in Puerto Rico – The use of escrow accounts at closing (4 of 4)

March 10, 2017 Leave a comment

Good morning!

I hope you are having an amazing week.

Here is what I promised, which is part 4 on Property Taxes in Puerto Rico.
I hope you find this very useful. If you have any questions don’t hesitate to call or email me.

Truly yours,

Santiago Lampón

PROPERTY TAXES IN PUERTO RICO – THE USE OF ESCROW ACCOUNTS AT CLOSING – TRANSCRIPT

Hello my name is Santiago Lampón. I am a lawyer and a notary in Puerto Rico. Now this is part 4. This is the first time I have done a 4-part episode but it is because of the subject, regarding property taxes in Puerto Rico when you are going to do a closing. Do watch the other three parts. This one let me summarize here. Part one is an introduction, part 2 is registration, part 3 is the assessment of the property. Now in part 4 I am going to tell you about the use of escrow agreements at closing. When someone purchases a property that was not registered at the property tax authority, which is CRIM, or if it was registered but it had not been currently assessed meaning: what is the value of the structure? What is the value of the land? Because the tax is percentage based. You need to assess a value and then they compete the tax. Then to do the closing, what we are doing nowadays, notaries in Puerto Rico is that we create and escrow where by the seller places into this escrow, in this account with the reputable title insurance company in Puerto Rico. The possible exposure of property taxes owed because the property had either not been registered or currently assessed.

Now this exposure is computed using the bases of the tax. Using as a base for the tax, the purchase price of the transaction and we go back to 5 years. So, it is one year, the current year plus going back 5 years, a total of 6 years. Each township in Puerto Rico may use different percentage. I am not able to tell you this. It is done at the closing or prior to the closing with do a computation. The amount is placed into an escrow, it is total the parties, the parties accept it and they actually sign an escrow agreement, agreement whereby they state what is going to happen to that money and how is it going to be dispersed, who is going to have to do what.

It is very important that yes you can close even if the property had not been registered or the property has not been assessed but it is important that you demand or promote that an escrow agreement be used. There are certain exceptions, I am not going to cover them right now, but I just wanted to let you know that it is possible to close even though there is the potential property tax liability but that it must be done in the right way. If you have any questions, please send me an email. My name is Santiago Lampón. I am a lawyer and notary in Puerto Rico and I hope you have a great day.

Categories: Uncategorized
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