In my opinion, it is most important that you interview and select an agent who will represent you, because they have experience here representing buyers and not the seller. This agent should also have the degree of ethics and professional behavior, to put you first in this transaction. This is, of course, what you want from an agent, whether you are looking at resales or new.
But there is more risk for you buying property which does not legally exist when you have an accepted offer. The contracts of the developers will not have the elements in them which we use in resale contracts.
How do you Vet the Property Developer?
You and your agent should vet the developers of the properties you like. What does this mean? What is the developer’s history with building here in the market where you are going to own?
Can you find any owners who are willing to talk to you who have bought in one of this developers’ completed projects?
The agent should learn from the listing agent about the requirements met in order to have the property in the FBS MLS? It is not in FBS MLS? Why is it not? The projects in this system should have provided a large amount of information to reduce the risk with the projects. For example, this means the developer has a permit from the city, furnished proof or ownership and control of the land, shows construction schedule, where funds are coming from to build the project, etc.
What about Deposits and Payment Plans?
The money you pay will go straight to the developer and not be in an escrow account. In almost all cases, the developer is using your money to build the project, not his own. If he is borrowing money, your purchase should note that the developer will pay the loan off to the amount needed to release your condo to be transferred with you, with no mortgage lien against it.
Important to Hire Your Own Attorney
You need an attorney, hired by you, who is able to review the builder contract and give you time to have an opinion of risk. There is pressure to make an offer using the builder contract, giving you little time to make a large payment. Before you do this, the developer agent should work with your agent to get documents, plus the purchase contract, requested by your attorney and give a reasonable time for review and negotiation.
Your right attorney can work with the developer or his attorney, to add protections for you as a buyer. Law here is codified, so adding some important codes for your protection can be important to you later.
Developers are required to have a one-year warranty for PV Projects, after they deliver the properties. And they need to run the HOA condo association until they can finish the project and get the required condo regime and bylaws recorded. The city issues catastral numbers to enable the city to register your property as private.
Taking Delivery of your New Condo
You will have to take delivery of the property when the developer notifies you, per the promissory contract. You need to pay all if not most of the purchase price, and you can take possession of your condo. You are under a formal agreement, but you are not the owner, until the escrituras are ready and the notary is ready to give you a date to close in his office.
You can be very excited about having a new condo which you can furnish and, perhaps even make changes while the unit is in construction. You remembered to look at the builder standards and equipment he promised to put into the unit, because the sales material described it. Did your builder give you a set of standards he will follow, a part of our entire written agreement? Granted that all builders reserve the right to substitute material or equipment if the promised is not available, or has become too expensive But, your opinion of what he can substitute, is many times different from what the developer thought was adequate for your unit. This is when understanding more about the developer and his reputation becomes important. You may not have any recourse with changes the developer makes while building the project.
Setting up the Condo Regime and HOA Fees
When you are an owner, you and your fellow owners will take over the running of the property through the civil association formed to activate your condo regime. You as owners will decide what the HOA fees need to be, after experiencing living in the property.
Choosing the Right Real Estate Agent
You can be happy with your purchase if you are very lucky or if you were careful and thorough in your choices, from the time you chose your agent.
For more guidance on vetting a real estate agent here in Puerto Vallarta, visit How to Choose an Agent.
This article is based upon Flex MLS reporting, 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. If you have any other questions, contact me through my website.Harriet Murray