Guadalajara Reporter

Home

Written by GR Staff
Saturday, 29 September 2007
Dear Sir, We are all familiar with the saying "Buyer Beware," but if you are a seller in the Lake Chapala/Ajijic area the same warning applies. We recently had the most terrrible experience trying to sell our home here. We entered into a "Contract To Purchase" for our home in the Raquet Club. On June 17, the prospective buyers made a downpayment of 10 percent of the purchase price. The closing was scheduled for September 19. One week prior to the closing, a landslide and flooding occurred in the San Juan Cosala area. The buyers advised us two days before closing that they did not want to buy our house and that they wanted their downpayment money back as well. They claimed our house was not in the "same condition as it was when they signed the contract" even though there was no preinspection made at the time of signing. Our house sustained no damage in the flooding but the street in front of our house was damaged as well as other areas in the Raquet Club. Standard real estate contracts state that if the buyers default they loose their entire downpayment. But beware: the real estate contract in this area means nothing. We ended up getting back only one-third of the downpayment while the buyers walked away from their commitment with two-thirds. This settlement was reached only after hours of negotiations and hiring an attorney to represent us. The way it works is like this: If there is a dispute over escrow money, GIL (a board of independent, neutral realtors) will conduct an "arbitration" hearing where an attempt is made to resolve the issue. In our case, the buyers stated up front that they would not go to arbitration and if we couldn't settle, we would see them in court. Therein lies another inherent problem: arbitration here has no legal clout. And if you do go to a Mexican court, it may take 2-5 years for your case to be heard. You will also spend a lot of money on attorney fees, and there is no guarantee that even if the law is in your favor you will win. On top of that, your house cannot be sold during the litigation process. If you think you have your house sold and that you are protected with a contract, think again. I have also heard of similar stories where the buyers got their money back after signing a contract simply because they found a house they liked better. Also be aware that is is common practice in this area for the buyer's broker to hold the escrow monies until the closing. This definitely needs to be changed. I believe the real estate contract to purchase needs to be reworked. Escrow monies need to be held by a nuetral third party. Buyers and sellers need to know that the real estate companies have no legal representation, and do not have any means to enforce the conditions set forth in the contract. Currently, if there is a dispute between the buyers and sellers regarding downpayment money, the money is usually returned to the buyers. It is "just easier" that way – or so I am told. We want to give special thanks to Ajijic Real Estate and their agents Tom and Diane Britton, along with the broker, Jaime Niembro, who supported us fully. If not for them, we would not have gotten any money. They were great to us throughout the whole ordeal and very trustworthy. Also a huge thanks to Lake Chapala Moving Company owner Winston Tortajada and our attorney, Alejandra Arrendando, who represented us in this matter. She is highly professional and was available to calm our fears and answer our questions. She is very knowledgeable in real estate law and a great resource to our community. Marjean Beard