ILN: BUYING AND SELLING REAL ESTATE - AN INTERNATIONAL GUIDE

[BUYING AND SELLING REAL ESTATE IN MEXICO] 168

pursuant to the provisions therein — as a definitive private purchase agreement. Upon the agreed period, the parties shall execute the final purchase agreement before a public notary — as analyzed herein after — , pursuant to the essential terms agreed upon on the promissory agreement. (b) Purchase Agreement ( contrato de compraventa ) Contrary to the promissory agreement 3 , the purchase agreement itself is final. However, it may be executed either privately, as a preparatory agreement — needing to later comply with the legal formal requirements — , or directly through a public deed granted before a notary public. As a rule, the sale is perfect and obligatory for the parties when they have agreed on the thing — the real estate — and its price, even if the first has not been delivered nor the second satisfied. 4 The private purchase agreement, similar to the promissory agreement, is commonly used as a preparatory agreement providing the parties and the notary public with an agreed timeframe to prepare the definitive agreement. As mentioned above, before executing the final agreement, preparations need to be made, such as drafting of the 3 However, pursuant to the terms and conditions set forth therein, courts may consider some promissory purchase agreements as final agreements. “ When a promissory purchase agreement contains elements that belong to definitive transactions, such as the way in which the price will be paid, or it is stipulated that the purchased thing is delivered, the promissory purchase agreement is disrupted, because then the consent therein no longer refers to granting a future contract, but actually the final contract is being entered into. ” Judicial precedent entitled “PURCHASE UNDER APPEREANCE OF PROMISSORY PURCHASE” ( “COMPRAVENTA BAJO ASPECTO DE PROMESA DE VENTA.” ), with registry number 241344.

correspondent public deed, filing a preemptive notice and a lien certificate before the Public Property Registry for priority or preference purposes, etc. Pursuant to the legal formal requirements stated on the applicable Civil Codes, a real estate purchase agreement shall be generally executed through a public deed and recorded before the local Public Property Registry, in order to be effective against third parties. 5 The public notaries will be responsible to ensure the validity and enforcement of the transaction. Prior to closing, they will check for the existence of any debts or liens against the property; that the correspondent taxes and other government fees are paid in full, that the real estate description is correct and that the seller has the capacity to execute the transaction. In addition, they will take care of the tax matters of the transaction, for instance, that the property taxes, transfer fees/taxes and any capital gains taxes are paid at or prior to closing. They are also responsible to properly record the transaction before the local Public Property Registry. After closing, the notary public will be responsible to provide each party with a certified copy of the property title, duly registered before the relevant authorities.

V.

Closing and Ongoing Costs (a) Closing costs

For guidance purposes only, these are typically the expenses that a buyer needs to take into consideration when acquiring real estate in Mexico, subject to different

5 Articles 2316 to 2322 of the Mexican Federal Civil Code ( Código Civil Federal ).

4 Article 2249 of the Mexican Federal Civil Code ( Código Civil Federal ).

ILN Real Estate Group – Buying and Selling Real Estate Series

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