Trial and Tribulations of Buying Pre-Construction Condos

No sooner had I returned to Victoria, B.C., in late September 2011 than Eddy the Realtor phoned me with the happy news that Sergio, our developer, had decided not to tile our terrace. This was because he said we bought our condo for a fraction (55 per cent) of what he thought it was worth. In his mind he had been taken.

I felt my not yet rested veins begin to throb again. I massaged my temples vigorously. What was going on? How could somebody be this arbitrary? We had a deal on paper. I was now staring at a vision of an unfinished 2,000-square-foot terrace with just a concrete base, including a patched hole where water had leaked, after I had been repeatedly told that of course it would be tiled.

Let me go off on a tangent without giving too much away. As I have been writing this column in 2014-15, I have received more than a few e-mails asking: “Knowing what you know now, would you do it all over again?”

Yes!

However, I would say that if you get involved with an unfinished building, you are leaving yourself open for some real surprises, especially if the developer is a “one-man show” like our Sergio. Capriciousness can play a large part in trying to get a place in the sun.

So by this time most of my friends in Victoria had started to avoid me because I was becoming annoying on the subjects of Mexico and the trials of trying to move into our condo. There was no sympathy whatsoever from anyone, especially from my ex-pal from the bank, Jimmy, who now smiled distantly whenever I came across him.

Actually by this time I was up to my eyes in alligators as far as my business was concerned, so for awhile I had to forget the rogue’s gallery of characters in Puerto Vallarta who haunted my every dream. To make things worse, I kept hearing that people I knew had none of my problems, because they had bought existing condos in well-run buildings managed by reputable companies in Mexico, and just shook their heads at my “issues.”

Michelle and I planned to return to PV on Dec. 1, 2011, to get everything ready for James and Olivia, two of our children, who would arrive on the 17th, so we could spend our first Christmas together in the new condo. The only thing that bothered me slightly was that Eddy the Realtor had become much more distant in our e-mails, but I put it down to having to work in his office amongst all our furniture and appliances. It couldn’t have been easy.

We had agreed to pay the developer five payments consisting of 10 per cent, 20 per cent, 30 per cent, 30 per cent and after inspection, a final 10 per cent. We had so far paid the first three instalments, with 40 per cent still to go.

I kept asking Eddy “How is it going?” and receiving mostly off-hand replies, which was getting on my nerves, because everyone else was asking me questions like “How is the elevator?” or “Is there electricity yet?”

We arrived in PV in a state of excitement, went straight to the hotel, changed and then struggled up the hill to our Valhalla, only to be met by a dug-up road in front of our condo building. We stood gapping at a huge hole, with workers trying to lift a large pipe into place.

“Probably nothing to do with our place,” I said hopefully to my alarmed wife. Then I saw Sergio jumping into his bullet-proof SUV. After a quick wave to us, he drove away. I turned to our contractor, Juan, who was standing nearby, and the story came out.

Unlike our country, in Mexico the land is not always prepared before work begins on a building, particularly in Centro, where we were. Work, I was told, usually goes on in tandem between the building and the infrastructure, but it seems that some had fallen behind.

“Fallen behind?” I said through clenched teeth.

“Yes,” said the helpful Juan, “the pipes and electricity, for example.”

“Electricity” I squealed, “We don’t have any power yet?”

“Sorry, señor.”

I sat down on the broken sidewalk. How was this possible? What had everyone been doing while we were away?

Just then Eddy the Realtor appeared, handed me a beer and sat down stoically.

“There is still time, Chris,” he said. “I have seen things like this clear themselves up in a matter of hours, but you never know. It’s Mexico, after all.”

I have heard that phrase before and now, too often. I began to vent hard and bitterly. I told him I didn’t care if it was Syria, that my family would be arriving soon. What was he going to do about it all? Where was our money going?

He stood up and repeated that he had seen this all before and he was having our furniture  brought over in a couple of days as he needed his office back. He had a point there, I had to admit. He had been very accommodating in that area. But I was getting the definite feeling that our Christmas would not be as advertised. Not with pipes all over the road and no sign of power or an elevator.

Another strange thing: I noticed that Juan our contractor and Eddy the Realtor were not speaking. Trouble loomed, I feared.

Next column Feb. 25: Oh no!

Copyright Christopher Dalton 2015

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4 Responses
  1. Justin Loman

    As I follow the story I don’t see there is a need to name names and try to bring companies and people down through a news column. In the end it would seem that the problems have come from poor buyer choices and not really someone trying to rip them off. If you follow the story it seems like the realtor’s qualification was that he was Canadian so that made Chris feel comfortable as a Canadian. His choice for a realtor that seems to be a little wet behind the ears was probably his downfall. All construction projects have issues, and that certainly is the truth in Mexico, but a trained real estate agent and good legal representation should have shielded the buyer from most of this. He said he would do it again, so I guess it turned out ok and he would do things differently, it’s those lessons that can be learned here for other people too. A good agent with experience in Mexico real estate and some sort of legal representation is the best investment, that certainly is true when you are buying something that isn’t even built and you are agreeing to a visual of the final project. Attorney, attorney, attorney. Remember real estate agents in Mexico do not require licenses. Choose someone with a long history, bad agents tend to fade out within a year or two.

  2. I am to the point that I tell my buyers if you can’t touch it, taste it, smell it, and live in it…it’s best to let someone else take the risk. This world is crazy and even a “good” developer can go bad with one badly timed decision, bill, or news story. On top of that, developers can have ejidos, governments, “bad guys” in suits, politicians and more to contend with (I have stories to share). I have even had a developer try to have me arrested and thrown out of Mexico because I dared to have an opinion on pre-construction (it’s not a good one, anymore).

    All that said, there are people that must have their pre-construction. There can be great opportunities to save and make money. We do all we can to protect buyers by modifying all developer sales agreements. It’s a strange thing but all of the paperwork is usually in the developer’s favor before we modify it.

    We also have the buyers sign waivers saying we told the buyer not to do it but they want to do it anyways. I would rather lose a sale and keep a friend instead of getting the sale and have them hate me if the development goes bad.

    The good news is we have had luck enforcing these developer agreements with Profeco. They have gotten all monies back to the buyers. Get the paper right, or better yet, keep walking. I wish I could tell you we have always been this careful but the last crash caused many of us to learn some hard (and expensive) lessons. Don’t believe anyone that says not to worry about it…ever!

    The Alberta New Home Warranty Program is an excellent model we should all consider. If we could develop (pun intended) something like this, our market would explode. I’ll see flying pigs first…but a Realtor can dream.

  3. Mary Beth Maria O'Connor

    There are many people that have great experiences with preconstruction projects and often with the help of a good realtor and a good attorney, they can avoid these pitfalls.

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