Possession Without Title is a Risk in Mexico Real Estate

When you Get the Keys, Get the Title!

Possession without title is a risk

BY BRIAN FLOCK

Too often, Americans buying property in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Mexico ignore not only the law, but also basic good sense.  Complete, legal title to a property in Mexico is supposed to transfer at the same time that you take possession of and finish (or start) paying for real property.  But, many buyers foolishly accept the keys to the unit, even though the deal has not closed and they do not have title.  Beware of this dangerous practice.

You should take title to the property as soon as you take possession of it, regardless of whether you financed through a bank or though seller-carried notes.  This is how you do it in the US. This is how Mexicans do it in Mexico. This is how banking institutions insist on doing it. On what basis would you agree to take title later and accept unnecessary risks?

A seller may suggest or even require that you not close title at possession of the property. The stated rationale is usually that this will allow you to reduce the upfront cash expenditures of Mexican closing fees. Alternatively, you may hear that the seller’s policy is not to give title until they have been 100% paid for the unit, and that this is “the way things are done here.” They may say that this is a requirement of their bank, or that the city hasn’t properly registered the property and that they are waiting on “paperwork.”

Whatever the reason given, unless you sign a contract which agrees that this is the way that the deal will be done, there is no legal basis for requiring that you take possession and make payments without closing title on the property. If you have signed a contract that does not offer you title at closing, yet the seller has not complied with other contract terms, you may have a basis on which to renegotiate the closing terms. Seek professional legal assistance from a trusted, Mexican lawyer.

Lic. Juan Carlos Ruiz, an attorney representing buyers, commented on the main difference between private contracts and registered titles. “It’s important for Americans to recognize that a sales contract has force between two parties: the Buyer and the Seller,” said Lic. Ruiz. “The contract does not have any effect on third parties that have legal interest in the property now or in the future. In contrast, a title registered in the Public Registry naturally has far-reaching legal effects on any third party who may have interest in the property.”

The bottom line is to take full title on all real estate transactions at the same time that you take possession and start payments on the property.  This will guarantee your legal property interests and protect you from unpleasant surprises in the future.

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