Leasing Tips in Puerto Rico - Relocate to Puerto Rico with Act 60, 20, 22

Leasing Tips in Puerto Rico

Most Americans, when they first relocate to Puerto Rico, opt to rent rather than buy—after all, it’s far less commitment and allows them to get acquainted with the island and its different regions before diving into a purchase agreement. Caution is particularly important in Puerto Rico, given the challenges associated with purchasing property on the island. However, renting isn’t necessarily easy either, and failure to conduct careful research can leave a renter with headaches.

If you’re coming to the island under the Act 60 tax exemptions, whether Export Services or Individual Resident Investor, you’re required to purchase property within two years of obtaining the decree. Renting beforehand will allow you to familiarize yourself with different areas of Puerto Rico as well as learn how the real estate market works on the island.

Where to Rent in Puerto Rico

The first step to renting a home or apartment in Puerto Rico is determining the location. From beachside properties, to urban apartments, to homes in the mountains, Puerto Rico offers a wide range of lifestyles to appeal to everyone’s tastes. The majority of newcomers to Puerto Rico opt for the beach, making beachside homes generally more expensive to rent. However, in the mountains, away from the constant breeze on the beach, homes can heat up to unreasonable temperatures, necessitating air conditioner use.

If you’re unsure where in Puerto Rico to settle down, trying out several short-term rentals may be the best option. This will require either several long-term Airbnb stays or a high familiarity with the property rental system in Puerto Rico.

Where to Look for Rentals

Generally, the most comprehensive resource in Puerto Rico for finding homes to rent or buy is Clasifidacos Online. Largely in Spanish and with a design imported directly from 1995, Clasificados Online is Puerto Rico’s go-to site for property listings, but be warned: listings may lack information, contain incorrect information, or be severely outdated.

Zillow is a much more usable alternative with more reliable information, but coverage is poor, with countless listings not appearing on the site. For Spanish speakers, Compra o Alquila is another option, but it’s entirely in Spanish.

No matter where you look, you have to be careful. Always check out a property in person before signing a rental contract—failure to do so can leave you in a dire situation. If you take your chances by signing a contract before visiting the property, you may end up with a house or apartment with the following problems:

  • Being in a state of near disrepair
  • Lacking air conditioners or high-quality window screens that keep bugs out
  • Containing insufficient power outlets
  • Having old and energy-inefficient appliances
  • Being located in an unsavory or loud neighborhood
  • Not offering a dedicated parking space
  • Not offering adequate storage space

How to Negotiate a Lease Agreement

Unlike in the mainland US, terms and conditions are generally negotiated verbally in Puerto Rico. Be careful, though, because realtors in Puerto Rico aren’t always trustworthy and may not work agreed-upon terms into the actual contract. Make sure to read the contract carefully—get a Spanish speaker to help you if your Spanish skills aren’t sufficient—and make revisions as necessary.

Puerto Rico’s laws on tenant rights and renting are laxer than on the mainland, so make sure to work in clear terms on the return of your security deposit, legal fees, maintenance issues, and attorney’s fees. Getting your security deposit back upon moving out can prove difficult, with many less trustworthy landlords dragging their feet in the mud. Including a specific provision on the prompt return of the security deposit and stipulating penalties for failure to comply can save you money and stress. Don’t forget to add that the landlord must cover attorney’s fees for any collection action initiated by the tenant.

Puerto Rico’s regulations around the habitability of a rental property are also more relaxed than in the US, with no particular habitability standards laid out in the law. That’s why it’s important to work such provisions into your contract. Make sure the landlord signs off on promising to provide you with reliable electricity, hot and cold running water, working windows and doors, and a pest-free environment. Word the provision such that it allows you to break the contract if the landlord refuses to provide a habitable dwelling as specified in the contract.

