A new attack on the real estate sector in Mexico City is brewing in the Congress of Mexico City.
Prior to this and as a precedent to the occurrences of the MORENA parliamentary group, in July 2020 the deputies Martha Soledad Ávila Ventura and Valentina Batres Guadarrama, presented to the Permanent Commission of the Congress of Mexico City an Initiative to reform and add various provisions of the Civil Code for the Federal District in the area of leasing, which deprived property owners with practically confiscatory measures, such as setting a mandatory minimum term 3-year validity for housing lease contracts; prohibiting the lessor from requesting surety bonds and real estate guarantees for the fulfillment of the tenant’s obligations; making it impossible for the landlord to collect the omitted rents and to evict them if the lease was verbal or did not physically display the lease; giving the defaulted and defaulting tenant greater protection in eviction processes than the owner, among many other legal aberrations.
This initiative was rejected almost immediately due to the strong demands of the real estate sectors, groups of lawyers, and civil society that opposed it, who will again have to put on boxing gloves to defend themselves against a new initiative of the same draconian cut as the one presented by Andrés Manuel López Obrador to prohibit “outsourcing”.
On November 10, MORENA deputy Paula Adriana Soto Maldonado presented an initiative to reform the Civil Code for the Federal District and the Urban Development and Housing Law of Mexico City to “prohibit the pre-sale of real estate.”
This deputy has stood out for defending the political, economic, and social rights of women in Mexico City, being also president of the Gender Equality Commission, which is why it is striking that a prominent feminist political scientist has intervened in this project legal that seems to be alien to their field of activity and knowledge and that, contradictory and ironically, could be a strong economic blow for the female labor sector if approved.
The argument and motivation of this initiative is that when in some cases a new property is sought “air is being bought or only the projects”, real estate developers may fail to comply with the construction characteristics or not finish the projects, which puts in a situation Complicated legal and disadvantageous to buyers who relied on real estate companies.
For that reason, this initiative proposes to prohibit the celebration of pre-sale contracts, authorizing only the sale and purchase until the developer has the notice of completion of work and occupation, that is, until construction work is completed.
Although it is true that there have been fraud and abuse by some real estate developers, this legislative proposal is excessive because it punishes all other real estate companies that have complied with their contracts and construction specifications.
Instead of severely sanctioning those who have breached the law or establishing dissuasive mechanisms to avoid fraudulent activities (for example, creating a list of developers who are not compliant or disqualified from doing business), it is decided to limit the contractual will of people, who It is the norm that in civil matters must always be privileged and protected.
As has happened with other government initiatives and decisions, they focus more on the problem than the solutions, putting in the wrecking machine and destroying everything in their path.
It’s like knocking down a tree just because you want to kill the moss on its bark; just like amputating a foot to remove a corn.
A Manichean vision of good or bad is not a constructive but a destructive strategy.
The consequences of passing this measure would be dire in several ways.
On the one hand, construction companies would have to apply for loans or financing in order to develop their real estate projects, since they would not have the resources from pre-sales. This would raise the cost of the project and pass the increase on to the final buyer, making new housing more expensive in Mexico City, which is itself the second-highest in the country.
In addition, the pre-sale offers buyers the benefit of obtaining a cheaper price than at the end of the work, so eliminating it makes the acquisition more expensive by 20 or 30 percent.
It also discourages private investment by small and medium-sized builders, favoring large builder groups and trusts that can build with their own resources or with better financing conditions, further concentrating wealth in these business circles.
The works and projects will have to migrate to other entities that allow better-contracting conditions, losing valuable jobs for Mexico City, which includes all construction employees, starting with bricklayers, plumbers, electricians, construction foremen, day laborers, employees. cleaning, security, and administrative personnel, as well as all the sectors that are around construction, such as suppliers of materials, tlapalería, cement, lumberyards, and a long chain that will be affected.
If the condition to sell will be to have the notice of completion of work and authorization of occupation, more corruption will be generated than the existing one due to the urgent need to obtain these documents, taking advantage of this the officials of the mayors on whom its issuance depends, which will be able to lengthen and stop the authorization processes to promote the “approach” and “request for facilitation”.
Women make up about 70 percent of the real estate agency workforce. This initiative hits them like a carom effect due to the adverse results in sales, a situation that deputy Soto has surely not seen.
This reform initiative that violates the right and contractual freedom established by the Civil Code, recognized by the Supreme Court of Justice of the Nation in multiple jurisprudence, should not be accepted.
It has become a repeated custom of this government administration to ignore the basic principles of law. Ignorance cannot be an excuse for these legal occurrences.
You need to incentivize the country’s economy, not kill it.