The laws for consumer protection are the reason for the new NOM regulation telling the developers of new construction to register their purchase offers for approval from COFECO, the consumer protection agency for Mexico.
Projects still in selling mode before September 19, 2022, are using their same contract as when they began selling, in some cases more than 12 months ago.
We are told the new projects will require the approval and filling of each developer ́s purchase contract. One of the main issues has been developers fining or charging penalties to buyers who miss their payment schedule.
There may not be right for buyers to receive fees for the developer being late with his construction or abusive in giving himself many months more than the normal building schedule. And now we are seeing the refund due the buyer under terms in the purchase contract may say no refund until the developer finds another buyer, and / or finishes the project.
Already all agents and even coyotes who are allowed to sell real estate here, are required, since September 19, 2022, to register our listings agreements. In some cases. we are the listing agents of the projects, and we as agents are selling the pre-construction for buyers. So, we are part of the selling process.
What Compostela, Nayarit and Vallarta AMPI chapters do is require information from these developers before they are vetted as best we can, and be promoted on our FBS MLS System.
Other websites which call themselves MLS or marketing sites, do NOT vet the developers / sellers. Point 2 Agent does not even require proof the agent putting in a property, is the listing agent.
Unfortunately, we are finding out that some AMPI agents do not realize that we are the only platform offering properties which vet the sellers, both resale, and preconstruction. Need to know feasibility of services, ownership of the land, who are the owners and. their formation of a company or as individual as a seller. We cannot catch all issues, but we aggressively work to be able to give the buyer the most information we can provide on their seller. We cannot eliminate all risk. But what we are working hard to do, gives more comfort to the buyer as we respect the consumer laws in Mexico for the public. This is part of our job.
As time passes and more contracts should be registered with the Consumer Agency, we may see some developers ignoring the law, and continuing to build without registered contracts.
We as agent, what if we use the developer contract which is not under the laws that are required as of the NOM regulation, then we are a party to the illegal transaction of a sale, and we as well as the developers can receive huge fines from PROFECO. And the buyer is at greater risk than the vetting we would be able to do. A key to vetting developers now is that they have the purchase offer written using the Consumer protection laws in Mexico.
If we cannot vet a seller who will not provide required information about their project and what is required by law in their offer, we should not proceed with that developer or that seller.
A buyer needs to pay for due diligence on any purchase of a home, lot or condo (new or resale). Mexico is not different from South American or Europe. The property needs to be evaluated by a proper attorney. The agent is not able to do this for the buyer, and paying a notary here is not viable. The notary is an attorney representing the government. An attorney working in real estate company and paid by them, is not an advocate for the buyer.
The uneducated agent or buyer will not realize they are selling a high-risk property whose seller does not conform to the law.
If we cannot put the property in the FBS MLS, it is a sign for the agent, coyote, or buyer to find another property with less risk.
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.
