On Monday, October 18th, the new “Regulation for Extended Term Sales in Real Estate Projects” issued by the MEIC entered into force

On July 20th, 2021, The Ministry of Economy, Industry and Trade (MEIC) published in the Official Gazette a new Regulation for Extended Term Sales in Real Estate Projects, which governs from last October 18th. The objective of this regulation is to rule article 44 of the Law for the Promotion of Competition and Effective Consumer Defense. In this way, such provisions do not apply to the sale of real estate properties built or completed, but to future projects or sales. In virtue of the above, some of the particularities raised by the new regulation are:

REQUEST FORM

The registration of the developer and the authorization of the real estate project must be done in a single stage, by submitting Form 001 “Requirements for the application for registration and authorization for future sales of real estate”.

FINANCIAL SOLVENCY

For this purpose, a protection trust or a down payment deposit must be in place; in case of not doing so, a guarantee equivalent to 100% of the amount of the real estate development must be rendered, issued by the banking or insurance entity duly authorized in the National Banking System or by the General Superintendence of Insurance (SUGESE).

DOWN PAYMENT PROTECTION TRUST

In virtue of the above, the down payment trust is practically mandatory for the procedure. This aims to manage all the money contributed by consumers or prospective buyers as part of the commitment to sell within the project.

In this sense, the release of the amounts in favor of the person responsible for the project (developer) will be made through six disbursements, once the 10%, 30%, 50%, 70%, 90% and 100% of the progress of the project, by stage or subsidiary property, is achieved.

The MEIC must be informed when there is an early termination of the trust or a replacement of the trustee.

In addition, in case of non-compliance of the merchant / developer, the return of 100% of the contributions or sums paid for down payments, extraordinary payments or additional credits must be executed.

OTHER CONSIDERATIONS

Those responsible for the projects must send the MEIC each year, in the first 15 working days of August, a report, including the last day of the previous month, of the information related to consumers and the terms of sales.

Based on the above, the provisions of the down payment protection trust contract, as well as the future purchase option contract, are delimited by the new regulation, which gives a more active role to the Public Administration (MEIC, in this case) by authorizing and monitoring these future sales.

In case you require collaboration to carry out this procedure, please contact your lawyer in charge at Lexincorp or send an email to evargas@lexincorp.com and we will gladly help you with the matter.

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