Dominican Republic Rental Law: Expat Mistakes to Avoid

Dominican Republic Rental Law: Expat Mistakes to Avoid

Miguel has been living in New York for three years. Every month he sends money to his brother in Santo Domingo to cover expenses on the property he bought as an investment. The plan was simple: rent out the apartment, generate income, and eventually move back. But since August 2025, the rules of the game changed completely with the new Dominican Republic rental law, and Miguel hasn't realized it yet.

The Law 85-25 on Rental of Real Estate and Evictions went into effect following its publication in the Official Gazette on August 15, 2025, replacing regulations that hadn't been updated in decades. For thousands of Dominicans living abroad who maintain rental properties on the island, this law represents a fundamental shift that many are ignoring completely.

The Most Costly Mistake: Investing Like Nothing Changed

Most Dominican expats are still operating their rental properties with the mindset of the previous system. They make informal contracts, accept multiple cash deposits, and assume they can freely adjust rents based on market conditions.

This disconnect from current legal reality is creating problems ranging from lower-than-expected income to legal conflicts that could have been prevented with basic information about the new regulations.

Deposits: From Informal Handling to the Banking System

Before Law 85-25, it was common for landlords to request three, four, or even six months of deposit, handled informally and without generating interest for the tenant. The new legislation establishes a maximum of two months of rent as a deposit for residential properties.

More importantly: these deposits must be handled through the state banking system (Banco Agrícola or Banco de Reservas), generating interest in the tenant's favor. When the contract ends, the deposit must be returned in full if the property is returned in good condition.

For Miguel and other expats, this means they can no longer use deposits as a personal "financial cushion" or manage them through informal accounts.

Rent Increases: Limits Many Don't Know About

One of the most significant changes is the limitation of annual rent increases to 10% for residential properties, when no different mechanism has been explicitly agreed upon in the contract.

This directly impacts the income projections of expat landlords who expected to adjust rents "according to market conditions" each year. Without a well-structured contract that clearly establishes the terms of adjustment, many will find themselves with income well below their expectations.

Evictions: Goodbye to Informal Solutions

The new law establishes strict procedures for eviction, including specific grounds and minimum notification periods. For example, in certain cases at least 180 days are required between notification via court officer and contract termination.

For a landlord living outside the country who depends on third parties to "resolve" situations with problematic tenants, not knowing these procedures can result in months of lost income and unnecessary legal expenses.

Contracts: From WhatsApp to Legally Solid Documents

Many expats are still signing simple contracts sent via WhatsApp, without specific clauses covering:

• Rent adjustment mechanisms
• Permitted use of the property
• Responsibilities for damages and repairs
• Clear termination conditions

Law 85-25 requires formalization and registration of contracts, moving away from the culture of verbal agreements or homemade documents without legal advice.

The Emotional Context: The Anxiety of Investing From a Distance

Carlos, another Dominican in Miami, describes his experience: "I bought the apartment thinking it was a safe investment. My cousin handles everything, but whenever there's an issue with the tenant I get nervous because I don't really know what rights I have."

This anxiety is common among expats who invest in real estate without fully understanding the legal framework governing their investments. The physical distance amplifies the sense of vulnerability when conflicts arise.

Important Exclusions From the Law

Not all properties are subject to Law 85-25. Excluded are:

• Tourist rentals of less than 90 days
• Rural properties
• Properties in free trade zones
• Certain state-owned assets

Some expats buy properties thinking about tourist rentals but actually operate them as medium-term residential rentals, thus falling under the new law's regime without knowing it.

Critical Timeline: What to Do Now

If you're an expat with rental properties in the Dominican Republic:

1. Review your current contracts to understand whether they comply with the new requirements
2. Consult with a lawyer specializing in Law 85-25 before renewing or signing new contracts
3. Adjust your financial projections considering rent increase limitations and deposit handling
4. Formalize procedures with whoever manages your property to ensure legal compliance

The new law is not an obstacle to real estate investment, but it does require a more professional and structured approach than many expats have traditionally used.

A Necessary Reflection on Long-Distance Investment

Law 85-25 marks the maturation of the Dominican real estate market toward a more regulated and transparent system. For expats, this means that relying solely on informal agreements or goodwill between parties is no longer enough.

The success of a long-distance real estate investment now depends more than ever on working with professionals who master the current legal framework and making informed decisions from the moment of initial search.

For those considering investing in rental properties in the Dominican Republic or needing to better understand the market before making decisions, exploring options through structured platforms can offer greater clarity. Toca Timbre is an app where buyers can explore properties posted by verified agents and contact them directly via WhatsApp for detailed information: Toca Timbre

Frequently Asked Questions

Does the new rental law affect contracts signed before August 2025?

Existing contracts continue to be governed by the conditions originally agreed upon, but renewals or new contracts must comply with Law 85-25. If legal disputes arise, lawsuits already in progress follow the previous regime under the principle of retroactivity.

Can I still ask for more than two months of deposit if I live abroad?

No. The law establishes a maximum of two months of rent as a deposit for residential properties, regardless of whether the landlord resides in the country or abroad. Additionally, these deposits must be handled through the state banking system.

What if my tenant uses the property for something different than what was agreed?

The new law provides that unauthorized use of the property for purposes different from those agreed upon in the contract is grounds for termination. However, the formal notification procedure and timeframes established by law must be followed for the eviction to be valid.

Sources

1. Law no. 85-25 on Rental of Real Estate and Evictions — https://www.puntualpago.do/guias/ley-85-25
2. What the new rental laws consist of — https://elnacional.com.do/en-que-consisten-las-nuevas-leyes-de-alquiler/
3. Legal analysis Law 85-25 — https://yoaldo.org/?p=1176
4. The new rental law: most relevant points — https://www.diariolibre.com/politica/congreso-nacional/2025/08/06/la-nueva-ley-de-alquileres-una-mirada-a-los-puntos-mas-relevantes/3206090
5. Legislation Law no. 85-25 — https://abogadom.net/legislacion/ley-num-85-25