[BUYING AND SELLING REAL ESTATE IN MEXICO] 172
non-binding intention of one party, lacking the essential terms of the final agreement. It is customary to also have a letter of intent or a signed offer to purchase before the promissory agreement. Letters of intent and promissory agreements do not require more formalities other than to have the signatures of the parties involved. The promissory purchase agreement, as well as the private purchase agreement — as analyzed herein after — , are commonly used as a preparatory agreement providing the parties with an agreed timeframe generally used to finalize the due diligence and draft 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 and the real estate property, file a preemptive notice and request 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 on 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 — 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) Definitive Purchase Agreement ( contrato de compraventa ) Contrary to the promissory agreement 4 , the definitive purchase agreement itself is the final and definitively contract. However, it may be executed either privately, as a preparatory agreement — needing to later comply with the relevant legal formal requirements — , or directly through a public deed granted before a notary public. As a general rule, the sale is perfect and obligatory for the parties when they have agreed on the object — the real estate — and its price, even if the first has not been delivered nor the second satisfied. 5 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 4 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.
5 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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