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Buying Presale Property in Mexico

We have found a relevant and recurring factor in cases where the developer promised to build and sell a condo to the buyer but failed to fulfill their obligations: The company was incorporated in state "X" of Mexico, the condo was promised to be built in state "Y," and finally, the address for receiving notifications from the developer is false, nonexistent, or, at best, located in another state "Z."

What does this mean?

It means that if the condo or property is not built, the buyer will be dealing with different applicable laws (not only what the contract states), making it much more difficult to claim a refund of the advance payments made toward the purchase price.

In this regard, it is advisable for potential buyers to have their contract reviewed by a Mexican lawyer before signing it and before disbursing substantial amounts of money.

Some suggestions for the presale contract could be:

  1. Trying to have the law of the state where the property is located as the applicable law;

  2. Requesting the developer to deliver a conditional promissory note;

  3. Establishing a penalty clause in case of non-compliance.

Another (non-legal) suggestion is to check the developer's reputation and request that their contract be registered with PROFECO.

The excitement of buying in presale may sound appealing because the price is significantly lower than the market price or the final price once constructed. However, it is extremely important to emphasize that the potential buyer is blindly trusting that the developer will build the condom and property as promised. Keep in mind that the warranties and protections that exist in presale transactions in Canada do not operate in the same way in Mexico or even exist.

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