Articles

BY MARIANA LOPEZ-BUSTAMENTE

Baja California is certainly enjoying a major historical real estate boom. Nonetheless, the real estate industry has also been one of the sectors with the most complaints before the Federal Bureau of Consumer Protection (“PROFECO”).

For this reason, if you are considering buying a property for residential purposes, it is very important that you take into consideration several caveats before putting your signature on the final contract.

Generally, real estate developers have standardized purchase contracts, meaning that these contracts have been prepared by them and are normally not negotiable, except sometimes as to price and form of payment. These contracts are called Adhesion Contracts by the Federal Consumer Protection Law (the “Law”).

Protect your investments.

According to the Law, developers, brokers and any other person intervening in the marketing and sale of real estate is obligated to record their adhesion contracts before PROFECO, to prevent them from containing abusive or unfair clauses that put consumers in a disadvantageous situation.

To that end, it is important for you to know the following 10 points that you should take into consideration before signing a purchase contract.

Before signing the contract…

1. Contract registration. Find out whether the contract model you are asked to sign has been previously authorized by PROFECO. If the contract has been authorized, it should have a registry number and authorization date. You can research Adhesion Contracts at the website: https://burocomercial.profeco.gob. mx/ by entering the contract’s registry number or the seller’s name.
2. Seller Investigation. It is also highly recommended to investigate whether there are prior complaints lodged before PROFECO against your potential Seller.
3. Liens. The Seller must provide all appropriate documentation showing clean title to the property, and disclose any liens affecting the same, as well as a full and precise description of the property’s characteristics, area, structure type, facilities, amenities, accessories, parking spots, additional services, among others.
4. Delivery date. Make sure that the contract specifies the property’s delivery date.
5. Conventional Penalties. Verify that any established penalties are fair and reciprocal for both parties. There are often cases where conventional penalties apply only to the buyer.
6. Warranty period. According to the Law, the Seller must provide a warranty for a period of not less than 5 years regarding structural parts, 3 years for waterproofing and 1 year for all the other items of the property. All terms start running upon delivery of the property.
7. Jurisdiction. The “jurisdiction” clause is the “forum and choice of law” stipulation. It is crucial because it indicates the place where any eventual complaints should be filed and the law that will apply to their resolution. Naturally, the forum and the applicable law should preferably be that of the place where the property is located and not of the place of the Seller’s location, because this would put you in a very disadvantageous position.
8. Lopsided provisions. Given that these contracts are prepared by the sellers, it is strongly advised that you pay close attention to all clauses imposing obligations and duties to the buyer. We have seen contracts where the buyer is obligated to purchase blinds and other items such as finishing decorations unilaterally selected by the seller and from suppliers that are also unilaterally selected by the seller.
9. Termination of the Contract. The contract must indicate the termination procedure and the corresponding implications to each party, and given the cause, you must review the terms and conditions regarding refunds.
10. Down payment. The seller has no right to request any payment until the agreement has been formalized by a written contract, except for any investigation expenses. Taking the previous recommendations into consideration will  diminish the risks of exposure in your real estate investment; however, we highly recommend that you always seek professional legal advice to review and determine the contract’s full terms and conditions and duties to the buyer. We have seen contracts where the buyer is obligated to purchase blinds and other items such as finishing decorations unilaterally selected by the seller and from suppliers that are also unilaterally selected by the seller.

Mariana Lopez-Bustamante is part of the legal team at SANCHEZ Y ASOCIADOS, a Tijuana based law firm that specializes in real estate transactions for foreigners. You can reach them at their office in Blvd. Agua Caliente 10611-507 in Tijuana, call them at +52 (646) 686-4137 or email at mlopezb@scaabogados.com.

Now She’s More Popular Than Ever Before!

Long known for her potential, Ensenada was nicknamed “Cinderella of the Pacific,” and that moniker was appropo for decades; recently, however, the City has begun a metamorphosis from a diamond in the rough to a highly polished gem.

The progress began with almost no fanfare back in February, when Mayor Novelo’s massive street repair program began to dramatically change the complexion of Zona Centro and other key regions of the City. Once pothole-infested roadways became smooth, safe and well-marked, making it easier and more pleasant for residents and visitors alike to travel to their destinations of choice.

Since that time, investors both foreign and domestic have been pouring resources into the City in the form of new condos, hotels, residential renovations and retail establishments. Back in february we brought an article to you that heralded one of the first of such major investments with the announcement of the Viento complex, which combined 167 condos and guest accommodations (in a City Express Hotel) with on-site recreational facilities, as well as retail support markets and a food court, that essentially made the triple towers a totally self-contained living environment.

That opened the floodgates, and as of this writing, it is difficult to keep up with the almost frenetic pace of new construction, expansion of existing structures, renovations, upgrades and the opening of a myriad of enthusiastic and optimistic businesses, large and small.  The construction of a Holiday Inn in Zona Centro is nearing the completion of its external shell; a new Kia dealership is rising up near CEARTE and a City Express Hotel is being built next to the Dodge dealershp, across from the Marine base on Blvd Costero..

One of the most explosive growth areas currently is the Playa Hermosa sector. Many new restaurants and cafes have popped up along Blvd Costero (aka Blvd Lazaro Cardenas), the beautiful coast highway that brings motorists from up north into the City, and carries them alongside the beach and the malecon, Ensenada’s most popular recreational area.

The Playa itself has been given a makeover by the federal government, with the installation of palapas, observation posts, winding boardwalks from the wide sidewalk that’s skateboard, roller skate and bicycle-friendly, down to the broad, sandy beach, and, recently, an “Ensenada” banner, which tourists and locals alike are proudly using as a backdrop for postcard-worthy photos.

The hottest story on the Playa right now is the ongoing construction of a shopping plaza, which is being built entirely from modified cargo containers! Yes, those unsightly metal boxes that have been piling up at the ports of Ensenada and El Sauzal are being finally being put to constructive use, customized and arranged into what is going to be a modern, open, unique shopping plaza that will feature eateries and various retail outlets, with an incomparable view of the bay, from the port of Ensenada to the towering hills of La Bufadora!

The beachfront property was leased from API (the revenue service of the waterways) by a conglomerate of private investors That group enlisted the services of Maganas (“herreria y estructuras”) as lead contractor on the project.

Maganas has already begun arranging the containers on the property, and is cutting openings in strategic parts of the boxes to allow for windows, doors and canopies; they’re also pouring slabs to create patios outside the units. Cranes are lifting boxes up to create 2-story units, with stairways leading up to observation areas and additional retail spaces.

Jorge Hernandez, on-site manager for Maganas’ construction project, said that the project is in its infancy; more containers are scheduled to be brought to the site, and that the area allotted for the plaza has room for a potential plethora of outlets.

That area of Playa Hermosa is adjacent to the spacious paved enclosure which has been the site for car shows and numerous other recreational events.

It’s a frequent host to tourists, bused in from the cruise ships to enjoy the view from an on-site observation deck, where they are served Puerto Vallarta-style by the nearby restaurants and coffee shops; waiters from those establishments can be seen running from their cafes and cocinas, across the Boulevard to the waiting tourists, bringing them everything from fresh coffee to hot tamales.

It won’t be long before those same tourists will be able to walk from their observation post to a unique new shopping plaza, where they can wine, dine and go shopping at a myriad of creative new outlets.

Cinderella has kicked off her glass slippers, and is dancing to the tune of a long-awaited renaissance.