Pre-construction dominates new supply in Los Cabos: a large share of the condos listed today are units under construction or still on plans. Buying pre-construction can get you the best entry price in the market — or turn you into the unwitting lender of a developer who never delivers. The difference is almost never a matter of luck: it lies in the contract you signed and in the research you did (or didn’t do) before putting down a reservation deposit.
This guide is the companion to our catalog of developments in Los Cabos: what is real about the opportunity, what the concrete risks are, and what your contract must say before you hand over a single dollar.
Why pre-construction carries so much weight in Los Cabos
The sales pitch for pre-construction is true at its core: launch prices typically sit between 15% and 25% below the value of the finished unit, and that appreciation builds during construction, with nothing more required of you than paying on schedule. In a market with sustained demand from foreign and Mexican buyers, and with scarce land in the established areas, the mechanism works — when the project actually gets finished.
Current supply is broad and concentrated in El Tezal, along the tourist corridor between Cabo San Lucas and San José del Cabo, and in the new phases of the master-planned communities toward the Pacific. A detail almost nobody explains: the vast majority of contracts are denominated in dollars. If you will be paying from Mexico in pesos, check which exchange rate the contract sets for each payment — agreed in advance, the rate of the day, or whatever the developer’s bank publishes — because that is where a cost hides that no sales brochure will show you.
The real risks
The risks of pre-construction are neither theoretical nor unique to other markets. These are the ones that exist here:
- Failure to deliver. Delay is the most frequent risk; abandonment of the project, the most serious. A stalled project with your money inside gets litigated for years, and an individual buyer’s position against an insolvent developer is weak.
- A developer without complete permits. Building license, land-use approval and, in coastal areas, environmental impact authorization. Some projects are marketed with permits still in process; if the authorities deny them or shut down the construction, your contract is worth only as much as the developer’s solvency.
- Condominium regime not constituted. Without a condominium regime (régimen de condominio) recorded at the Public Registry of Property, individual units do not legally exist and, therefore, you cannot take title to your condo even if it is finished. It is one of the most common and least explained problems in pre-construction.
- Abusive clauses. Mexico’s Federal Consumer Protection Law (Ley Federal de Protección al Consumidor) requires contractual penalties to be reciprocal and equivalent between the parties (Article 73 TER): if you are charged interest for paying late, delivering late must cost the developer. Many contracts penalize in one direction only.
- Your money financing another project. If your payments go into the developer’s general account, nothing prevents them from ending up in another project or in old debt. A structure to safeguard payments exists and is verifiable — below we tell you what it should look like.
What your pre-construction contract must include
A good pre-construction contract is not a template: it is an instrument that allocates the risks of construction between you and the developer. These five elements are non-negotiable.
Adhesion contract registered with PROFECO
Article 73 of the Federal Consumer Protection Law requires housing subdividers, builders and developers to register their adhesion contracts (standard-form contracts) with PROFECO, Mexico’s consumer protection agency, and on a pre-sale the contract must reflect the project’s authorizations, licenses and permits. Ask for the registration number and verify it in the Public Registry of Adhesion Contracts. A serious developer has one; one that is “working on it” is asking you to finance getting its paperwork in order.
A late-delivery penalty with teeth
A defined delivery date, a limited grace period (90–180 days is customary in this market) and, from that point on, a monthly penalty in your favor — the usual benchmark is the unit’s market rent. After a maximum period, the right to rescind with a full refund plus interest. And remember the legal principle: penalties must be reciprocal and equivalent. If the contract only says “estimated date” with no consequences, you don’t have a delivery date: you have an intention.
Formal safeguarding of your payments
Serious projects channel buyers’ payments into an administration and guarantee trust (fideicomiso de administración y garantía), from which funds are released as certified construction progresses. That prevents your money from being diverted and gives you a formal position if the project falls apart. Ask whether it exists, which institution acts as trustee and what role you hold within the structure. A “that’s not how we work” is also information — and valuable information.
A payment plan that follows construction
The norm in Los Cabos is a reservation deposit, a down payment and payments during construction that add up to between 30% and 50% of the price before delivery, with the balance due at closing. The principle to defend: your payments should follow construction progress, not the developer’s financial calendar. Demand a formal receipt for every payment and make sure the contract identifies the exact unit — tower, floor, number and square meters — not “a type B unit.”
A limited hurricane clause
Baja California Sur is a hurricane zone, and every contract includes force majeure. The problem is open-ended wording that turns any storm into an indefinite extension. The right clause defines which events qualify, requires the developer to notify and document them, and caps the cumulative days of extension. Force majeure, yes; a blank check, no.
How to vet the developer
The contract protects; prior research prevents. Before putting down a deposit, spend a few days verifying:
- Delivery track record. Which projects it has finished, when, and how late. Visit at least one delivered project and ask the owners how delivery went, the quality and the after-sale service. Nobody will give you better information.
- Permits in plain sight. Building license and land-use certificate from the Los Cabos municipal government; on projects near the coast, the environmental impact authorization. Ask for copies: “it’s in process” means it doesn’t exist yet.
- Condominium regime. Ask what stage its constitution and recording are at. If the project has two towers sold and the regime is nowhere to be found, that is a serious warning sign.
- Lawsuits and reputation. Look for lawsuits, complaints before PROFECO and press coverage of previous projects. A developer with a history of conflicts with its buyers rarely changes on your project.
- The contract itself. Take it for independent legal review before signing — not with the developer’s notario or its sales team. It is the best money you will spend in the whole transaction.
Closing: where it all becomes real
The pre-construction contract is a promise; you become the owner with the deed. At delivery, the balance of the price is paid against signing before a notario and recording at the Public Registry of Property. Budget for that closing from the start: in our guide to closing costs in Los Cabos we break down the acquisition tax, notary fees and registration fees.
As a foreign buyer, you will hold title through a restricted-zone fideicomiso, the bank trust set up when the unit is deeded; Mexican buyers take title directly in their own name. And don’t lose sight of the post-delivery warranties: by law, a minimum of five years on structural elements, three on waterproofing and one on all other elements (Article 73 QUÁTER of the consumer protection law). They are legal minimums, not courtesies from the developer, and they run from the actual delivery of the property.
Frequently asked questions
How much is paid before delivery on a pre-construction purchase?
The norm in Los Cabos: a reservation deposit, a down payment and payments during construction that add up to between 30% and 50% of the price, with the balance due at closing. Be wary of structures that require much higher percentages before handing over the unit.
What happens if the developer is late?
Whatever your contract says — which is why it must set a delivery date, a limited grace period, a monthly penalty in your favor and the right to rescind with a full refund plus interest after a maximum period. The law requires penalties to be reciprocal and equivalent for both parties.
Can I assign my rights before delivery?
Only if the contract allows it. Many developers accept an assignment with their prior authorization and a fee. If your strategy includes reselling before closing, negotiate that clause from the start and get it in writing.
What warranties do I have after receiving my condo?
The minimums set by law: five years on structural elements, three on waterproofing and one on all other elements, counted from the actual delivery of the property. The developer can offer more; never less.
Do I need a fideicomiso to buy pre-construction?
If you are a foreign buyer, yes: Los Cabos is in the restricted zone, so you hold title through a fideicomiso set up when the unit is deeded; Mexican buyers take title directly in their own name. The trust you should also ask about on a pre-sale is the administration and guarantee trust that safeguards buyers’ payments during construction.
At Ramar we support every pre-construction purchase with contract review, permit verification and follow-through all the way to the deed — we are one of the few brokerages in Los Cabos with in-house legal and accounting teams. If you are evaluating a development, write to us and we will review the contract and the numbers with you before you put down a deposit.
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