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Real Estate Law

Real Estate Development Projects: Legal Structure from Start to Finish

March 15, 2026 — Enrique Benet-Gregg

A real estate development project is not a linear sequence of procedures: it is a legal architecture in which each phase conditions the next. An omission in the initial due diligence can become a deed nullity at the end of the cycle. The complete map that follows identifies the points of greatest legal exposure at each stage and the instruments that mitigate them.

Phase 1: Land Acquisition and Due Diligence

The starting point is the verification of the property title and the chain of ownership registered in the Public Registry of Property and Commerce of the State of Quintana Roo, in accordance with the Law of the Public Registry of Property of the State of Quintana Roo (LRPPQR), whose article 3 establishes the principle of registry publicity and enforceability against third parties. Equally essential is the verification that the real estate is not affected by federal zones, easements of the Federal Maritime-Land Zone (ZOFEMAT), or protected natural areas regulated by the General Law for Ecological Balance and Environmental Protection (LGEEPA), articles 44 to 77, and its Regulation on Protected Natural Areas.

For foreign developers or vehicles with foreign participation, article 27 of the Constitution applies in conjunction with the Foreign Investment Law (LIE). In this context, it is essential to distinguish the operative scope of each provision: article 10 of the LIE establishes the restrictions applicable to Mexican legal entities with foreign participation regarding the acquisition of real estate in restricted zones, while article 11 of the LIE specifically regulates the exception through banking trust, establishing the trust scheme with a term of fifty years renewable, administered by authorized Mexican credit institutions. This distinction is operatively critical for advising a foreign investor when choosing the acquisition vehicle: article 10 defines the prohibition; article 11 defines the permitted structural solution.

Phase 2: Structuring the Investment Vehicle

The choice of vehicle conditions taxation, risk transfer, and eventual exit. The most commonly used options are the investment promotion stock corporation (SAPI), regulated by articles 227 to 251 of the Securities Market Law (LMV), and the real estate development trust, whose legal basis is found in articles 381 to 408 of the General Law of Titles and Credit Operations (LGTOC). When the project involves a contribution of land to the trust, articles 14-B and 14-C of the Federal Tax Code (CFF) relating to transfers through trusts and their implications for income recognition must be observed.

Phase 2.5: Construction Financing and Guarantee Structures

The real estate development cycle is rarely financed entirely with own capital. Obtaining a construction credit line implies, in virtually all institutional cases, the constitution of a mortgage as guarantee on the trust assets or on the real estate under development, which introduces a layer of legal complexity that must be resolved before the first deed registration of individual units.

The global mortgage guarantee that encumbers the project as a whole must be released unit by unit as deed registration progresses. This mechanism of partial mortgage release operates through the issuance of a letter of no debt or corresponding release instrument by the creditor financial institution, and is formalized in a public deed before a Notary. The normative basis for the mortgage and its partial cancellation is found in the corresponding articles of the Civil Code of the State of Quintana Roo regarding real estate guarantee rights, consistent with article 2893 of the Federal Civil Code in its supplementary function where applicable. Without the formal release of the global mortgage with respect to the specific unit, the Notary cannot execute a transfer free of encumbrances, which makes this procedure a critical bottleneck in the closing.

When the development trust is also the vehicle that receives the construction credit, the trust institution acts simultaneously as administrator of the trust assets and as a party to the credit contract. This duality must be expressly regulated in the trust agreement and in the irrevocable instructions to the trustee, specifying the conditions under which the trustee is authorized to encumber trust assets and to release units from the global encumbrance as partial payments by the acquirers are evidenced.

Finally, when the developer offers or acts as intermediary for mortgage products for end-unit purchasers, whether through agreements with banking institutions or direct financing schemes, the provisions of the National Commission for the Protection and Defense of Users of Financial Services (CONDUSEF) and the transparency obligations established in the Law on Transparency and Promotion of Competition in Guaranteed Credit come into play. The developer acting as intermediary of financial products without the proper regulatory structure assumes risks of being classified as an unauthorized intermediation entity, with the corresponding administrative and criminal consequences.

Phase 3: Permits, Licenses and Authorizations

This phase concentrates the highest regulatory density. The key instruments are:

  • Land use and zoning: in accordance with the Urban Development Program for the Population Center applicable and the Law on Human Settlements, Territorial Planning and Urban Development of the State of Quintana Roo (LAHOTDU-QR), articles 83 to 97, which regulate the compatibility of uses, densities and occupation coefficients.
  • Environmental impact authorization: mandatory for tourism and residential developments affecting areas exceeding the thresholds of article 28 of the LGEEPA and its Regulation on Environmental Impact Assessment, article 5, fractions I, N and O.
  • Building license: regulated by the Building Regulations of the Municipality of Benito Juárez or the corresponding municipality, together with applicable Complementary Technical Standards.
  • Alignment certification and official number: prerequisite to any building license in accordance with municipal regulations.

