Specific Steps

Specific Steps in buying property in Mexico
1. Promissory Contract

Sometimes, the parties start their legal relationship by signing a Promissory Contract (Contrato de Promesa de Compraventa). This procedure is usually followed when the parties cannot enter immediately into a Purchase Agreement for any reason, such as:

  • Legal documents such as those set out above have not been provided or examined.
  • The Purchaser cannot immediately pay the full price.
  • The Purchaser does not want to pay the price or deposit until he has been duly advised by a lawyer.

The main purpose of such Promissory Contract is for the Purchaser to be assured that the property has been taken off the market (usually for a limited period of time) and for the Seller to ensure that the Purchaser is seriously interested in proceeding. If the Purchase Agreement is not signed within a pre-determined period, the property will again be placed on the market. Please be aware that in most of the cases the Buyer could be penalised for not going ahead.

The Promissory Contract should include:

  • Identification of the parties and the property.
  • The amount to be paid upon signing the contract, the total price and payment conditions.
  • The period in which the Purchase Agreement will be signed before Notary.
  • The consequences of not signing the Purchase Agreement.
  • The consequences of any of the parties withdrawing from the transaction.
  • The amount paid on reservation is deducted from the total price to be paid by the Purchaser.
  • The Promissory Contract must be dated and signed by both parties.

2 – Purchase Agreement

Both parties enter into a Purchase Agreement (“Contrato de compraventa”) which MUST BE signed before a Notary, identifying the property to be sold and detailing the conditions of the transaction. This is the only way accepted in Mexico which recognises you as owner of the property.

A Private contracts are not proof of ownership.

Before the Purchaser signs the Contrato de compraventa, his lawyer must make sure of the following:

  • That a proper search has been carried out at the Land Registry office and a “Certificado de Libertad de Gravamen” has been obtained confirming the description, ownership and charges (if any) of the property.
  • If some improvements have been made, a qualified architect must check the improvements and confirm that these are in order and comply with the Mexican regulations relating to planning laws, building regulations, permits and licences.
  • The Purchaser’s lawyer must make sure that all necessary permits have been obtained. i.e. building permits, no construction limitations, no rental prohibitions, etc.
  • That the property does not have any tenants or occupiers.
  • That there are no outstanding amounts for the utility services, especially Taxes.
  • If the property is part of a condominium or community of owners.

The Purchaser’s lawyer should obtain the following:

  • Copy of the condominium declaration.
  • Copy of the condominium regulations.
  • Certification from the condominium administrator confirming that the property does not owe any payment to the condominium.

 

3. Completion

When the above requirements have been completed, the formal act of sale takes place in front of a Notary. This act is known as the signature of the Title Deed “Escritura Pública de compraventa”. The “Escritura” is then taken to the Inland Revenue office to pay the taxes and then registered at the Land Registry office and Municipality.

Documentation required from the parties

 For the property:

  • Copy of previous Title Deed
  • Copy of the last 2 utility bills for each service and or Community Fee
  • Copy of the last “Predial” payment (council tax).

From the Vendor:

  • Official identification (i.e. Passport, driving licence, IFE card, etc.)
  • In case the Vendor is a company, copies of the company’s documentation and proof that the representative is duly authorised to represent the company.
  • Information about residence, marital status and occupation.
  • In case the Vendor is a company, the representative will need to provide personal
  • documentation
  • If the Vendor intends to be represented by an Attorney, then a Power of Attorney (“Poder”) will be necessary.

From the Purchaser:

  • Permission obtained from the Ministry of Foreign Affairs (SRE) that a foreigner is authorized to acquire real estate
  • Official identification (i.e. Passport, driving licence, residential permit card, etc.)
  • In case the buyer is a company, copies of the company’s documentation and proof that the representative is duly authorised to represent the company.
  • Information about residence, marital status and occupation.
  • In case the buyer is a company, the representative will need to provide personal
  • documentation
  • If the buyer intends to be represented by an Attorney, then a Power of Attorney (“Poder”) will be necessary.

 

4. “Fideicomisos” in the Restricted Zone

Mexican Constitution prohibits direct ownership of real estate by foreigners in what has come to be known as the “restricted zone”, (close to the borders and cost line as mentioned before).

However, in order to permit foreign investment in these areas, the Mexican government created the “fideicomiso,” which is, a real estate trust. Essentially, a Mexican bank must be designated as the trustee and, as such, has title to the property and is the owner of record. This enabled foreigners, as beneficiaries of the trusts, to enjoy unrestricted use of land located in the restricted zone without violating the law.

The bank, as trustee, buys the property for the foreigner, then has a fiduciary obligation to follow instructions given by the foreigner who is the trust beneficiary. The trust beneficiary retains and enjoys all the rights of ownership while the bank holds title to the property. The foreigner is entitled to use, enjoy, and even sell the property that is held in trust at its market value to any eligible buyer.

In order to allow foreigners must obtain a permit from the Ministry of Foreign Affairs prior to contracting to acquire real estate in Mexico.

The beneficiaries of the trust (fideicomisarios) may be:

  • Mexican corporations with foreign investment
  • Foreign individuals or legal entities
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