For close to ten years or more, a major part of our inventory to sell has been preconstruction. This construction has been in Jalisco, mainly in the city of Puerto Vallarta.
In Nayarit there are preconstruction condo projects stretching from Nuevo Vallarta (now recognized as Nayarit) going up the coast north through Bucerias and La Cruz and continuing.
The interesting points about this unusually large number of units being built is the collaboration for the most part has been that the buyer’s funds are used to finance the project rather than bank financing.
So, if the project gets into trouble, it will be because the developers, who are, for the most part, out of Guadalajara, will not be using the funds wisely for the construction or cost of construction jumps.
The projects that have been stopped by the municipality have caused problems for the buyers, sellers, and the community.
City leaders have been lacking in taking a strong position in preserving the city and not destroying it because of greed.
There is no question that the culture of the Americans and Canadians who have been taught to use mortgages to leverage their investments have benefited by having the seller as their lender.
Fewer projects would have been done if the desire for being here by the foreigners had not been so strong. The demand for these 10 years has been higher than our normal resale supply.
¨The fly in the ointment is¨ too many of the developers, city planning, and real estate agents have been greedy and have not done their jobs.
They have ignored the new regulations since 2022 that reconfirms consumer protection laws on the books since the 1990s in Mexico.
They are ignoring the building requirements they are to show you as a potential buyer. And the advertisements that misuse the AMPI name and fail to tell you about your proper rights to information are inexcusable.
The truth is, we in our three chapters of the Bay: Vallarta, Compostela, and Nayarit, have received the forms that every agent showing preconstruction should use.
The Associates or broker should have taught their agents to use this form when meeting the listing agent of a preconstruction project.
Unfortunately, not enough agents or associates in this Bay use the forms.
So, you, as a consumer, need to ask for them.
You, as a buyer, have the right to see them.
You can, and you should, have a bilingual attorney advise you about the documents and not depend on an agent to tell you what they mean. Very few can tell you what they mean.
There is no licensing of agents here, and most are no more informed than you are about this subject.
Like the US and Canada, truth in advertising has not prevailed, and just today, new laws go into effect in the USA October 24, 2024, about abuse with products. The new law gives buyers the right to cancel as fast as the sellers took to indebt consumers with products they may not need.
The worldwide web is full of lies and distortions.
More people are vetting by insisting upon sources for the information advertised and the claims by sellers of all products, including real estate.
The builders use their own purchase offers even though the government has a Profeco offer prepared for use.
Our agents are required to use the Profeco-approved listings for the preconstruction and rescission time to end the agreement. The rescission time is not in the purchase agreement of the buyer. Nor is the purchase agreement the developers use bilateral.
I have sold preconstruction projects during the time we have had this product. We have been given by the Mexican government the consumer laws from the NOM 247 regulations. And, our chapter’s MLS requirements for preconstruction have been required for any of these projects to be in Flex.
Buyers we are working for also have a bilingual attorney review the requirements below and advise their clients of what they have found as a risk to consider seriously. This diligence is before the seller purchase contract is signed by the buyer and before the down payment is wired directly to the seller.
Typically, the sellers will not escrow the money as they are using it to build.
The information you need to have when you are considering a preconstruction project are:
- Seller Proof of Construction License
- Description of materials and finishes
- Deed of the land and how it is being paid off if not already owned by the developer
- Construction Schedule
- Payment Plan
- Copy of their Purchase Contract, which is not bilateral
- Reference to your closing in the future when you receive the official trust and CFDI guarantee of what you paid for the property
This document would come at closing, which is after construction and usually after occupancy of the buyer in the property.
This article is based upon legal opinions, current practices, and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review.