Phase 4: Pre-sales and Contracts with Purchasers

Anticipatory commercialization activates the Federal Consumer Protection Law (LFPC), particularly its articles 73 to 76, which regulate adhesion contracts for housing and commercial establishments registered with PROFECO. The registration of standard contracts in the Federal Registry of Adhesion Contracts (RECA) has been required in accordance with articles 73 to 76 of the LFPC and applicable NOMs since the progressive operationalization of the system. To determine whether a specific PROFECO resolution or regulatory update published in the DOF has modified registration requirements for real estate pre-sales, the DOF and PROFECO portal must be consulted for the applicable resolution or NOM in effect at the time of the operation, without it being possible to attribute with certainty such requirement to a 2023 legislative reform without identifying the corresponding specific publication. In parallel, if the developer offers vacation rental schemes or return on investment, the National Banking and Securities Commission (CNBV) may qualify the operation as a public resource-raising transaction, with the regulatory consequences of article 103 of the Law on Credit Institutions (LIC).

In jurisprudential matters, there is a prevailing doctrinal tendency that real estate pre-sale contracts establishing staggered payment obligations without delivery of a determined asset may be classified as preparatory contracts subject to the rescission rules of civil law, which would impose on the developer the burden of demonstrating construction progress to justify retention of advance payments in case of dispute. However, this characterization cannot be presented as established jurisprudence of the First Chamber of the Supreme Court of Justice of the Nation without identifying the isolated thesis or corresponding jurisprudence with its registration number and reference to the Judicial Gazette of the Federation. It is, in the current state of verification, a prevailing doctrinal criterion and an interpretive tendency consistent with general principles of contract theory, whose exact jurisprudential confirmation must be verified in each specific case.

Anti-Money Laundering Obligations: LFPIORPI

An aspect of compliance that no developer operating in Quintana Roo or the Riviera Maya can ignore is the regime of the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (LFPIORPI). Article 17, fraction I of said law identifies operations of transmission or constitution of real rights over real estate as vulnerable activities subject to customer identification obligations and reporting to the Tax Administration Service (SAT). Fraction XV of the same article extends these obligations to the provision of construction and real estate intermediation services when the value thresholds established in the General Rules issued by the SAT are exceeded.

The developer has the obligation to submit Notices to the SAT regarding operations that reach or exceed the established thresholds, as well as to implement customer knowledge procedures (KYC) that allow identification of the final purchaser, the source of resources, and, where applicable, the existence of politically exposed persons (PEPs) within the acquisition chain. The Public Notary has independent obligations in this matter at the time of closing: it is obligated to verify compliance with the corresponding notices and to report independently when it detects signs of operations with resources of illicit origin, regardless of the developer’s actions. Failure to comply with these obligations exposes both the developer and the Notary to severe administrative sanctions and, in cases of fraud, to criminal liability. For projects with international purchasers, enhanced due diligence under the LFPIORPI is not a formality: it is a structural element of the closing process.

Phase 5: Constitution of Condominium Property Regime

The deed of individual units presupposes the constitution of the condominium property regime in accordance with the Law on the Condominium Property Regime of the State of Quintana Roo (LRPCQR), articles 5 to 22, which establish the requirements of the constitutive instrument: description of private and common areas, undivided interests, internal regulations, and value table. This instrument must be registered in the Public Registry prior to any partial deed of individual units.

Phase 6: Deed of Units and Closing

The transfer of each unit is formalized by public deed before a Notary of the State of Quintana Roo. Since real property located in Quintana Roo is governed by the Civil Code of the State of Quintana Roo and not by the Federal Civil Code, the applicable provisions for purchase and sale are those contained in said state ordinance, specifically the articles that regulate the purchase and sale contract in the book corresponding to obligations and contracts. The Federal Civil Code applies only in matters of federal competence or as supplementary in the terms expressly provided for by local legislation, so its direct invocation to regulate a sale of immovable property in Quintana Roo is technically imprecise before a sophisticated client or before a jurisdictional authority. Additionally, the tax provisions of article 126 of the Income Tax Law (LISR) regarding withholding on the disposition of immovable property must be observed. The foreign purchaser shall process the permit from the Ministry of Foreign Affairs in accordance with article 27 of the Constitution when applicable.

In the context of closing, the deed of each unit also activates the reporting obligations under the LFPIORPI described in Phase 4, with independent notarial verification of compliance with the notices to the SAT.

Practical Implications

Projects that fail legally do not usually fail due to an isolated error: they fail because the structure was designed for the closing phase without considering the regulatory exposure of the intermediate phases. A conditional environmental impact authorization may disable densities already committed in presales; a poorly structured trust may cause double tax accumulation; an unregistered adhesion contract may result in the nullity of liability limitation clauses in litigation with purchasers; an unsecured global mortgage may paralyze the deed process at the moment of greatest commercial pressure on the project.

