Dear Lisa: Downsides of Renting

Dear Lisa: Downsides of Renting

Your book, Moving to Mexico’s Lake Chapala, advises people to rent 3 – 6 months before buying a house. But I’ve heard a lot of horror stories about renting here. What are the downsides?                                                                                – Curious Dear Curious, It all depends on who owns and manages the property, of course. But there are some…

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LakeCity Development Project Still in Planning Stages on a Smaller Scale

LakeCity Development Project Still in Planning Stages on a Smaller Scale

In March of 2015, I broke the story of a large development complex being planned in the Lourdes community off the Carretera across from the Villa Montecarlo Hotel in Chapala. It was an ambitious project, to include 5 towers of 29 stories comprising over 2,000 hotel suites and residential condos, plus 420 residential villas, a…

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Francisco Diaz Interview: LakeCity and Las Minas Condo Updates

Francisco Diaz Interview: LakeCity and Las Minas Condo Updates

LCR: I understand you have been involved with the development committee in the Chapala municipal government. You must have interesting knowledge about the various building projects underway in the area. First, what is your background, and what are your particular interests? FD: My full name is Francisco Javier Diaz Ochoa. My father was the vice…

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Another Despicable Real Estate Practice

Another Despicable Real Estate Practice

Most people who are interested in buying and selling real estate at Lake Chapala are familiar with the monthly magazine Point South. It consists only of real estate ads. Space is purchased by the various real estate agencies in the area to showcase their listings. The cover is a big ad, too. It’s the premium…

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It’s Over – Real Estategate Guilty Verdict Upheld – Appeal and Amparo Finished

It’s Over – Real Estategate Guilty Verdict Upheld – Appeal and Amparo Finished

Itsover

While local real estate agencies, owners, and agents have been in damage-control mode, spinning tall tales to the public (and especially their clients) about Real Estategate ever since the Lake Chapala Reporter scooped this story last August, the Mexican government commission on economic competition, COFECE, has given its final ruling on the matter: Guilty as charged: guilty of running an absolute price fixing monopoly. No other appeals or amparos (injunctions) will be entertained.

As the original story reported, the heart of this racket consisted of forming real estate association groups (clubs) whose bylaws mandated that members had to charge at least 7% in sales commissions in order to list real estate on the group’s coveted multiple listing service (MLS). Those real estate agencies, owners, brokers, and agents who refused to participate in this scam were excluded from posting real estate on the MLS. The result, as decided by COFECE, was an illegal real estate price fixing monopoly in the Lake Chapala area between the years 2003 and 2007, and the deliberate cheating of largely elderly retirees out of millions of dollars of their life savings.

The guilty parties read like the Who’s Who of Lake Chapala’s real estate leaders.

Name Fines (in pesos)
Ajijic Real Estate $5,111,344
Absolut Fenix Real Estate/ReMax Fenix/Buen Clima Realty $4,444,645
Chapala Realty/Coldwell Banker $3,431,426
Eager y Asociados $3,092,192
Hernández Realty $2,481,610
El Tépalo/Vita Real Living Concepts $1,836,386
Adolfo Durán of Casa México $1,722,979
Beverly Hunt of Laguna Realty $1,541,977
Interlago Real Estate $1,420,921
GIL $1,362,760
AMPI – Chapala $1,362,760
Aarmonica Real Estate $670,592
Manuel Hernández of Hernández Realty $247,729
Mark Eager of Eager y Asociados $110,483
Marilyn Somers Doyle Burnham of Continental Realty $79,921
Dixie Nicholson of Absolut Fenix Real Estate/ReMax Fenix/Buen Clima Realty $36,612
Sandra Allin of Aarmonica Real Estate (currently of Collins Real Estate) $7,492
Richard Tingen of Chapala Realty/Coldwell Banker $6,479
Pedro Arellano of Arellano Corporation $4,899
Antje Groppe of Ambiance Fine Homes $92
 Total $28,973,299

SAT (Mexico’s tax department) is now aggressively pursuing the 28,973,299 pesos in fines levied against the guilty parties. This effort may be thwarted by some of the guilty parties having fled the country, some having transferred their assets to their children, and some having deliberately changed the names of their agencies and associations. This represents a double crime: participating in the original scam, and then hiding assets from the government’s tax agency.

The full details of this ruling can be found on COFECE’s website on their resolutions and opinions page: https://www.cofece.mx/cofece/index.php/resoluciones-y-opiniones. Click that link and scroll half-way down the page to case number DE-019-2007. The documents are all available there.

The real estate community can no longer hide the ugly truth of the Real Estategate scandal. It will undoubtedly try more damage-control maneuvers and fast talking. But the truth is in black and white for anyone to see who wishes to confront the guilty with the facts.

Case DE-019-2007 covered abuses between the years 2003 and 2007. A COFECE lawyer who has worked on the case is very interested in opening a new case covering subsequent years, since it appears the abuses have continued. Laws have changed in the mean time, permitting prison penalties in addition to fines to be imposed. This could have the effect of additional real estate office closings and additional people fleeing the country.

People involved in real estate, at any level, would do well to look themselves in the mirror and ask themselves how they can in good conscience, knowingly continue to participate in the most heinous scam their community has ever known. And if they choose not to look in the mirror, their families and friends would do well to confront them. No amount of money is worth the soul-destroying shame of ripping off their neighbors of millions of dollars. Those millions of dollars of dirty money have financed enough power to even intimidate the weekly publication Guadalajara Reporter into keeping quiet about their misconduct, threatening it with expensive lawsuits that could close it down. This is what mafias do.

If everyone confronted them and boycotted them and their other holdings, they would be out of business, and a cancer in this community would be eradicated.

Any real estate person refusing to negotiate a sales commission of a house below 7%, or a lot below 10%, is suspect. The norms are 5% and 7%, respectively.

The good news is that there are local real estate agencies who choose not to be part of this long-running scam. See the article here. Point anyone who is looking to buy or sell real estate there.

Limpio Lake Chapala.