The Risks of Pre-Sale Purchase Agreements: Protect Your Assets

In the Mexican real estate market, especially in high-growth areas, pre-sales represent an attractive opportunity to acquire properties at competitive prices. However, the purchase agreements governing these transactions often include a provision that puts buyers' assets at serious risk: a fixed payment schedule based on calendar dates rather than linking payments to the actual progress of construction work.

This contract model obliges the buyer to make monthly payments or payments in predetermined stages (e.g., down payment, monthly installments, and balance), regardless of the physical progress of construction. While the buyer must pay on time and in full, the developer does not always guarantee compliance with delivery deadlines. This creates a contractual imbalance that can become catastrophic when problems arise.

Why is this scheme so risky?

When the developer faces financial difficulties, permit issues, or simply decides to pause construction, the buyer finds themselves in a vulnerable position:

1. The developer stops building or abandons the project altogether.
2. Significant delays occur in construction, extending the delivery date indefinitely.

Even so, the contract obliges the buyer to continue paying in accordance with the agreed schedule. If the buyer, frustrated by the lack of progress, decides to suspend or slow down payments, they automatically fall into breach of contract. This allows the developer to:

Retain payments already made.

• Initiate legal action against the buyer for breach of contract.
• Include penalty clauses that impose additional fines or even terminate the contract, with the total amount paid forfeited.

The emblematic case of Tulum: A national warning

Tulum has become the most painful example of these risks. During the post-pandemic real estate boom (2019-2024), thousands of buyers invested in pre-sales of luxury condominiums, attracted by promises of high vacation returns and capital gains driven by the Mayan Train and the new airport. However, the reality has been devastating. Reports from media outlets such as Bloomberg and El Financiero indicate that more than 70 pre-sale projects were never delivered, leaving hundreds of investors—many of them foreigners—without properties and costing them millions of dollars. Local lawyers receive daily inquiries from affected parties who discover unfinished or nonexistent construction projects. In many cases, the pattern is identical to the one described:

• The buyer assumes fixed monthly payments in accordance with the schedule.
• The developer stops or delays construction (due to lack of permits, financial problems, or irregularities).
• The buyer, seeing that construction has stopped, halts payments.
• The buyer sues the developer for breach of contract.
• The developer countersues, arguing that the buyer breached the contract first by suspending payments.

This creates a legal and financial limbo: buyers lose certainty, face lengthy, costly lawsuits, and, in many cases, do not recover their investment.

Authorities in Tulum have warned about 26 developments operating without permits and are shutting down irregular projects in the coastal area. These scandals, including massive fraud, land seizures, and even the disappearance of developers, have eroded confidence in the pre-sale market in Quintana Roo and serve as a red flag for all of Mexico.

How can you protect your assets in pre-sales?

The key is not to sign contracts without expert advice. A real estate lawyer should:

• Review and negotiate clauses linking payments to certified work progress (by an independent expert or notary).
• Include effective penalties for the developer for delays.
• Require collateral (escrow, bank trust, or performance bonds).
• Conduct thorough due diligence before any payment.

This is where Title Solutions de México makes a difference. With over 29 years of experience and thousands of successful transactions, its mission is to protect clients' assets by providing comprehensive support:

• Complete audits of the property and developer (title search, review of permits, and hidden risks).
• Drafting and review of purchase agreements, balancing clauses so that payments are conditional on the actual progress of the work.
• Support throughout the entire purchase process.

In a market where standard contracts favor the seller, Title Solutions empowers the buyer with legal and financial certainty from the outset, preventing an investment dream from turning into a nightmare.

If you are considering a pre-sale, don't wait for the problem to arise. Anticipate and act preventively. Contact a real estate law specialist and protect what you have worked so hard to build: your assets.