San Diego, CA asked in Estate Planning and Real Estate Law for Puerto Rico

Q: As the current owner of land in Puerto Rico, am I permitted to lease the land to an individual or entity..See more info

As the current owner of land in Puerto Rico, am I permitted to lease the land to an individual or entity for the purpose of constructing a dwelling on the property?

1 Lawyer Answer
Rafael  Pagan-Colon
Rafael Pagan-Colon
  • San Juan, PR
  • Licensed in Puerto Rico

A: So long as you are the current sole owner of the land, you can lease said real estate to an individual or entity. Nevertheless, a lease contract is temporary by nature. Allowing a third party to erect a permanent structure on your land, of which you're not the owner, exposes you to legal expenses and loss of the real estate property, should you need to recover your property. You should consider several factors:

(a) any lease for a term of 6 or more years gives the lessee (tenant) the right to file said lease agreement with the Puerto Rico Property Registry; which may make it difficult for said tenant to be evicted, should you -say- decide to sell the land to a third party different from the tenant.

(b) Who would own the dwelling that you mentioned in your text? (1) If the tenant retains full ownership of the structure, you expose yourself to suffer the loss of the portion of the land directly under the structure (a term known as reverse accession). (2) If the tenant retains full ownership of the structure, you'll have a difficult time evicting the tenant from the land, should the tenant default on his lease. (3) If you will retain ownership of the structure at the end of the lease, the contract should state so beforehand.

(c) Is the tenant's intent to purchase the land from you? Then you both should subscribe a rental contract with a purchasing option, asking for a significant deposit and establishing a finite term within which to exercise said option, besides the rental payments.

Regardless of who the tenant is, and what promises are made, everything should be set in writing to avoid costly misunderstandings. I wish you well.

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