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Keys to buying apartments under construction and avoiding complications - Infobae
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www.infobae.com
March 23, 2025
This modality, which allows you to acquire a property before it is built or finished, presents both economic opportunities and legal and financial challenges.
By Jose Luis Cieri
Building under construction at the corner of Fitz Roy and Soler, in Palermo
Buying an apartment off the ground, a modality that allows you to acquire a property before it's built or finished, presents both economic opportunities and legal and financial challenges.
This format is widely used by those looking to invest in real estate or purchase their first home. However, the process involves risks that must be carefully analyzed.
Below is a detailed guide on the advantages, risks, and recommended steps for choosing this option.
As Walger told Infobae : "By leveraging the business with pre-sales money, the developer benefits by giving up their profit. They're putting them in the business."
In addition to the price , another advantage lies in the direct financing options. Buyers typically make an initial down payment of 40% of the total price, and the remainder is paid in installments adjusted according to the Argentine Chamber of Construction (CAC) index.
However, this method also has its drawbacks, such as possible delivery delays due to weather or material difficulties. "When you buy a finished property, you can already see what you're getting and assume fewer risks related to construction times," Walger told Infobae.
Currently, due to rising construction costs, companies must carefully adjust their financial projections.
Sometimes if the fee value is too high, semi-annual reinforcements can be proposed that coincide with the bonuses.
The value of homes under construction has risen 25% in the last twelve months, but has not yet fully reflected the more than 70% year-over-year increase in construction costs in the final sale price. This difference tightens margins and, if the project faces deviations, can lead to financial complications.
Today, construction costs are no less than USD 1,600 per square meter, and in the premium sector, they exceed USD 2,000 per square meter.
According to the Zonaprop portal, the measured construction cost rose 2.8% last February and has accumulated a 107% increase since October 2023. Building today costs 3.1 times more than it did in 2020, the lowest in the series compiled by the real estate platform.
For his part, Germán Santaella , a civil engineer and specialist in building construction, explained that these monthly adjustments are common but depend on the country's economic situation: "Materials are directly related to the value of the dollar, and labor to inflation in pesos. This type of adjustment is common."
“Domain and restraint reports are essential to ensure there are no legal restrictions or liens on the land or unit,” Walger added.
Santaella added that contracts should contain specific details such as square meters, delivery date, and the project's technical specifications. He also recommended notarizing the contract for greater security.
If the development has amenities, equipment funds will be collected upon taking possession. This amount will be used to equip those spaces. For example, to purchase a table, chairs, dishes, a refrigerator, among other items, for the SUM, or lounge chairs for the pool, or machines and dumbbells for the gym.
"The purchase contract must clearly state the functional unit, price, payment method, and delivery date. Everything must be certified and sealed for greater security," Santaella warned.
Each buyer should request and review the project's legal and technical documentation in detail. Walger listed the main points:
Furthermore, it is essential to research the background of the developer, the construction company, and the architect in charge, visiting previous projects or consulting with clients who have purchased from previous projects.
Agustín Walger explained that this occurs when the developer fails to sell the necessary units to finance the project. He recommended closely monitoring the progress and verifying the company's track record. Another significant risk is the possibility that the property's quality and finishes may not be as expected.
In such a case, Germán Santaella advises requiring developers to comply with the terms of the contract and, if necessary, proceed through legal channels. "The best way to mitigate these risks is to investigate the background of the construction company or developer," he advised.
Reading the contract carefully before signing it is key to avoiding surprises in the future (Illustrative Image Infobae)
In the city of Buenos Aires, the average price of one-bedroom apartment (45 m2) in Caballito ranges between USD 100,000 and USD 110,000, while a two-bedroom apartment (70 m2) reaches USD 165,000-170,000.
In contrast, in Palermo , prices range from USD 140,000 for one-bedroom apartments to USD 200,000 for two-bedroom apartments. In Almagro , a studio apartment costs around USD 85,000-90,000, and in Núñez, a one-bedroom apartment costs between USD 120,000-130,000, and a two-bedroom apartment costs between USD 170,000-180,000.
Walger clarifies that "construction costs are similar in different neighborhoods," but the impact of land values is what generates wide discrepancies in final prices.
