shortcuts that can become big cuts

(In your pocketbook!)

by cheryl miller, cips, abr, aia, broker, baja realty and investment

Interestingly enough many foreigners believe that Mexico is still the wild-wild-west and does not have the 
sophistication to regulate land and building, as is the case in their home countries and cities. 
(They try to “get away” with things that end up later to be a true nightmare.)  Nothing could be farther from the truth.

Not only does Mexico, including, La Paz and Los Cabos counties have zoning codes, they also have building codes, in addition to tax codes that govern your deductibility of the investment you make in your property.  And many lots are also found within condominium regimes with another level of rules and regulations regarding design and construction from that community’s Home Owner’s Association.

Building here in the Baja can be an awesome adventure yielding the home of your dreams at a fraction of the cost of what you can do in your home area… but that dream home can become a nightmare if you do not familiarize yourself with the local laws, codes and regulations. 

Before you purchase, familiarize yourself with the specific zoning for the lot you are interested in purchasing; 

For instance, in some zones you are allowed only one story. Or you are allowed a certain size footprint on the ground and a maximum square meters of construction on the lot.  Is it enough?

You may also discover that the zone changes across the street, allowing for commercial uses…Is that OK with you?  Are there zone changes expected by application or the city in the near future?

This type of due diligence can be specified, with a date for completion, as a contingency of the sale in your offer.

Familiarize yourself with the Community’s Design Guidelines:

Each planned community who has lots for sale will also have a set of rules, regulations or guidelines that are an added level of specific restrictions and approvals you must adhere to.  They may specify acceptable areas in which you may build on the lot, the maximum height and the number of stories you are allowed, the style of architecture and the colors and materials allowed.  It is always a good idea to read these regulations prior to making an offer.

Building Codes and Permits:
YES, you will need a permit.  Unless you are building a wooden shed of less than 20 square mt.s in size…you need to pull a permit. If you do not pull that permit, you a) be shut down, fined and still have to pay for and obtain a permit, b) when you sell, you absolutely need to do the process with fines (about 11% of the costs of the property at the time of the rectification) prior to the closing, or c)  sell as vacant land and take a huge loss. Most buyers won’t accept the lack of legal construction and shouldn’t, as it just passes the issue and fees onto to them and you cannot charge for the illegal construction.

Believe it or not, Los Cabos actually has a pretty sophisticated system now of aerial photos to catch people that have not pulled permits or reported accurately their square meters of construction.  So sneaking one by is getting much more difficult, and in the end, is a loss for you in any re-sale you may want to do. 

You will find that building codes are pretty similar to those found up north (any of the Unified Building Codes) as far as fire and life safety is concerned.  Things like ceiling heights, door heights, escape windows and ventilation in bedrooms and living areas…these are pretty much the same.  Differences occur in structural values, but your Mexican engineer and architect are familiar with those.

Pulling a permit here in Baja, although it has become more difficult in the past years, is still much faster, easier and cheaper than your home state/country.  Unless you are doing something that requires a zone change, an unfamiliar building system, or asking for entitlements, you will find it to be quite fast and reasonable.

In some cases, clearing the land prior to construction may be required.  This too, requires a separate permit.  Your architect can arrange to get the appropriate permits for you. They generally require saving certain species of plants, either through relocation or by selling them to another location or a landscaper, and a donation of trees to the Municipality for use in street mediums or parks.  The costs for these permits are based on the size of the land you require to clear, but they are quite reasonable. 

Bear in mind, clearing land in Baja California Sur without a permit, if caught, is illegal and can render enormous fines, so it is best to do it right the first time!

What you need to get a permit:
You will need to hire a Mexican architect and/or Structural engineer.  Many architects are also licensed in Structural Engineering and vice versa. Many are not. The Structural Engineer needs to be registered with the Municipality in which the work will take place.  A basic full set of plans here in Mexico for a home, includes a site plan, floor plans, elevations (referencing site grades), a couple of sections, electrical and plumbing drawings.  Your site plan should be developed with a site survey, if appropriate.

If you want your home architect to develop the design, that is fine, but your architect will need to team up with a local Architect and Engineer to develop the “working drawings” as they must be in Spanish and in the metric system, as well as signed by a locally registered professional.

In addition to your engineer/architect, a Director of the Work (Director de la Obra) is required.  This person has a special higher designation than your architect /engineer and is legally and financially responsible for the project. Should anything go wrong or fail, they are held responsible.  They must also registered in each county.  They are supposed to check the drawings and the engineering and oversee the work from the standpoint of public safety and quality of construction.  There is an additional fee for this oversight, but it is required for buildings over a certain square meters (pretty much any home falls into this category).

Of course, a fee for the permit is paid based on the estimated value of construction that your architect submits with the application for the permit.  Although there is a maximum guideline the Municipality allows, it is always best to submit the real value rather than to minimize the costs during the permit stages. Why? Because the value of your manifestation is based on your permit value. Manifestation is the value given to your construction after completion for tax purposes. But it is not just your yearly taxes that are involved, it is also the value you are allowed to deduct against capital gains when you sell. Unless you or have facturas for every dime of the improvements,  the only way to increase the manifested value is to do a “re-evaluation” through various means before selling,  which can be costly. So, don’t go cheap on your permitted value…A few hundred dollars now in permit costs, can save you thousands of dollars later in capital gains taxes.

And one more time, all costs of goods, materials and services for you construction should be factured by an OFFICAL factura in your name with the address of your property.  Should the costs of your construction exceed the permit amount all of those facturas will yield a higher capital gains deduction and potentially save you thousands of dollars when you sell!  Take the extra time to get the facturas…it will save you a heartache in the end.

Building in Baja can be exciting and rewarding… but as everywhere, the greatest rewards come to those that educate themselves to what is required of them!

By Cheryl T. Miller, Broker of Baja Realty and Investment, Architect.  Contact Cheryl at 624-122-2690 or by writing  14 years experience in the Baja, serving all types of properties, and a land specialist.