Legal integration from beginning to end is not a luxury for large projects: it is the only model that makes the rights of all parties enforceable when the project faces stress.

IBG Legal has advised real estate development projects in which a conditional environmental impact authorization, received after the execution of presale contracts, required renegotiating densities committed with purchasers and restructuring the condominium regime before it was possible to deed the first unit. We have structured development trusts that have been subject to review by the CNBV in projects with an investment return component, and we have represented developers in clarification proceedings before that Commission. That concrete experience, accumulated in real operations with real consequences, is what differentiates our advisory services from generic regulatory analysis. If your project is in any of the phases described in this article, and especially if it faces a regulatory contingency not foreseen in the original structuring, contact us.

Sources and References

Federal Legislation

  • Political Constitution of the United Mexican States, article 27. Last amendment published in the DOF: October 18, 2024.
  • Federal Civil Code, articles 2248 to 2263 (sale of property, applicable in federal matters or supplementarily where state legislation expressly provides; the sale of real property in Quintana Roo is governed by the Civil Code of the State of Quintana Roo). DOF: last amendment January 11, 2024.
  • Civil Code of the State of Quintana Roo, applicable articles regarding the sale of real property and real security rights, including mortgage and its partial cancellation. Official Gazette of the State of Quintana Roo: current version.
  • Federal Tax Code (CFF), articles 14-B and 14-C. DOF: last amendment October 31, 2024.
  • General Law on Ecological Balance and Environmental Protection (LGEEPA), articles 28, 44 to 77. DOF: last amendment May 8, 2023.
  • Regulation of the LGEEPA on Environmental Impact Assessment, article 5, sections I, N and O. DOF: last amendment October 31, 2014.
  • Foreign Investment Law (LIE), article 10 (restrictions on Mexican legal entities with foreign participation in restricted zones) and article 11 (bank trust as acquisition mechanism for foreign natural persons: fifty-year term renewable, administered by Mexican credit institutions). DOF: last amendment June 15, 2023.
  • General Law on Securities and Credit Operations (LGTOC), articles 381 to 408. DOF: last amendment January 22, 2024.
  • Securities Market Law (LMV), articles 227 to 251. DOF: last amendment March 9, 2023.
  • Federal Consumer Protection Law (LFPC), articles 73 to 76. DOF: last amendment May 20, 2024.
  • Law of Credit Institutions (LIC), article 103. DOF: last amendment March 9, 2023.
  • Income Tax Law (LISR), article 126. DOF: last amendment January 1, 2024.
  • Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (LFPIORPI), article 17, sections I and XV. DOF: current last amendment. General Rules issued by SAT pursuant to said law.
  • Law on Transparency and Promotion of Competition in Guaranteed Credit. DOF: current version applicable to intermediation of mortgage products.

State and Municipal Legislation

  • Law of the Public Registry of Property of the State of Quintana Roo (LRPPQR), article 3. Official Gazette of the State of Quintana Roo: last amendment 2022.
  • Law on Human Settlements, Territorial Planning and Urban Development of the State of Quintana Roo (LAHOTDU-QR), articles 83 to 97. Official Gazette of the State of Quintana Roo: last amendment 2023.
  • Law on the Regime of Condominium Property of the State of Quintana Roo (LRPCQR), articles 5 to 22. Official Gazette of the State of Quintana Roo: last amendment 2021.
  • Construction Regulation of the Municipality of Benito Juárez, Quintana Roo. Last published version: 2019, with administrative updates.

Jurisprudential Criteria

  • There is a prevailing doctrinal tendency to the effect that pre-sale real property contracts with staggered payment obligations without delivery of a specific asset may be classified as preparatory contracts subject to the rules of rescission under civil law, imposing on the developer the burden of demonstrating work progress to justify the retention of advance payments. This characterization is consistent with the general principles of contract theory in the Mexican legal system. The identification of the isolated thesis or specific jurisprudence of the First Chamber of the SCJN with registration number and reference to the Federal Judicial Gazette must be verified in the Federal Judiciary consultation system for each specific case; this reference cannot be presented as reiterated doctrine of the Chamber without such verification.
  • Regarding the registrable enforceability of real property trusts against third-party purchasers acting in good faith, there are criteria from the Collegiate Circuit Courts in application of the principle of registration publicity. The identification of the thesis number and registration of the specific criteria of the XXVII Circuit (Quintana Roo) must be verified in the Federal Judicial Gazette before invoking them in jurisdictional proceedings.

Doctrinal Sources

  • Rojina Villegas, Rafael. Mexican Civil Law, Volume V: Contracts. Porrúa, Mexico, updated edition.
  • Díaz Bravo, Arturo. Commercial Contracts. IURE Editores, Mexico, 12th edition.
  • Pérez Fernández del Castillo, Bernardo. Civil Contracts. Porrúa, Mexico, 16th edition.

Official Sources

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