Developer Financing: Guarantees and in Whose Favor

When the developer finances your pre-sale, something happens that is almost never said out loud: the person who lends to you is the same person who has to deliver the work to you. Creditor and debtor are the same person. That is neither good nor bad in itself, but it changes the question that matters. The question is not "Is the project bonded?", but "In whose favor was each guarantee surrounding my transaction issued?". The answer determines whether you have something to claim or not.

Is developer financing a credit?

This piece does not classify your payment plan as credit or non-credit: that depends on how your contract is written. The Federal Law for Consumer Protection, in its article 66, regulates the supplier's obligations in installment and credit transactions, including the duty to inform the cash price, the number of payments and their frequency (LFPC, art. 66). What you can do is concrete: check if your contract documents a cash price different from the installment price. If it does, you are faced with a transaction with a credit component and the information obligations of that article come into play. Consequence: before signing, request in writing that the contract distinguish both prices; that distinction is what activates your information rights.

The three paths of article 71: only one puts the guarantee in your name

To sell before municipalizing the development, the law gives the promoter three alternative paths, and the choice is theirs, not yours. Article 71 of the Law of Urban Actions of Q. Roo establishes three sections:

• Section I — Certificate of Completion. A Municipal Certificate of Completion of Urbanization Works, which the law itself allows to be "partial according to the stage the development is in or total for the subdivision or urban complex". That is, it can cover only the stage of your unit, not the entire development.
• Section II — Bond to the treasury. A bond "in favor of the municipal treasury, that guarantees the completion of the projected works... of the stage of the subdivision in which the lot or unit to be transferred is located, until the development is municipalized". The beneficiary is the treasury, not you.
• Section III — Guarantee in your favor. The only one of the three in which the promoter "constitutes a guarantee in favor of the users, buyers or tenants", and which "shall be recorded by the notary in the deed of sale".

Of the three, only section III names you as beneficiary. The other two are satisfied with a municipal document or with a bond in favor of the authority. Consequence: it is not enough that the project is "in order"; request in writing which of the three paths was used in your transaction, because only one leaves you something to claim directly.

They tell me the project is bonded, does that protect my money?

The existence of a bond does not mean your deposit is backed. If the path chosen was section II, the bond is issued in favor of the municipal treasury and what it guarantees is the completion of the works of that stage, not the money you delivered. Only under section III is there a guarantee constituted in favor of the buyer. Telling you "it is bonded" answers a different question than the one that matters to you.

Can I ask for the bond to be issued in my name?

The choice between the three paths is the promoter's, not yours: the law does not give you the authority to impose section III. What you can do is ask which path was chosen and, if it was III, verify that it is recorded in the deed. In that section, the amount of the guarantee is the greater of the appraisal of the property by a legally authorized appraiser and the agreed sale price. If the path was another, the guarantee exists, but its beneficiary is the authority.

The bonds that do exist and in whose favor they are issued

There are mandatory bonds before municipalizing, and it is useful to know what they guarantee and to whom. In the Law of Urban Actions, article 69 provides for a bond equivalent to 100% of the budget for infrastructure or urbanization works in order to sell before they are completed, and another of 15% of the budget for urbanization works for hidden defects. The law is explicit about the recipient: "Bonds or guarantees must be issued in favor of the Treasury of the corresponding Municipality." And it defines their purpose: "to ensure the correct construction of the works... as well as compliance with obligations". They guarantee works, not deposits, and the beneficiary is the municipal treasury.

In the condominium regime, Law 69, in its article 9 section X, provides for a bond of 15% of the total value of the condominium to guarantee completion of work, and another of 10% of the total value of the condominium to respond for the quality and defects of construction. The law closes that point this way: "Both bonds shall be issued in favor of the corresponding municipal treasury." Here too, the treasury is the beneficiary.

There are two different clocks that are worth not confusing. In the Law of Urban Actions, the guarantee for quality and hidden defects is released "once two years have passed from its constitution". In Law 69, the 10% bond has "a term of two years from the total delivery of the condominium". It is two years in both cases, but one runs from when the guarantee is constituted and the other from when the completed condominium is delivered to you: the starting point changes everything.

What happens to what I already paid if the developer doesn't finish the tower?

The bonds in article 69 of the LAU and article 9 section X of Law 69 were not designed to return your deposit: they are issued in favor of the municipal treasury and guarantee the completion of works and construction defects. Direct protection over what you contributed only appears if your transaction was documented under section III of article 71, with a guarantee in your favor recorded in the deed. That is why the first question you must resolve is which path was used.

What consumer law lets you demand in writing

Regardless of the guarantee path, if your transaction falls under the Federal Law for Consumer Protection there are information obligations that the supplier must fulfill. Article 66 gives you three concrete points of support.

The first: prior information. In section I, the law requires informing the cash price, charges, the number of payments and their frequency, and includes "the right to pay off the credit in advance with the resulting reduction of interest".

