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Last Monday, October 18, the new "Regulations on Sales on Future Execution of Real Estate Projects" of the MEIC came into force.
[/vc_column_text][us_separator][vc_column_text]On July 20, 2021, the Ministry of Economy, Industry and Commerce (MEIC) published in the Official Gazette a new Regulation on Installment Sales for Future Execution of Real Estate Projects, which will be in force as of October 18. The objective of this regulation is to regulate article 44 of the Law on the Promotion of Competition and Effective Consumer Protection; in this sense, such provisions do not apply to the sale of constructed or finished real estate, but rather to future projects or sales. In light of the above, some of the particularities raised by the new regulation are: APPLICATION 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 installment sales of real estate." FINANCIAL SOLVENCY For this purpose, a protection trust or premium deposit must be in place; otherwise, a guarantee or surety equivalent to 100% of the amount of the real estate development plan must be provided, issued by a bank or insurance entity duly authorized in the National Banking System or by the General Superintendency of Insurance (SUGESE). PREMIUM PROTECTION TRUST In light of the above, the premium trust is practically mandatory for the process. Its objective is to manage all the funds contributed by Consumers or prospective buyers as part of the sales commitment within the plan. In this sense, the release of the amounts in favor of the person responsible for the plan (developer) will be made in six disbursements, once 10%, 30%, 50%, 70%, 90%, and 100% of the progress of the construction of the Installment Sale Plan is achieved, by stage or subsidiary property. The MEIC must be informed of any early termination of the trust or replacement of the trustee. Furthermore, in the event of noncompliance by the merchant/developer, 100% of the contributions or amounts paid in premiums, extraordinary payments, or additional installments must be returned. OTHER CONSIDERATIONS: Plan managers must submit to the MEIC each year, within the first 15 business days of August, a report with a cutoff date of the last day of the previous month containing information related to consumers and the terms of sales. Based on the above, the provisions of the premium protection trust agreement, as well as the future purchase option agreement, are defined by the new regulation, which gives a more active role to the Public Administration (MEIC, in this case) in authorizing and supervising these future sales. If you require assistance with this process, please contact your attorney at Lexincorp or send an email to evargas@lexincorp.com, and we will be happy to assist you.
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