If you are planning to buy real estate in Mexico in locations such as Los Cabos, Loreto, Puerto Vallarta, Cancun, Tulum, Playa del Carmen etc. this article is for you. With an increasing number of options to choose from, prospective buyers need to be aware of recently enacted commercial regulations for the real estate marketplace.
The NOM 247-SE-2021 was released in the first quarter of 2022. The NOM´s purpose is to guaranty that the sale of housing real estate, related agreements, commercial practices and advertising information provided to prospective buyers are compliant with certain requirements.
To whom does it apply, and who is obliged to observe it?
This regulation is applicable to suppliers of housing in Mexico who are builders, developers, brokers, and any person who participates in the advice and/or sale to the public of real estate intended for housing. It is mandatory for individuals or companies engaged in marketing residential properties to the public in the country. The NOM does not apply to commercial real estate sales or private individuals who sell their property in a direct deal with the buyer.
What is NOM-247-se-2021?
The NOM regulates the information requirements for the marketing and advertising of real estate for housing purposes, the NOM also sets forth the basic elements for contractual agreements between the parties and seeks to regulate some of the rules of the Consumer Protection Law and laws on urban development, civil protection, urban housing, personal data protection among others, that are applicable to consumers that aim to purchase real estate for housing purposes.
As of September 22, of 2022 when the NOM became enforceable, full disclosure became law for all residential housing.
What are the main obligations?
Obligations contained in NOM 247 are categorized into four types: a) Relating to commercial practices, (b) Relating to commercial information requirements, (c) Advertising of real estate intended for residential purposes and, (d) Mandatory elements in contracts. Prospective buyers should verify that sellers, brokers, developers etc., comply with certain obligations. As the obligations in NOM 247 are numerous, the most relevant ones are presented below:
Down payments. Proof of advance or down payment must be given to the buyer.
Pre-sales obligations. Buyers must verify that the seller or broker shows the sale price of the property as well as its features. The seller, developer, broker, or advisor must have economic capacity should a claim or request for a refund occur. The pre-sale must be made by means of a pre-sale adhesion contract for real estate intended for housing.
Data Privacy Obligations. Potential buyers must verify that the provider has a Privacy Notice, and should the provider indirectly obtain any personal data, he must inform the data owners of the details of how he obtained such information. Data Privacy Law applies.
Obligation to have channels to deal with complaints and requests. Buyers must have access to free and accessible consumer service mechanisms that operate on working days and hours, and must be able to ascertain a public address for the provider to hear and receive notifications.
Internet Portal. Buyers should verify that the internet portal is updated with information such as prices, types of properties, membership contract models, among others.
Obligations in the field of real estate development. Promotion must be clear and with up-to-date information, avoiding abusive or coercive conduct or commercial practices.
Obligation to deliver a Bill of Rights to consumers. Buyers should receive a letter (physical, printed, or electronic media format) explaining the protection afforded by the Federal Consumer Protection Law ("LFPC")
Obligations regarding information used by suppliers. The information must be in Spanish and other languages if desired, but if there are inconsistencies in the text or wording, the Spanish language will prevail. The information must be verifiable, clear, and not contain dialogue or images that could lead to error or confusion. It must contain the price of the property, payment terms, credit, among others.
The NOM requires that information provided to the consumer about a possible termination of the contract must clearly include that the parties will reimburse each other for the services rendered and when the property has been delivered, the supplier/seller may demand it plus an amount at the rate of rent in case of use and/or compensation if there is demerit of the property.
In the case where part of the price has been paid, the seller may demand interest and, if more than one third of the agreed amount or the total of the agreed payments have been paid and the supplier demands the termination or performance of the contract due to default, the consumer shall be entitled to opt for rescission or payment of the overdue debt. Plus, any benefits that may be applicable.
Thanks to the NOM, buyers are protected from illegal clauses. Adhesion contracts will be invalid if they have clauses that are not permitted.
For example, clauses that unilaterally modify the terms and conditions of the contract, (except when it implies a reduction in the price or a benefit to the buyer), those that transfer the civil liability of the supplier to third parties outside the contract or that release the supplier from its civil liability or that derived from the existence of hidden defects or in case of eviction, shorter statute of limitations than the legal ones, among others.
Mandatory advertising provisions.
Potential buyers should validate that supplier's advertising is verifiable, clear, and truthful. The description of the property must be true to reality, and must describe the materials used, the date of construction among other features.
The seller must inform everything concerning the property and abide by negotiated terms throughout the process such as price, rates, guarantees, deadlines, reservations, etc. The project must be available in physical or digital form to share with the buyer.
Buyers have the right to select the notary public who will formalize their purchase and they are protected by PROFECO (Consumer protection Federal agency) and several governmental and private groups such as the Mexican Association of Real Estate Professionals that is associated with the U.S.-based National Association of Realtors that also protect potential buyers.
Buyers that seek to buy real estate in beach destinations such as for example Los Cabos are also protected by the State´s multiple listing associations that operates policies that govern listings and advertising of properties. We recommend seeking professional legal advice before signing any type of contract or agreement.
Our firm has an experienced team of attorneys focused on real estate matters. Both in transactions and in the resolution of disputes related to real estate sales and timeshares.
If you have any questions, you can contact us at firstname.lastname@example.org, we will respond immediately.
Important note: This article is not legal advice. Before making any decision, you should seek the advice of a professional you trust.