When purchasing a property in Mexico it is important to protect yourself in the event of possible legal disputes over ownership rights to a home or piece of land. One of the ways to insure against potential financial loss is to obtain title insurance. In Part 1 I spoke to Ivan Castillo at Stewart Title Latin America´s Playa del Carmen office so he could explain what it is and what they provide clients who have it. We continue with Part 2 and take a look at specific issues that might arise in which title insurance would benefit the client.
Give me an example of a property dispute regarding an overlap of lots.
So let´s say, you have a lot and the owner has title insurance for this lot in particular. And this is the beach, ocean front…this is the main highway, he built a development of condos. You have the property next door and guess what: the property next door did some sort of survey and he realize that his property actually overlaps. What happens with the properties that are right here. In theory these condos are in the property of the neighbor, which means that the neighbor is the owner of everything that is built over his property. That is a clear claim in title where your neighbor is saying, in accordance to my survey, the lot goes from here to here. So everything that is built inside is mine. That is an actual case. In that case in particular this developer did not have title insurance. If he did have title insurance we would have been involved in defending the title and more defending the owners that own property in this area. So that is one example of an insurance policy and claim in title.
What about squatters rights? Can someone lay a claim on a property if the owner is away?
In order for a squatter to actually take title. If you´re squatting in bad faith and it´s publicly known that you´re not the owner that wouldn´t apply. Because an individual that´s claiming to have lived there for an uninterrupted period of time in a public way and in a specific way there isn´t any 3rd party saying that they own the property and are only squatting. Then they can never take title, because there is probably an owner there. There´s an owner of the complete property. However if you´ve lived in that piece of property for a certain period of time in a public way and without anyone suing you because they claim to have the property and so on, through a legal procedure you can request a judge to recognize you as an owner and issue you title. However if a 3rd party pops up and says ¨You are not the owner and here are the documents¨ then that period of time would be interrupted and that individual that is living on the property cannot claim title and request through a legal procedure for him to be recognized as owner.
So there is a specific period of time?
Exactly, ten years. It´s not common but it does happen. People are trying to take advantage to create problems, to extort people and because through the process of which you are trying to kick people out it can take a long period of time in court and it will cost you a lot of money as well.
The bank would have to sue them because they are not paying and through a legal procedure they would take possession of the house, put it for sale and recover their money through action. So there is a legal document, probably a loan agreement through which the bank lent them the money and the borrowers within that document stated language of what would be the consequences of them not paying in a timely fashion. It doesn´t mean that they are not the owner, but the lender has certain rights to collect. So the judge would have to recognize the lender as an individual who has rights. When there is financing involved there is a lien over the property.
Is there a difference to the way it would work in the U.S.?
No, it´s the same thing. So the bank will repossess the property, put it up for sale, recover the loan amount, and that´s it.
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