Milestone Payments in Pre-Construction Condominium Purchases

When purchasing a pre-construction condo in Mexico, one of the most important elements of your payment structure is how and when you release funds to the developer. Many condominium projects use “milestone payments” — payments tied to specific stages of construction — rather than relying on arbitrary calendar dates. This approach can help ensure that the work is actually completed before you hand over your money. Milestone Payments in Pre-Construction Real Estate help protect the buyer.

Understanding Milestone Payments

In a typical pre-construction condo project, milestone payments are linked to major construction achievements. For example:

• Foundation Completed – The base structure and supports are in place.

• Second Floor Finished – Framing, concrete, or steel up to the second floor is complete.

• “Obra Negra” (Rough Construction) – Structural walls, roof, and essential framework are built.

• Completion of Finishing – The floors, bathrooms, appliances, windows and installations are in.

By tying payments to these checkpoints, you ensure that your money is supporting visible, verifiable progress rather than funding unrelated expenses or delays.

Why Verification Matters

Before making each milestone payment, verify that the promised work has been completed. This can be done with an on-site visit, photographs, or a third-party inspection.

Too often, buyers rely on the developer’s word or a date on the contract. The risk? You might be paying for work that hasn’t been done. In one cautionary example, a developer collected the next scheduled payment but was instead “in Acapulco sitting on the beach drinking rum” — while the construction site sat idle.

The solution is simple: no proof, no payment. Only release funds when you can clearly see that the milestone has been achieved.

The Problem with Arbitrary Payment Dates

Some contracts call for payments to be made on specific dates regardless of progress. This creates a serious risk for buyers:

• The developer may collect funds before the work is done.

• Delays or lack of activity on the site will not stop the payment schedule.

• Your leverage diminishes once the majority of funds are already paid out.

By tying payments to verified milestones, you keep the developer accountable and ensure that money flows in tandem with tangible progress.

Example of a Milestone Payment Schedule

Here’s a sample payment structure for a four-story condo building:

• Reservation: $10,000 USD refundable holding deposit. Fully refundable for up to 2 weeks with a Letter of Intent (LOI).

• 35% Down Payment at contract execution.

• 40% During Construction — divided into 4 milestone payments of 10% each:

  1. Foundation complete

  2. Second floor finished

  3. Roof on

  4. Interior finishings complete

• 25% Upon Delivery of the completed unit.

This approach keeps the project on track and aligns payments with visible progress.

When buying a pre-construction condominium, milestone payments aren’t just a formality — they are a safeguard. By tying your payments to specific, verifiable stages of construction, you protect your investment, ensure accountability, and keep your developer motivated to stay on schedule.

If you’re exploring pre-construction opportunities in Cabo, we can help you structure a safe and effective payment plan.

Contact: Fletcher Wheaton – fletcher@remexico.com