In September 2022, the NOM Regulation 247 became a regulation to require immediate use by developers of the consumer protection laws in Mexico. The laws had become legal years before 2022, but legislature realized they were not being followed by the developers of preconstruction condominiums and homes. For your safety in buying in Mexico, these laws apply to all states where preconstruction sales of condominiums are taking place.
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 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 lien (mortgage) on the property where the building is being constructed.
- The status of the property regarding taxes and utilities.
- Construction and land use permits.
If the sale is taking place through a real estate broker who has the listing as a new project, they should have available for you and your buyer agent all the information mentioned above, plus the contract in which the developer authorizes them to promote the sale of the development (listing agreement).
If the Developer or the Real Estate Listing Broker refuses 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 to 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).
There are many more specific details that should be verified, such as: concessions in the federal zone, land use, the transformation of ejido into private property, foreigner’s requirement to be beneficiaries in a fideicomiso bank trust for residential property.
Preconstruction has become very popular with foreign buyers because they can make payments over the term of construction to pay the agreed-upon purchase price. Developers can use the buyer’s money for construction and not have to pay interest on the money coming in toward the purchase price. Discounts are offered at the beginning of the project. The three Ampi chapters with their MLS FBS database, report the transaction as a sale to know the purchase price in the signed contract of the builder and buyer.
Knowing the agreed-upon price for a presale has been as important as it is with the ´sold prices´ of resale units. This information advises buyers and sellers of prices agreed upon between the two parties when they enter into an agreement. This data must be timely to be a realistic price for the day, month, year the agreement is made.
The sales contract of the developer for the buyer is not bilateral but uni-lateral in favor of the seller developer. For this reason, these consumer laws mentioned above are very important to the buyer, who can be harmed by losing his money if the project is not finished in the condition that the developer has represented it to be.
Traditionally, the time for the buyer to take occupancy and make the last payment owed for the full purchase price, is upon notice in the contract of how this will take place when the builder has met the municipality regulations to recognize the property has been issued an occupancy permit. The closing with a notary is when the condo regime is registered, and the property is issued a catastral identity number for each unit. The closing between the parties is usually several months after the buyer takes occupancy. The buyer has occupancy, seller still has title to the property.
This article is based upon legal opinions, current practices, and my personal experiences. Please seek legal advice when entering into a purchase contract.