Asset protection and limited personal liability concerns foreign investors buying property in the Dominican Republic. To mitigate this risk, many investors consider setting up a corporate entity to hold their DR property.
However, as mentioned in a previous article, “How to Hold Your Dominican Property,” setting up a corporate entity to hold your property in the DR may not make sense due to the cost of setting up, ongoing administrative costs, yearly required filings, and potential tax implications.
So, if you hold your DR property under your name, how can you protect yourself?
Insurance.
You’d get insurance on the property. If your property is an Airbnb or short-term rental, you’d specifically want to get liability insurance. Liability insurance will protect you from claims if a guest is injured at your property due to a slip, fall, or other accident.
Airbnb does provide its hosts with liability insurance up to $1 million per occurrence in the event of third-party claims, but an additional policy may need to cover any gaps in coverage.
It should be noted that frivolous lawsuits targeting an individual’s assets are not the norm in the Dominican Republic. Unlike in the USA, where lawyers take on your case for a percentage of the settlement or judgment, legal fees in the Dominican Republic are paid upfront, meaning that many cases are not pursued.
Either way, protecting yourself and getting your property insured is advisable.
________________________
Maria Abreu is the CEO and Managing Attorney of Abreu & Associates, a law firm practicing exclusively in Dominican Republic Immigration and Nationality law. She is also the founder of Retire and Invest DR. This organization hosts conference events for foreigners interested in living, retiring, and investing in the DR. You can contact Maria at: mabreu@abreuimmigration.com.