What different contracts are involved in a Mexico Real Estate transaction?

Within Mexican Legislation, there are several Mexico real estate contracts related to the transaction; the most common agreements are oriented to purchase, sell, lease and encumber properties, whether these are preconstruction projects or finished residences.

• The Sale-Purchase Agreement is a common civil agreement, by which the Seller transfers a property to the Purchaser, and the latter pays a certain amount of money for such transaction; if the object of this agreement is a property located within the restricted zone, such legal act can only be configured by Mexican individuals and/or Mexican Corporations (which might or not have foreign shareholders). It must be highlighted that Corporations with foreign investment can only acquire Mexico Real Estate that is not intended for Residential Purposes; otherwise the parties must engage into a Trust Agreement.

• The Trust Agreement derives from an Anglo-Saxon legal figure, and is intended for those foreigners who desire to acquire Mexico properties within the restricted zone (50 km from the coast line and 100 km from the boundary-frontier line); as this restriction is highlighed in article 27 of our Mexican Constitution. This legal figure uses three parties: a) The Trustor, which is the party interested in transferring the property to a third party; b) The Trustee, which is the party which will legally hold the property, and whose main purpose is to administrate the property in the benefit of the Trust Beneficiary (This entity is commonly a derivative of a Bank Institution, and charges a yearly fee which oscillates between $450 usd and $600 usd); c) The Trust Beneficiary is the party which will enjoy and use the asset held by the Trustee, and is free to encumber and transfer the property in favour of a third party with the authorization of the Trustee.

• The Lease Agreement is a common contract by which the Leaser allows the Tenant to use and enjoy a property for a time frame, in exchange of a quantified amount. (Eviction processes in Mexico are time consuming and expensive, thus it is highly recommended to have sufficient collateral and/or guarantees to protect the proprietor from an un-performing tenant).

In addition to the aforementioned agreements, which are the most commonly used in Mexico laws for Real Estate transactions, there are accessory contracts which aim to grant security to an unshielded party. Some of the legal tools used as collateral and/or security are: a) Mortgage Agreements, b) Guarantee Trusts, and c) Promissory Notes.

Juancarlos Pelaez has been focused and has been helping non-Mexicans with their real estate contracts and activities for over 10 years in the Yucatan Peninsula region.  A graduate  from the prestigious Mexican University of Monterrey Technologico and a Masters Degree from Madrid Spain, JuanCarlos has ample knowledge in the regional laws and obstacles that most Americans and Canadians experience.  You can contact him at (512) 879-6546 or through the company’s web site www.TOPmexicorealestate.com NETWORK

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