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Buyer beware in Baja

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Standing on a model sundeck of a new Rosarito condominium tower while taking in the panoramic ocean view, it's hard not to get swept away in the moment. Should we buy here? What about the last place we saw? Will the next one be even better? Other than price, amenities and location, is there anything else to consider? The answer is a resounding "Yes!"

A new breed of U.S.-based company, specializing in Mexican real estate, is beginning to ask these questions for discriminating U.S. clientele. "In addition to the language barrier, building standards and real estate practices are far different in Mexico. Our clients want reassurance, and we provide that," said Juan Franco of Baja Residential, a U.S. real estate broker who grew up in Tijuana.

Even though Mexican building standards aren't as stringent as they are in the United States, it's not unreasonable to expect a development to be built to American standards. Unfortunately, many projects tout these standards, but few actually deliver.

"Just because the sales person tells you they're compliant, doesn't necessarily mean they are," noted Ward. "You have to ask for the right documentation."

An influx of American buyers is forcing change and developers are beginning to listen. A great example of this philosophy can be found at The Falls of Puerto Nuevo. The Falls is making building standards and safety a hallmark of its development. "Safety isn't an amenity, it's a necessity. Just because it's not required doesn't mean we don't have an obligation to build a world-class product," says U.S.-based developer Jerome Cleland.

The Falls is currently in pre-sale and its plans call for a self-contained fire suppression system and numerous other safety features which are standard in the United States but lacking in many of the other developments nearby. Building materials are compliant to U.S. fire and earthquake code and the project is planning for the future. Considering that retiring baby boomers are the primary buyers in Baja, The Falls felt it was important to comply with ADA standards, an excellent feature to consider when reselling. The developer has also instituted a strict peer review process with American architects, engineers and construction management firms to ensure the building meets American code.

Beyond the structure itself, there are a host of other important legal considerations that accompany a real estate purchase.

"Without question the most important element to the buying decision is the issuance of a master title policy for the land itself. It follows that title insurance will be available for the individual units as well," said Garth Ward, legal counsel to Baja Residential. "Obtaining title in Mexico is not as easy as it is in the U.S., so buyers should use a reputable U.S.-based firm like First American or Stewart Title. It's important for the American buyers to understand that these organizations do extensive research on the chain of title to ensure their investment is protected."

Whether you're buying in the United States or in Mexico, preparation and due diligence are keys to success in real estate.

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