When it comes to pre-construction or pre-sales properties, it’s natural to feel a hint of apprehension. While horror stories may circulate, it’s important to approach the process with a level-headed mindset and conduct due diligence. Aside from that, there are many benefits when purchasing a new construction such as discounted price, rate of equity gain, and construction quality. Here are key steps to consider when buying into a new project:

• Legal Due Diligence: Verify that the seller is the legal owner of the property or holds a valid contract of sale or transfer from the owner. Request to see the property’s deed (escritura) to ensure transparency.
• Building Permits: Confirm that the seller has obtained current and paid-up construction permits for the intended project. This step ensures compliance with local regulations and enhances the project’s legitimacy.
• Developer’s Reputation: Research and verify the reputation of the developer. Request references from previous clients and reach out to them for feedback on their experience. This will provide insights into the developer’s track record and reliability.
• Master Broker/Marketing Entity: Evaluate the track record, reputation, and experience of the master broker or marketing entity involved in the project. Their expertise and success in pre-construction projects can give you confidence in the development’s quality and future prospects.
• Sales Agent Relationship: Assess your comfort level and satisfaction with the sales agent who is directly assisting you. Ensure they possess a solid understanding of the legal structure underpinning the development and can effectively communicate it to you.

Most pre-sale or pre-construction contracts outline penalties and consequences for project delays or non-completion. Developers are typically obligated to pay daily or monthly delay fees, and if the project fails to complete, you are entitled to a refund once the developer sells the project to another buyer.

Keep in mind that project delivery dates are typically estimates. Allow for a potential delay of 1-3 months due to supply chain issues or change in governmental ordinances. Developers usually construct buildings from the bottom up, meaning units on higher floors may be completed later. A reputable developer often offers a 1-2 year construction guarantee to provide assurance.

By conducting thorough due diligence and considering these factors, you can mitigate risks and make an informed decision when venturing into pre-construction purchases.