Some Puerto Rico landlord are also slow to address maintenance issues, refusing to fix problems until they grow too big to be ignored. Costs for minor repairs—roughly, under $300—are usually pushed onto the tenant, too. If you include language in your contract that gives you the right to break the lease if the landlord refuses to promptly address maintenance issues, you can ensure you’re not stuck in a home with broken appliances or other maintenance issues for a substantial period of time.

Crafting the right Puerto Rico lease agreement can be a tricky and time-consuming endeavor. The team at PRelocate, having already navigated these Puerto Rico real estate challenges themselves, have created a agreement template to save Puerto Rico renters time and effort. The template is highly editable, allowing renters to easily customize the agreement for their specific situation while legally safeguarding their interests.

If you’re looking to rent with the option to buy in the future, be sure to specify this in your contract by including an option to purchase. This is a good idea for Act 60 recipients testing out a home within the two years they have to purchase a property. If you include a purchase option, you’ll have to draw up a specific, separate purchase agreement.

Issues with Landlords

When looking to rent in Puerto Rico, it’s crucial to do your research on prospective landlords to ensure you’re not jumping into a contract with an unsavory character. Get some references for the landlord by contacting previous renters, if possible, or people in the neighborhood. In addition, verify that the landlord is making regular payments on their mortgage. If they aren’t, the bank may repossess the property and override your contract, kicking you out. In a similar vein, reach out to the utility companies to make sure the utilities are up to date—otherwise, you could end up without water or electricity for a few weeks and may have to shell out some money in legal fees to prove you’re not the one supposed to be paying them.

Also verify whether the landlord plans to sell the property during your lease. An obscure rule in Puerto Rico allows a new owner to break any existing contracts with tenants, so if a new owner takes over the property, they may cancel your contract and evict you with little notice or try to increase your rent. The only way you can bypass this obscure rule is to record the lease in Puerto Rico’s official property registration system (CRIM) and pay the associated fee. This may not be necessary for short-term leases like one year, which is the default period of a lease on the island. However, if you’re on a longer-term contract, CRIM registration is probably worth the money.

Executive Summary

Leasing a property in Puerto Rico is not the same as leasing one in the United States, but with the right research, resources, and proper due diligence, an American can dive confidently into the process. It’s important to note that as more and more Americans migrate to the island to take advantage of the Act 60 tax incentives, the real estate supply on Puerto Rico is dwindling, and it can be difficult to find a property to rent. That’s why it’s recommended to work with a real estate broker, who can help prospective renters locate off-market listings or listings that haven’t been made official yet. Hiring a real estate broker can be a good way to find properties all across the island, but it’s especially beneficial for the higher-end areas that double as popular expat destinations. By hiring a real estate broker and following the tips in this article, you can be well on your way to finding a fantastic Puerto Rican rental property.

PRelocate’s Real Estate Brokerage Services

If you’re looking to purchase or lease real estate in Puerto Rico, PRelocate can help. We’re a licensed real estate brokerage firm (license C-21696) with experience and extensive knowledge of the Puerto Rico real estate market. Our team is professional, responsive, friendly, and experienced, and with both native English- and Spanish-speaking staff, we can help you break down any language barriers you might encounter. We can save you time and effort by helping you find the right Puerto Rico property for you quickly and easily. In the meantime, you can view current real estate rental and for sale listings.

Get our help to buy, rent, or sell property in Puerto Rico

 

Disclaimer: Neither PRelocate, LLC, nor any of its affiliates (together “PRelocate”) are law firms, and this is not legal advice. You should use common sense and rely on your own legal counsel for a formal legal opinion on Puerto Rico’s tax incentives, maintaining bona fide residence in Puerto Rico, and any other issues related to taxes or residency in Puerto Rico. PRelocate does not assume any responsibility for the contents of, or the consequences of using, any version of any real estate or other document templates or any spreadsheets found on our website (together, the “Materials”). Before using any Materials, you should consult with legal counsel licensed to practice in the relevant jurisdiction.

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