In Mazatlán, we continue to experience the well-known “real estate boom,” which has been ongoing for several years and shows no signs of slowing down. And while the growth of a city is generally positive—since urban development drives the economy—it is also true that problems arise that should never occur, such as real estate fraud.
In my experience, some developers fail to honor their commitments to clients who, in good faith, have paid them money. Sometimes they never deliver the property, other times they deliver possession but fail to execute the deed, and in some cases, they comply with neither obligation.
Although there is no method that can guarantee with absolute certainty that your property will be delivered on time and properly deeded, there are measures that can reduce the risk and increase the likelihood that your investment will materialize.
Verify who is selling the property
Before making any down payment, investigate the reputation of the company and, most importantly, of its partners. Mazatlán is a small city—surely someone knows them and can provide useful references.
Review their track record
Find out how many developments they have completed in Mazatlán and whether they met their clients’ expectations. Some companies may have many projects, but of poor quality, which causes frustration among buyers. Others may have no prior experience; in such cases, you must carefully weigh the risk of investing with someone who has no track record.
Review the financing structure of the development
It is essential to understand what resources will be used to build what you are being sold. Ask yourself:
- Did the developer obtain a mortgage loan?
- Will the project be built with investors’ money without taking out loans?
- Will a third party inject capital into the project?
- Will a trust be established?
The reason is clear: in many cases, the money runs out and projects are left unfinished, half-built, or—in the worst-case scenario—never even begin.
Seek legal advice before making any payment
All of this research will help you minimize risks, but it will never be an absolute guarantee. That is why, before making any down payment, you should seek the advice of a trusted attorney. Only a specialist can provide you with a solid and objective opinion on the viability of the investment you plan to make.
Daniel Eduardo Tenorio Arce
Partner at Bufete Alvarez y Asociados
