What do you need to know about pre-construction property contracts?

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Maria Pia Mcleod P. A.

Date Published: 2019-11-12

There are some terms and conditions that you need to know before buying a property in plans or in pre-construction, in other to avoid looking bad when signing the contract.

These are:

  1. Unilateral contract: the developer is the one who writes the contract and establishes the terms of it. The buyer has no right to make any changes.
  2. Cancellation period: throughout the 15 days after signing the contract, the buyer usually has the right to cancel it. If he doesn’t agree to any of the clauses, the buyer can do it with no penalties.
  3. Non-transferable: The contract is made in the name of the buyer or on behalf of a company where the buyer is the sole owner. The property can not be sold or transferred to a third party before the work is completed. The exception is that the developer authorizes it.
  4. Form of payment: Most of the projects follow a standard which is: 10% at the signing of the contract, 10% between 60 and 90 days after the first deposit, 10% at the start of construction, 20% in the middle of the construction of the building and 50% at the property closure.
  5. Financing without contingency: If for the final payment, the buyer requested a loan and this is not granted at the time of closing and does not have the money, the developer has the right to keep the total money delivered to date. What the developer does is provide lenders.
  6. Delivery time: Generally, it takes 2 to 3 years if its sign from the beginning of the project, it could take less time depending on what stage the project is in. It is also important the details that come with the unit at the delivery time.
  7. Finishings: the standard is that projects are delivered with floors and no paint; with household appliances, kitchen cabinets and complete bathrooms with or without floors.
  8. Estimation of closing costs when buying a pre-construction: the expenses to be paid vary if the transaction is cash or financed.


This article is made for informative and divulgative purposes. For this reason, it is important that before making any decision, visit or contact a certified specialist in the field, since the opinion of the expert is the one that should be considered.
 

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