Puerto Vallarta Real Estate Magazine: Condo Developer Due Diligence. Is the developer providing you with the right information previous to the sale?
The real estate business can be a very tricky business. Very often you hear horror stories about people who lose thousands of dollars or even their lifetime savings because they made a wrong decision, or at least an uninformed one. This seems to happen anywhere in the world, but here in Mexico foreign buyers are more prone to fall in to the category of “deceived investors”. Having the right information before purchasing your property here in Puerto Vallarta is crucial, especially if you are buying from the developer. Few developers are transparent and willing to provide the right information to their customers. On the other hand, there are developers that are very difficult to deal with and refuse to provide the buyers with the proper information, even if they are required by law to do so.
So what information am I entitled to receive from the developer before signing a contract?
The Mexican Consumer Protection Law states in articles 73 and 73 BIS that the developer must have available for any possible buyer, the following information:
- The construction project of the building which should include architectural, structural and installation plans, as well as a scale model.
Proof of ownership (copy of the public deed that proves the developer owns the property where the building will be constructed).
If there is an existing lean (mortgage) on the property where the building is being constructed.
The status of the property regarding taxes and utilities.
Construction and land use permits.
And what about realtors working for the developer?
If the sale is taking place through a real estate broker or a real estate agent, they should have available for you all the information mentioned above plus the contract in which they are authorized by the developer to promote the sale of the development.
If the Developer or the Real Estate Broker refuse to provide you with the information required by law, they can be subject to a monetary sanction of up to MXN$3’066,155.98 pesos (article 128 of the Mexican Consumer Protection Law). In more serious cases, the sanction can be up MXN$4’584,196.01 pesos and the temporary or even permanent closing of the business that committed the infraction (article 128 BIS of the Mexican Consumer Protection Law).
You must also be aware that depending on the type of property you are acquiring, there are many more specific details that should be verified such as: environmental permits, concessions in federal zone, land use, transformation of ejido into private property, and the list goes on.
As you can see, executing a proper real estate purchase contract in Mexico requires for all these conditions to be fulfilled, otherwise you might face conflicts that will cost you a lot of money or even the loss of all your investment.
This article contributed by Roberto Ortiz De Montellano, Puerto Vallarta Real Estate Attorney. Visit his website here.