Santaella noted that prices vary depending on the sales stage. "The first units are sold at a lower price to attract buyers and finance the construction, and then prices increase," he explained.
In addition, expenses include notary fees (approximately 2%), stamp duty (3.5%, usually 1% is paid as a down payment and 2.5% upon possession of the unit) and, in specific cases, funds for the equipment of amenities or a reserve fund for the initial maintenance of the consortium.
Not monitoring the progress of the work or demanding periodic reports are two mistakes to try to avoid.
In some cases, payment is required upon delivery of the unit, even if the building isn't fully finished or the amenities aren't operational. "Often, price adjustments aren't clear, and payments end up higher than expected. It's best to have the contract link payments to the CAC index and detail each amount, adjustment, and term," Pirovano said.
If the developer fails to meet deadlines, modifies the project, or fails to construct the building, the buyer can take legal action. They can claim damages, request termination of the contract, or demand the deeds be signed if the unit is completed.
"If the breach is as serious as not constructing the building or radically changing the project, the situation could even be classified as a criminal offense, under categories such as fraud or violation of agreed-upon rights," Pirovano concluded.
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Source:
Claves para comprar departamentos en pozo y evitar complicaciones legales y financieras
Esta modalidad, que permite adquirir una propiedad antes de que esté construida o terminada, presenta tanto oportunidades económicas como desafíos legales y financieros
www.infobae.com
March 23, 2025
This modality, which allows you to acquire a property before it is built or finished, presents both economic opportunities and legal and financial challenges.
By Jose Luis Cieri
Building under construction at the corner of Fitz Roy and Soler, in Palermo
Buying an apartment off the ground, a modality that allows you to acquire a property before it's built or finished, presents both economic opportunities and legal and financial challenges.
This format is widely used by those looking to invest in real estate or purchase their first home. However, the process involves risks that must be carefully analyzed.
Below is a detailed guide on the advantages, risks, and recommended steps for choosing this option.
Pros and cons to consider
One of the main reasons for choosing this option is the economic advantage. Agustín Walger , director of New Developments at Lepore Properties, stated that when purchasing an apartment in a pre-existing condition, you get a better value per square meter compared to finished properties.As Walger told Infobae : "By leveraging the business with pre-sales money, the developer benefits by giving up their profit. They're putting them in the business."
In addition to the price , another advantage lies in the direct financing options. Buyers typically make an initial down payment of 40% of the total price, and the remainder is paid in installments adjusted according to the Argentine Chamber of Construction (CAC) index.
However, this method also has its drawbacks, such as possible delivery delays due to weather or material difficulties. "When you buy a finished property, you can already see what you're getting and assume fewer risks related to construction times," Walger told Infobae.
Currently, due to rising construction costs, companies must carefully adjust their financial projections.
Sometimes if the fee value is too high, semi-annual reinforcements can be proposed that coincide with the bonuses.
The value of homes under construction has risen 25% in the last twelve months, but has not yet fully reflected the more than 70% year-over-year increase in construction costs in the final sale price. This difference tightens margins and, if the project faces deviations, can lead to financial complications.
Today, construction costs are no less than USD 1,600 per square meter, and in the premium sector, they exceed USD 2,000 per square meter.
According to the Zonaprop portal, the measured construction cost rose 2.8% last February and has accumulated a 107% increase since October 2023. Building today costs 3.1 times more than it did in 2020, the lowest in the series compiled by the real estate platform.
For his part, Germán Santaella , a civil engineer and specialist in building construction, explained that these monthly adjustments are common but depend on the country's economic situation: "Materials are directly related to the value of the dollar, and labor to inflation in pesos. This type of adjustment is common."
Legal review
Before signing any contract, the experts consulted agree that legal review is crucial. According to Walger, buyers should verify aspects such as the land title, the trust agreement or articles of association of the responsible company, and the approved project plans.“Domain and restraint reports are essential to ensure there are no legal restrictions or liens on the land or unit,” Walger added.
Santaella added that contracts should contain specific details such as square meters, delivery date, and the project's technical specifications. He also recommended notarizing the contract for greater security.
If the development has amenities, equipment funds will be collected upon taking possession. This amount will be used to equip those spaces. For example, to purchase a table, chairs, dishes, a refrigerator, among other items, for the SUM, or lounge chairs for the pool, or machines and dumbbells for the gym.
