Know what you need to know about pre-construction property contracts

There are some terms and conditions that are necessary for you to know before purchasing a property off-plan or in pre-construction to avoid issues with the contract you sign.

These include:

• Unilateral contract: the developer drafts the contract and sets the conditions. The buyer has no right to make changes.
• Cancellation period: usually within 15 days from the contract signing, the buyer has the right to cancel the contract if they disagree with any clauses. This can be done without receiving any penalty, at least in the United States.
• Non-transferable: the contract is made in the name of the buyer or in the name of a company where the buyer is the sole owner. The property cannot be sold or transferred to a third party before the completion of the construction. The exception is if the developer authorizes it.
• Payment schedule: in most projects, there is a standard payment schedule as follows: 10% at the contract signing, 10% between 60 and 90 days after the first deposit, 10% at the start of construction, 20% halfway through the building construction, and 50% on the property closing day.
• Contingency-free financing: if the buyer requested a loan for the final payment and it is not granted at the time of closing and they do not have the money, the developer has the right to keep all the money received up to that date. What the developer does is facilitate lenders. Delivery time: generally, it is 2 to 3 years if signed from the start of the project, but it can be shorter depending on the project stage. The details with which the unit is delivered also influence.
• Finishes: the standard is for projects to be delivered with floors and without paint; with appliances, kitchen cabinets, and complete or incomplete bathrooms. Estimated closing costs when buying pre-construction: the expenses to be paid vary depending on whether the transaction is cash or financed.

This article is for informational and educational purposes only. Therefore, it is important that before making any decision, you visit or contact a certified specialist in the field, as the expert's opinion should be considered.

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