The second: the agreed price. Section IV requires "Respect for the price originally agreed upon in installment transactions or with retention of title, except as provided in other laws or contrary agreement". That final exception matters: the price is respected, except if another law or an agreement says otherwise.

The third: the account statement. Section V requires the supplier to send you "at least a bimonthly account statement, by the means it chooses, containing information on charges, payments, interest and commissions".

And one more obligation, from article 73: "Contracts related to the activities referred to in the previous paragraph shall be registered with the Procuracy." Consequence: these four things —prior information with the right to pay off early, price respected, bimonthly account statement and contract registration— are enforceable without depending on which guarantee path the promoter chose. Demand them in writing.

The sales authorization: what article 71 requires and how far its nullity reaches

What is the sales authorization and where do I see it?

The sales authorization is issued by the Municipality and advertising must cite it. The Law of Urban Actions, in its article 69, requires that "In all types of advertising where lots are offered, reference must be made to the license of the subdivision, urban complex or condominium and to the sales authorization of the Municipality, citing its number and the date of issuance." Take the ad you have in front of you and look for that number and that date: they must be there. If they do not appear, it is the first sign that something needs to be verified.

There is a relevant deadline, and it applies within the path of the section II bond: the Municipality has up to 10 business days from when it receives the policy and the budget to deny authorization; once that time passes without notification, the notary may execute. That administrative silence enables the deed only on that path, not as a general rule for all three paths.

What if I buy in a development that sells without municipal authorization?

The law assigns a serious consequence, but it is worth reading its exact text. Article 71 says: "Commercialization, use or rental transactions of lots in subdivisions or urban complexes that are carried out without Municipal authorization... shall be considered null and void." There is an asymmetry here that should not be ignored: the preamble of article 71 does name the condominium, but this nullity paragraph literally speaks of "lots of subdivisions or urban complexes" and does not mention the condominium. This piece does not resolve whether that nullity reaches or not the apartment in condominium of a buyer: the wording leaves that question open and it is exactly the point that a lawyer should review with your case in hand.

What to ask for before signing, and what remains uncovered

Before signing a payment plan with the developer, request in writing —without inventing lines that the law does not give you— the following:

• Which of the three paths of article 71 was used in your transaction.
• If it was section III, verify that the guarantee in your favor is recorded in the deed.
• The number and date of the Municipality's sales authorization, and check them against the advertising.
• The prior information from article 66 section I, including the right to pay off early.
• The bimonthly account statement from article 66 section V.
• The certification of contract registration with the Procuracy.

There are things this piece does not cover, and it is worth saying so. The financial cost of the plan —rates, charges, comparisons— is another matter. Construction defects in the tower and the constructor's liability to you are also dealt with separately; here only who is the beneficiary of the bonds is named. And the consequences of stopping payment are not developed here.

Regarding the guarantee escrow: it was not located in the legible section of the document consulted, so this piece does not affirm anything —neither for nor against— about that scheme. That it does not appear in the section read does not mean it does not exist; it means it cannot be written about until it is read in full.

To review the specific content of your contract, use the guide on what to review in the contract before signing.

Frequently Asked Questions

Does Profeco have anything to do with buying an apartment?

Yes, under the condition of article 73 of the LFPC: transactions involving real estate are subject to that law "when the suppliers are subdividers, builders, promoters and other persons involved in advising and selling homes to the public intended for residential use". The same article requires registering the contract with the Procuracy. That registration is an obligation of the supplier; its existence does not resolve a dispute by itself, but it is a verifiable requirement you can demand.

Does it apply the same if I buy to rent and not to live in?

The literal condition of article 73 speaks of "homes intended for residential use". This piece does not affirm that the law covers or excludes a purchase intended for rent: the text does not resolve it expressly and extrapolating it in any direction would be inventing. If your intention is to rent the unit, that is a point that should be reviewed by a real estate lawyer with your contract, because what consumer protection obligations you can invoke depends on it.

Does the notary review any of this or just sign?

The notary has a limited obligation under article 71: to "verify compliance with the provisions of this article and shall insert in the respective deed the guarantee instrument used". That means verifying what that article requires and inserting the guarantee instrument, not reviewing the complete content of your sales contract or substituting for your own legal review. That contract review remains yours, ideally with professional advice.

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This content is informational and does not substitute professional advice. A real estate lawyer with experience in pre-sale contracts and consumer information obligations should review your case before signing. Validity of the cited rules: Law of Urban Actions of Q. Roo, POE 28-05-2026; Law of Condominium Property of Q. Roo (Law 69), POE 12-11-2021; Federal Law for Consumer Protection, DOF 12-12-2025 for articles 66 and 65 BIS, and decree DOF 04-02-2004 for article 73.

If you are about to sign a payment plan in pre-sale and want to know which of the three paths of article 71 was used in your transaction, a Propyte advisor can help you locate the documents and know what to ask for in writing before signing. Schedule a conversation with our team.