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Mexico - House Purchase

The purchase of real estate/property in Mexico can be very complicated, both for Mexicans and foreigners. There are some restrictions for foreign ownership of real estate, according to the Foreign Investment Law of the United Mexican States (official name of this country). They were published in the official Gazette of the Federation, on October 27, 1993. They have more to do with the purchase of land in coastal areas or near the country’s boundaries, and therefore, would not apply to the purchase of most properties within Mexico City.

Any foreigner is able to own land in Mexico, regardless of his/her immigrant status. However, an authorization must be obtained from the Secretariat of Foreign Relations in Mexico City. One of the conditions to obtain this authorization is to agree and swear before the Ministry, that the buyer will consider him/herself a Mexican national wotj respect to the property, and will not invoke the protection of the government of his/her nationality in any matter related to such property.

When purchasing a property, the first difficulty is determining the ownership of the property. Ownership and sales may be registered in Mexico, but registration is not a requirement, thus the owner of a property may not be the owner and may not have the right to transfer a title to the property. There is no title insurance either; in the case of a fraudulent sale, the only recourse of the buyer would be through the criminal courts, which usually take up large amounts of the investor’s time and money before giving a ruling.

The vendor is responsible for the property sales tax in Mexico, and for this reason, the vendor usually requests that the sales price stated in the contract be lower than the actual price paid for the property. It is the purchaser’s decision whether to accept this request, but if problems arise in the future, the buyer will be able to recoup the price stated in the contract. Or if the property is ever taken from you, the basis for any settlement will usually be the declared taxable value.

As you see, it is very important that any purchase of real estate be made through a reputable real estate agent along with the services of a specialized attorney.

Paguro advises not to make a pre-construction purchase, because laws are not strong enough to make builders follow through on all of their promises during the pre-construction phase, especially in the event of a currency devaluation or inflation. It would be better to buy something you can see and touch.

In Mexico, the only enforceable provisions are those contained in a legal, written and signed contract. Letters of intent, word agreements and the like, which may be legally enforced in other countries, are meaningless in Mexico.

All legally binding contracts in Mexico are written in Spanish. A contract in any other language is invalid. If you request to have a copy of the contract in your native language or in English, the Spanish version will apply, so it is important that the translation from Spanish is as exact as possible. When you sign a contract, be sure to understand each of its provisions. It is most likely that one of the provisions will say that you fully understand and agree to all parts of the contract, and that it should be immediately binding.

Do not rely only on your real estate agent or vendor to understand the contract, even if he/she seems reliable. I recommend you to obtain the services of a "perito traductor" -expert and licensed translator- to avoid any problems.

It is recommended that you have any signed contract immediately registered through a notarial office, although this is not required in Mexico. Ask the notary to give you certified copies of the contract and have those certified copies authenticated by the embassy of your country. Registering a contract does not guarantee its legality, but it gives a great deal of protection under the Mexican law. Do not rely on the vendor or real estate agent to register the contract. The costs of the above mentioned services may be a little high for the purchaser, but well worth them.

In Mexico, the document used to pass on property from one party to the other is called "escritura". Certified copies of the original "escritura" are given to both the vendor and the purchaser, but the original itself is inscribed in the notary’s ledger and not given to the purchaser. The copy must have an original signature of the notary, and should provide the entry information of the transaction on the notarial ledger. Before having the "escritura" inscribed in the notary ledger, be sure to verify that the information it contains is correct. The correction of any errors later on, could be very costly.

As a protection to the purchaser, the notary public will require a document named "Certificado de Libertad de Gravamen". This document should be provided by the seller or the notary, to declare that the property is free of liens and/or encumbrances. This document is provided by the "Registro Publico de la Propiedad", the Property Public Records.

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