"The purchase contract must clearly state the functional unit, price, payment method, and delivery date. Everything must be certified and sealed for greater security," Santaella warned.
Each buyer should request and review the project's legal and technical documentation in detail. Walger listed the main points:
- Deed of the land where the building will be built.
- Company bylaws or trust agreement, depending on the business format.
- Powers of those signing the transaction on behalf of the seller.
- Approved plans and technical specifications for the units and common spaces.
- Type of contract: bill of sale or trust adhesion.
- Notarization of signatures to provide greater security to the agreement.
Furthermore, it is essential to research the background of the developer, the construction company, and the architect in charge, visiting previous projects or consulting with clients who have purchased from previous projects.
Main risks and how to avoid them
Buying off the shelf, while attractive, is not without risks. One of the most common is delayed delivery times.Agustín Walger explained that this occurs when the developer fails to sell the necessary units to finance the project. He recommended closely monitoring the progress and verifying the company's track record. Another significant risk is the possibility that the property's quality and finishes may not be as expected.
In such a case, Germán Santaella advises requiring developers to comply with the terms of the contract and, if necessary, proceed through legal channels. "The best way to mitigate these risks is to investigate the background of the construction company or developer," he advised.
Reading the contract carefully before signing it is key to avoiding surprises in the future (Illustrative Image Infobae)
Reference prices by neighborhood
The cost of subdivision apartments varies considerably depending on the location and characteristics of the project.In the city of Buenos Aires, the average price of one-bedroom apartment (45 m2) in Caballito ranges between USD 100,000 and USD 110,000, while a two-bedroom apartment (70 m2) reaches USD 165,000-170,000.
In contrast, in Palermo , prices range from USD 140,000 for one-bedroom apartments to USD 200,000 for two-bedroom apartments. In Almagro , a studio apartment costs around USD 85,000-90,000, and in Núñez, a one-bedroom apartment costs between USD 120,000-130,000, and a two-bedroom apartment costs between USD 170,000-180,000.
Walger clarifies that "construction costs are similar in different neighborhoods," but the impact of land values is what generates wide discrepancies in final prices.
Santaella noted that prices vary depending on the sales stage. "The first units are sold at a lower price to attract buyers and finance the construction, and then prices increase," he explained.
How to choose and finance the purchase
A key aspect is understanding the financing terms offered by developers. For example, to acquire a property worth USD 100,000, a 40% down payment (USD 40,000) must be made and the remaining 60% financed in monthly installments, adjusted by the CAC index. These installments are typically spread over 24 to 30 months, depending on the stage of construction.In addition, expenses include notary fees (approximately 2%), stamp duty (3.5%, usually 1% is paid as a down payment and 2.5% upon possession of the unit) and, in specific cases, funds for the equipment of amenities or a reserve fund for the initial maintenance of the consortium.
Common Mistakes
Among the most common mistakes, Santaella highlighted:- Not reviewing the documentation with a specialized lawyer.
- Signing contracts with unclear clauses or without defining adjustments, deadlines, or terminations.
- Failure to investigate the history of the developer and construction company.
- Not planning for all the additional costs, from taxes to deed fees and equipment.
Not monitoring the progress of the work or demanding periodic reports are two mistakes to try to avoid.
Overcoming legal difficulties
When investing, every buyer must pay special attention to the delivery terms established in the contract. Pablo Pirovano , a mortgage law specialist and partner at Pasbba Abogados, warned that one of the main problems arises when the construction schedule doesn't precisely define the deadlines or the times when the buyer must begin paying expenses.In some cases, payment is required upon delivery of the unit, even if the building isn't fully finished or the amenities aren't operational. "Often, price adjustments aren't clear, and payments end up higher than expected. It's best to have the contract link payments to the CAC index and detail each amount, adjustment, and term," Pirovano said.
If the developer fails to meet deadlines, modifies the project, or fails to construct the building, the buyer can take legal action. They can claim damages, request termination of the contract, or demand the deeds be signed if the unit is completed.
"If the breach is as serious as not constructing the building or radically changing the project, the situation could even be classified as a criminal offense, under categories such as fraud or violation of agreed-upon rights," Pirovano concluded.
www.buysellba.com
