ILN: BUYING AND SELLING REAL ESTATE - AN INTERNATIONAL GUIDE

[BUYING AND SELLING REAL ESTATE IN MEXICO] 167

once a year and no later than March 15th of each year, at least ninety- five percent (95%) of the total taxable income accrued during the immediately preceding fiscal year.

used merely to express a non-binding intention of one party, lacking the essential terms of the final agreement. The promissory purchase agreement, as well as the private purchase agreement — as analyzed herein after — , is commonly used as a preparatory agreement providing the parties with an agreed timeframe generally used to finalize the due diligence and formulate the final and definitive agreement to be executed at a later date. For instance, before executing the final agreement, the public notary needs to draft the correspondent public deed comprising the definitive agreement, collect data and personal information of the parties, file a preemptive notice and a lien certificate before the Public Property Registry for priority or preference purposes, calculate taxes, etc. It is not uncommon to agree therein to a down payment from the promisor buyer, usually held in deposit by the promisor seller. After the agreed period of time, should the promisor buyer fail to buy, at no fault of the promisor seller, then the promisor buyer will forfeit the down payment. On the contrary, failure from the promisor seller to sell would generally trigger an agreed penalty, usually consisting of an amount equal to the down payment, plus returning the deposit to the promisor buyer. In the case that the promisor seller does not return the down payment and/or pays the agreed penalty, then the promisor buyer will have a strong claim against the promisor seller, in order to judicially demand either the deposit and penalty due or the execution of the final purchase agreement, as some courts may consider some promissory purchase agreements —

IV. Promissory and Purchase Agreements Once the buyer has decided in what capacity she/he will acquire title over the real estate, whether directly or through a Mexican Corporation, a regular Mexican trust or a FIBRA, transfer of ownership will take place through the execution of an agreement. Note that it is strongly recommended, at all times but specifically before closing of the contract takes place, to undertake a thorough due diligence and seek proper legal advice before engaging in any transaction. The following are the agreements typically used to formalize the real estate property acquisition in Mexico: (a) Promissory Agreement ( contrato de promesa ) A promissory purchase agreement is a very common way to agree with a seller the acquisition of a real estate property, without executing at that point the final purchase agreement itself. Through a promissory purchase agreement both parties reciprocally agree or promise, one to sell and the other to purchase real property at a stated price, as well as to enter into a final purchase agreement within a certain period of time, having agreed upon the essential terms thereof. This type of agreement is different from a “letter of intent” since, under Mexican law, a promissory agreement is binding on the parties and may be judicially enforced, in order to oblige the promisor to execute the final agreement. Meanwhile, a letter of intent is largely

ILN Real Estate Group – Buying and Selling Real Estate Series

Made with FlippingBook Online newsletter