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 Mexico:
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 Property
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
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
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 regulations.
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 located.
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)
- 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
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 valid.
There are two types of elements to the contract:
- A. Essential Elements: The essential elements of any purchase sale agreement: consent
which is granted by the
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
hand, and the payment of a certain price as consideration of the transfer.
- B. 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
For example, real estate transactions must be in writing, and in order for such
to be binding before
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
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 agreement.
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
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 Agreement:
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.