Justitia or Lady Justice is an international symbol of law and justice. She is always portrayed holding a balance which represents equity for all the parties of a transaction or dispute. Equity for all parties is precept that applies not only in the legal field, but also in the business field with the famous “win-win situation”. All contracts should also be fair and balanced. However, there are some contracts that can be one-sided and this may represent a risk to one of the parties. Developers in Mexico are prone to have one-sided contracts in their favor, even though by law there are required to include certain clauses in those contracts for the protection of the buyer.
So what clauses is the developer required to include in the sales contract?
The Mexican Consumer Protection Law states in article 73 and 73 Ter, that the developer must register the template of the sales contract before the Consumer Protection Agency, and in order to be registered the contract must include the detailed rights and obligations of both parties, equal penalties for both parties in case of default, a specific date when the construction will be finished, a specific date for delivery of the unit, a specific date for the transfer of the title, and the technical characteristics of the construction and the finishings.
And can there be an extension in case the construction is delayed?
According to the Federal Consumer Protection law, the developer can only unliterally extend the delivery date if he provides proof to the Consumer Agency that this delay was caused by Acts of God (such as a hurricane or earthquake) or Force Majeure (such as a strike or a riot). Other than that, the developer will be in default and in order to have an extension you will need to sign an amendment to the sales contract.
Having a balanced contract requires both negotiation and knowledge of the law. It is usually when one of the parties is kept in the dark that a contract is one-sided towards the other party. If you are buying property in a foreign country you should know your rights, foresee any risks and have proper legal representation, this way you will have a fair contract and you will protect your investment.