Procedures For Purchasing Property in
One of the first things you should
request when purchasing property in Mexico is a copy of the lien certificate (certificado de libertad de
gravamen) on the property. It should indicate the owner of record, surface area and classification of
property type, the legal description, and whether there are any liens or encumbrances filed on record
against the property. The buyer can also request a certificate of no tax liability (certificado de no
aduedo) from the local taxing authority.
Legal Steps To Purchase Real Estate In
1. Offer and acceptance and/or promissory agreement
In accordance with Mexican Law, a letter of intent fulfills the requirements for it to be considered to
be a valid contract, with the condition that there has been mutual consent on the part of both the
seller to transfer a specific property and the buyer to acquire it.
2. Title Search and Conditions of the
This will ensure that none of the information of the Public Registry of Property and Commerce regarding
the property is overlooked.
3. Requirements for closing and formal
execution of a standard real estate Transaction in Mexico:
Certificate of No-Encumbrances:
This certificate will enable the Notary to assess that the property does not have any lien or
encumbrance, or any claim pending over it, and thus can be transferred with a clean title. It is
obtained directly at the Offices of the Public Registry of Property and Commerce and basically it
must contain at least the following information: I) the number of years of documented history made
on the property; II) the surface area of the property in accordance with the records; III) the metes
and bounds of the property; IV) the name of the owner; V)classification of the property (urban or
rural); VI) a legal description of the property (such as if it is owned in a trust or by several
owners); VII) the name and signature of the registar and VIII) the official seal of the Public
Registry of Property and Commerce.
Certificate of No-Tax Liability:
This certificate will enable the Notary Public to assess that the property tax has been paid prior
to the transfer of the property.
Property Appraisal and Site Survey:
In accordance with the Real Estate Law ("Ley de Catastro"), it is mandatory to carry out a
site survey on the property and do an official appraisal. The appraisal must be done estimating the
commercial value of the property, considering its surroundings, a market survey and zoning
4. Notary Public and Public Registry
of Property and Commerce
The function of the Notary Public is to act as an extension of a Judge or the Government. His duty is to
ensure that a real estate transaction is formally executed in compliance with all legal requirements.
Upon the execution of the transaction, the deed of title must be recorded at the Public Registry of
Property and Commerce of the domicile in which the real estate, subject matter of the transaction, is
A Mexican "notario" is an
attorney who, after passing rigorous examinations, is commissioned by the government as a public notary.
A notario holds high office for life, unless he or she is removed for cause. The notario fulfills a
public function delegated by the government. Although licensed as an attorney, the notario is not in a
position to provide either of the parties with legal advice. The notario's responsibilities include
collecting and reviewing the sales contract, property tax and water payment receipts; ordering a bank
appraisal: freezing the property's file at the local public registry (no documents may be recorded in a
property's file during three consecutive thirty-day periods); reviewing the property's file to verify
the legal ownership and search for liens, encumbrances or anything that could affect the title (as the
majority of public registries are not automated, this procedure can take from 60 to 90 days); requesting
the public registry to issue a "Certificado de Libertad de Graveneres" (Certificate of Freedom
from Liens and Encumbrances); and performing the closing at this office where the notario handles the
transfer of the deed, tax withholding on the underlying real estate transaction, and the recording of
the documents at the public registry.
The Most Common Choices For Purchasing
Real Estate In Mexico:
1. General Purchase Sale Agreement
A purchase sale agreement occurs when one of the contracting parties obligates itself to transfer the
ownership of property and the other agrees to pay a certain price in consideration of the property
rights. The contract is perfected and binding between the parties as soon as the property and its price
are agreed upon, even when the property has not yet materially been delivered and the price paid. All
such contracts must meet specific requirements in accordance with Mexican law in order to exist and be
There are two types of elements to
Essential Elements: The essential elements of any purchase sale agreement: consent which is
granted by the seller's agreement to transfer the real estate to the buyer, and in turn, the buyer's
consent to pay a certain price; and object which is the purpose of the title transfer of the real
estate on the one hand, and the payment of a certain price as consideration of the transfer.
Validity Elements: The
validity elements are: legal capacity that refers to the legal rights of the parties to enter into
the contract; and legal form, which are the formalities with which a transfer complies in order to
be perfected. For example, real estate transactions must be in writing, and in order for such to be
binding before third parties, they must be recorded at the Public Registry of Property and Commerce.
Basically, the fundamental obligations of the seller in a purchase sale agreement, are: a) to
deliver the property being sold to the buyer; b) to guarantee the quality of the property; and c) to
guarantee the title (with cure in case of eviction).
On the other hand, the buyer's principal
obligation is to comply with the payment of the price in the terms place, and form agreed in the
2. Installment Sales Agreements
withholding transfer of title:
In this kind of agreement, the seller reserves title of the property until full payment of the sale
price is made, but the buyer may use and enjoy the real estate until full payment is made. Usually, this
kind of agreement includes installment payments. There are some advantages in using this kind of
agreement: First, the agreement can be recorded at the Public Registry of Property and Commerce as being
enforceable and binding before third parties. Second, the seller is not able to sell the property while
the purchaser is in compliance with the sales agreement, usually meaning that he is current in his
payment obligations to the seller. Finally, the obligations of the parties are subject to what in
Mexican Law is commonly known as "Condicion Suspensiva" (suspensive condition), which
conditions the agreement to full payment of the price to the seller.
3. Irrevocable Real Estate Trust
This is better known as a "fideicomiso" and is the most common instrument for the acquisition
of real estate property within the restricted zone, usually for residential purposes. The seller, "trustor",
will transfer property to a Mexican bank institution, the "trustee", by means of an
irrevocable trust agreement. The trustee will hold the property on behalf of a designated beneficiary
(usually the buyer). The bank is obligated to administer the real estate only for the benefit of the
beneficiary, who holds the right of use and enjoyment of the real estate, as an owner. The bank holds
title to the property but the beneficiary is entitled to use it and even sell the property held in trust
to any eligible buyer, providing that he instructs the bank to do so.