Are you buying real estate in Mexico? Beware!

Don’t kiss your hard earned dollars goodbye!

Over the past 24 years I have been fortunate to represent dozens of US clients in, amongst other matters, purchasing beachfront properties In Mexico and structuring the respective land trusts or fideicomisos. During that time span I have had to persuade my clients not to enter into a purchase agreement because the seller does not actually own the property or because seller has not observed all legal requirements to be recognized as the owner of record, that is, the respective Trust Deed has someone else’s name on it, or the transfer is flawed because seller is not observing the formalities required by law or by the Trust Deed to legally transfer the property, subject matter of the sale, why?, well, the reason is pure and simple, seller acquired the rights to the property through an informal assignment of rights with the previous seller or he is the true trust beneficiary of record yet intends to assign his rights failing to abide to the rules of the trust, specifically those that make it mandatory for the seller to assign these rights with the prior knowledge and consent of the Trustee, which compels seller to notify the Trustee to have him prepare and sign the contracts in behalf of seller, to notarize and record the transaction with the corresponding office of the Public Register of Property and Commerce.

An informal assignment of rights is a private agreement between the parties, seller and buyer, this contract does not formally grant ownership over the property to the buyer, because the Trust Deed will still bear the name of the owner, which is legally the trust beneficiary of record, thus the deed will not be under the name of the buyer unless, both parties, understand and follow the above described formalities beforehand.

An informal assignment of rights has a considerable potential to go wrong anytime, it sometimes is carried out with the consensus of the parties, why? To avoid paying capital gains taxes, save attorney and notary public fees and possibly to also avoid recording duties. In the event that seller passes away and the assignment of rights was not formally and correctly completed, the successors might be able to inherit the property and rights over the property and might not want to acknowledge the contract thus jeopardizing the buyers rights. Don’t me mislead, the consequence for cutting corners can be rather harsh and expensive, these sort of things occur too often in Mexico, causing a myriad of legal problems to good faith buyers which might end up in a legal tangle. Knowledge is power, so do your homework!

For more information on the above or regarding any legal and business issues in Mexico don’t hesitate to contact the author anytime.

Rafael Solorzano, Esq.
822 Grissom Avenue
San Diego, Ca 92154
(619) 573-9384 Office
bctrusts@hotmail.com


Rafael Solorzano, former Trust VP for Banco Nacional de Mexico, S.A, A corporate attorney, licensed in all 32 Mexican States, with over 24 years of experience in fideicomisos (Trusts), corporate law, immigration, international business consulting, environmental, Health & Safety regulations, Federal Zone, Zoning Laws, Hunting, Firearms and Explosives Law.