You have found the dream property, and you want to make an offer. Everyone involved is very friendly and seems very nice. You trust your new friends, and assume you have protections in place to prevent you from having problems with the purchase.
Due Diligence is Necessary!
Your responsibility is to require it before becoming committed to sending money or being bound by a contract. You need a professional agent and competent attorney to help you conduct due diligence, whether you are buying resale or new construction.
What does due diligence include?
- Contract of sale: What rights as a buyer do you have? What penalties are there for either side? Where do you send your money? What is included in your purchase?
- The seller escritura (deed) shows the property is legally registered in the public records. New construction will show the land escritura (deed), because the building is not built yet.
- There must be identification of the seller and evidence in the escritura that he has the legal right to sell.
- If you are buying a condo, the condo regime is your joint ownership with its rights and responsibilities. What are the bylaws and rules of the existing regime? If new construction, what does the proposed condo regime (new construction) say regarding homeowner fees, pets or not, restrictions on owners, parking, etc.?
- If the property is under construction, who receives your payments for the purchase? Will the money be used for the construction? Does the developer have the ability to finish the property or is he depending on presales? Issuing bonds or insurance is not common, so what are your risks, and are you comfortable with them?
- In resales, normally purchase funds are put into a third-party escrow company registered in Mexico to do business.
- In new construction, funds usually go directly to the developer.
Due Diligence for New Construction and Re-Sales
Time for a due diligence varies. Re-sales allow more time for investigation of the legal documents of the property and inspection. There is more legal documentation in an existing property.
With new construction, the list of what needs to be created, such as individual condo registration in the tax registry, condo regime registration, is done closer to the physical completion of the property.
Construction can take 12-18 months or longer. Buyers many times have possession before they close and receive their trust inside the escritura.
Here in the market of the Bay of Banderas, we are experiencing a large number of condos for sale. Buyers become excited with the idea of something new, for updated kitchen and baths, enormous pools and gyms, hot tubs, or entertainment areas.
AMPI agents have an ethical responsibility to allow you to use any professional (attorney, engineer, accountant, architect, etc.) you wish to use to evaluate your proposed purchase.
Any agent real estate attorney, attorney or other person advising you is under the civil code to be honest and competent themselves.
We want you to be happy with your choice of a home, condo or land here in Mexico. Insist on your right for due diligence.
What is AMPI?
AMPI stands for Asociación Mexicana de Profesionales Inmobiliarios, A.C. AMPI has international agreements with NAR, CREA, FIABCI and ICREA, which cover the globe in cooperative agreements. Currently in Nayarit and Jalisco, there is no licensing requirement for real estate agents to practice.
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