SALES RESTRICTIONS – BRAVOS DE BOSTON, VILLA BORINQUEN AND OTHERS
Any town in Puerto Rico or practically anywhere in the World, is not truly in the business of acquiring and selling land for a profit. Accordingly, any acquisition and subsequent transfer of land by a government entity must serve a public purpose. Vieques is not the exception.
I approach the practice of law in a very practical way. I focus on results, and in the real estate business the most sought after result is a registered title. Accordingly, we are on the lookout for items that get in the way of recording a title. Whenever we are dealing with titles that come from or emanate as a result of government action, the item we are most on the lookout for are so called “sales restrictions.”
Whenever a government entity sells or transfers land to an individual, one thing they are trying to avoid is the purchase and subsequent sales of that land by speculators, meaning people who buy the land for profit. The challenge becomes, then, identifying who is buying the land out of necessity versus the one who is buying the land with the sole or main purpose of making a profit.
In comes the “sales restriction” condition or clause incorporated into most government deals.
A sales restriction encumbers a given property for a set period of time. The terms of the clause or condition need to be expressed through a deed executed by the seller and the buyer of the property, and the deed containing the condition needs to be recorded at the Puerto Rico Property Registry.
Ordinarily, such a clause or condition follows this pattern:
- If the buyer (owner) of the property wishes to resell the property in X amount of years from the date he or she acquired title from the town; then,
- The buyer (owner) will pay the town a certain amount of money established in the clause or condition, or established as a matter of law or through a City Council Ordinance or regulation. This amount is seeing as a “penalty” and its payment (or release from) is a condition precedent to a closing.
- The seller pays the penalty and he or she is then free to sell the property. The new purchase and sales deed would reflect that the penalty was paid.
Of course, if the purported sale is going to be executed after the term for the sales restriction has expired, the sales restriction would be extinguished and the owner is free to sell the property as he or she wishes.
The Town of Vieques has been issuing titles for lots in Villa Borinquen and Bravos de Boston for many years, most of them with conditions establishing sales restrictions. Various terms have been in effect throughout the years. At some point in time the sales restrictions would extend for 15 years and, at times, they extended for 5 years.
If you want to know if your title has such a condition or restriction, all you do is read your deed (carefully) and you will recognize if such a language is present by comparing the contents of your deed to my summary (1 to 3) above.
The sales restrictions could be removed or revoked by approval of the City Council and with the Mayor’s consent to the approval.
On October 27, 2010, an ordinance was approved by the Vieques City Council which was subsequently validated by the Mayor, allowing for the removal of certain sales restrictions for some titles granted by the Town of Vieques as laid out in the ordinance. Nevertheless, the removal of the restrictions is not automatic. The Ordinance mandates that the property owner coordinates that the Mayor signs a deed validating the removal of the sales restriction, and the deed must be filed at the Property Registry.
As with any ordinance or regulation, the City Council has the power to revoke its prior actions at any time, hence rendering the authorization to remove sales restrictions null and ineffective. This would meant that sales restrictions would continue to be in effect and cannot be removed.
Of course, for those properties that the deed cancelling the sales restrictions were executed and filed with the Property Registry before the ordinance is cancelled, the removal of the sales restriction would be permanent.