By Enrique Saldana 

Laissez-faire: Refusal to interfere in other people’s affairs, or the practice of letting people do as they wish, or the principle of the non-regulation of the real estate industry. It is a well known fact that Mexico practices the Laissez-faire principle in their real estate industry, and although this principle may very well successfully apply for the economy in general, it is not very healthy in terms of non-regulation of the real estate industry as a profession in Mexico.

In the United States of America, as well as in Canada and other parts of the world, laws have been implemented and continue to be modified to regulate the real estate industry and protect the buyer/purchaser in their real estate transactions. There are different types of disclosures required by the Federal Government as well as more specific disclosures required by each and every state of the Union to inform and protect the buyer’s interest.

The non-regulation of the real estate industry in Mexico gives way to a lot of abuse on the part of some unscrupulous realtors and developers whom do not have the best interests of their clients in mind. And, let’s clarify and put emphasis on the word SOME in this sentence, for that is not necessarily the rule.

While there are Realtors Associations such as AMPI (Asociacion Mexicana de Profesionales Inmobiliarios) which have built associative relationships with NAR (the National Association of Realtors) in the USA, and CREA (the Canadian Real Estate Association), the non-regulation of the real estate industry in Mexico is still a major concern for a lot of individual investors wishing to purchase property in Mexico.

Regulation of the real estate industry should not only cover real estate sales people, but developers and private and individual sellers of real estate property. It should have a holistic approach to the real estate industry in Mexico in general.

We have heard many “horror” stories of people losing their deposits, which is not “chump change”, especially when we consider purchasing prices in the $300,000-$600,000 usd price ranges of which the minimum deposit is 30% of the total sales price, as a general rule. Not to mention the fact that some developers are asking their clients to pay off the property in full and not issuing title (ownership) once the property is fully paid for.

Unfortunately, the American and Canadian purchaser of property in Mexico whom most commonly understands the concept of the “caveat emptor” doctrine, “Let the buyer beware,” in those countries, does not apply in Mexico.

The “Caveat Emptor” doctrine specifies that the buyer cannot recover from the seller from defects on the property that rendered the property unfit for ordinary purposes. The only exception is if the seller actively concealed latent defects, or if it has been specifically determined and guaranteed in a contract warranty. It is the purchaser’s responsibility to educate himself/herself in the area of real estate purchase, to obtain legal council, or ask the assistance of a professional real estate agent that would answer all their questions and guide them through the purchasing process.

More of a reason why the real estate industry needs to be a Laissez-faire Affair No More in Mexico and must be regulated, as well as the mortgage industry, of course.

What can you do?

Well, you can begin by contacting your local realtors association office in you home town and ask them to refer a good real estate company, you could contact AMPI in Mexico, or you could contact your mortgage broker and ask them to refer a capable real estate professional in town. Not all good realtors work with the major franchises in town, so you could find someone that works as an independent realtor that is honest and a dedicated professional. You just need to be able to find that person. How do you do that? You ask other professionals to refer you to that person, and then you ask the appropriate questions.

I had a recent case whereby a “major developer” in town, due to an internal power struggle and mismanagement of funds, was putting in jeopardy the investment of its property investors (90% of these were foreign investors) and, though a good percent of the condo units were already paid in full, they did not have a condo regime, nor were they interested in getting one until they would have resolved their internal struggle. This prompted some of those condo unit “owners” to organize and demand the transfer of title through the set up of the condo regime by the developer or face a group law suit. Well the developer had no choice but to comply and obtain the condo regime approval. This is common practice in our area, not so much in other resort areas, but Playa del Carmen and the Riviera Maya areas.

What baffles my mind is the fact that foreigners come to town and accept to pay off their condo purchase in cash without the certainty as to whether or not they are going to obtain title to the property. Something I am sure they do not do back in their home country. I never heard, nor did I ever experience, of any of my clients back in the USA paying off their property purchase and sitting down to enjoy the property not getting themselves concerned with obtaining a transfer of title on the property. So why do they accept that in Mexico, it is beyond my understanding.

The rule of the game is: “No Condo Regime, whenever a condo regime is required for title purposes, No Title Ownership to the Property”, as simple as that. I

s it perhaps that the real estate professional in Mexico, in his/her efforts to sell more property, is not properly doing the job of informing the purchaser and advising him/her as to real estate law in Mexico? Or, is it that realtors, as well as developers, are so ill trained that they do not understand the legal ramifications such irresponsible acts may cause? Or perhaps, what we really need is a major law suit case, such as the one that was developing in the case I just mentioned above, as a break in case to make people understand the seriousness of the issue?

Whichever the case may be, the bottom line and answer to all these questions is a regulated real estate industry that can protect the best interest of the purchase (consumer).

What is needed is: A Laissez-faire Affair No More in our real estate industry in Mexico.

However I feel that, with the new changes in legislation, more professionalism being instituted into the real estate industry in Mexico, and the continuous growth in our area, that these changes are bound to happen.

This article is provided by Enrique (Henry) Saldana – Mexico Mortgage Solutions (in Mexico)/Advanced Mortgage Corp. (in the USA)  Cel: (984) 116-8528; Cell: (998) 147-8936
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www.mxmortgagesolutions.com

Enrique (Henry) Saldana is an independent Mortgage Broker, you may contact him with any questions you might have with regards to Mortgages in Mexico.

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