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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 need to be made, such as due diligence, drafting of the correspondent public deed, filing a preemptive notice and request 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. 6 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 for properly
recording the transaction before the local Public Property Registry. After closing, the notary public will be responsible for providing 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, the following are the expenses that a buyer typically needs to take into consideration when acquiring real estate in Mexico, subject to different local requirements that each City or State may have in the correspondent local regulation: (i) In case of a Mexican Corporation, incorporation costs such as notary public fees and registration fees — regulated locally in each State — ; (ii) In case of a Mexican trust, notary public fees and registration fees — regulated locally in each State — , as well as applicable trustee’s fees; (iii) Real estate appraisal; (iv) Notice to SRE, if applicable; (v) Tax or services certificates, evidencing that no government fees or taxes are outstanding; (vi) Taxes, whether local of federal, if applicable, such as income tax — for the seller — , acquisition of real estate tax, value added tax, etc.; and (vii) Notary fees and filing fees, such as, preemptive notices, certificate of encumbrances, registration of the change of title thereof, expedition of public deeds, etc.
5 Article 2249 of the Mexican Federal Civil Code ( Código Civil Federal ).
6 Articles 2316 to 2322 of the Mexican Federal Civil Code ( Código Civil Federal ).
ILN Real Estate Group – Buying and Selling Real Estate Series
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