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In a letter sent to Congress, the Association of Multiple Banks of the Dominican Republic (ABA) presented its technical observations on the General Law on Rental of Real Estate and Evictions, a piece that was recently approved in first reading by the Chamber of Deputies.
In the letter, signed by the president of the ABA, Rosanna Ruiz, it is requested to thoroughly review articles 15 and 16 of the project, to ensure that the objective of protecting the tenant and the landlord does not result in an undue transfer of functions to financial institutions.
Similarly, the ABA expressed concern about the mandatory deposit of the rental contract guarantee in banking institutions stipulated in the initiative, considering that functions are imposed on the financial system for which it has neither legal nor operational attributions.
"Although it can be interpreted as a measure to encourage banking and traceability, it is a guarantee within a rental contract, which is a private relationship between landlord and tenant. Imposing its mandatory management through a financial entity alters its legal nature and adds an external actor without clear attributions within said relationship," the document states.
In the letter addressed to Congressman Amado Díaz, president of the Special Commission, the ABA objected that the project proposes that banks must deliver those guarantees "without further processing", without defining objective criteria or processes to determine whether or not the contract has been fulfilled, which it considers unfeasible.
"It is not clearly defined whether said deposit must be kept intact throughout the term of the rental agreement, nor whether it could be subject to early withdrawal under certain conditions, much less who has the power to authorize its return in cases of dispute or breach," it is indicated in the communication.
Regarding the obligation to report contracts to the banking supervisory body, the ABA considered that this "represents an unprecedented operational burden and is completely detached from our functions as a financial sector."
He argued that these obligations would introduce significant compliance burdens, including the development of specific technological functionalities, product segmentation, specialized staff training, and the creation of differentiated mechanisms to identify and properly manage deposits classified as "rental guarantees".
The ABA warned that, if the proposed wording is approved without adjustments, it would place banking entities in a position analogous to the current process of interposition of attachments, frequently used without clear criteria or adequate mechanisms of prior judicial control, generating abuses and distortions that translate into legal insecurity and economic impacts.
Following all of the above, the guild expressed that, far from resolving a need, the project could introduce more legal insecurity in relationships that should be maintained under the framework of contractual autonomy between parties.
It was noted that the piece introduces restrictions that affect the principle of freedom of contract, denaturing the essence of private legal business. It indicated that it compromises the ability of the parties to negotiate according to their legitimate interests and violates the principle of freedom of enterprise expressly recognized in article 50 of the Dominican Constitution, in addition to discouraging important figures in the securities market, such as closed-end investment funds.
In a press release, it also warned that the initiative could discourage investment in new rental properties, which would directly impact construction, a sector that has a multiplier effect on the economy.
Finally, the ABA reiterated its willingness to collaborate with Congress in this process, with the conviction that it is possible to reach a balanced, functional text that respects the current legal framework.
