Is my real estate investment secure?, could i lose my property?
Over the past year, I have represented an increasing number of clients who have come to me with issues on properties they have purchased in Mexico. Mainly the issues were that the properties either had a lien from a third party, or have been adjudicated or were in the process of a foreclosure by a some creditor, often times a (bank), Mexican IRS (Hacienda), Social Security (Seguro Social) or some other governmental agencies.
The problem which was the common denominator with such clients was the fact that although they purchased the properties, and fully paid for them, they did so through a private contract that was not registered, and thus the property still showed in the Public Registry under the developer’s name, and not under their name.
Such situations basically left my clients exposed. At the mercy of creditors which the developers had, as they proceeded to pursue liens on the properties which my clients had purchased, but that were still under the name of the developers as explained above. Some of those properties ended up being adjudicated in a public foreclosure by the Mexican IRS and Social Security Office for back taxes and governmental fees that the developer owed, some in the millions of dollars.
Due to the above, we had to pursue several legal processes in court in order to defend my client’s properties, and/or get their properties back. A process that, although we were able to prevail, in most instances represented a high level of complexity, because in some cases the properties had already been adjudicated by the creditors.
Many buyers feel fully protected or with enough peace of mind, because they have executed a private contract by which they purchased the property, have fully paid for the property, and most importantly are using and enjoying the property.
However, in terms of security, signing the private purchase contract is only the first step towards obtaining full security on the investment or purchase transaction. As such full security will only be reached once the contract is formalized before a Notary Public, via a public deed under the name of the buyer, and such deed is then registered in the Public Registry free of any liens.
Another issue which is often times criticized, even by some attorneys, is whether or not foreigners can execute and have private contracts regarding properties that are located in the restricted zone (properties located 100 km from the borders, or within 50 kilometers from the shorelines such as those properties of Puerto Peñasco, Cancun, Cabo San Lucas, etc.).
Contrary to what some people and attorneys say as to the fact that they consider such private contracts invalid due to the fact that they are executed or entered into by foreigners regarding properties within the restricted zone, in my opinion such contracts are completely valid, and are completely enforceable, as such contracts only represent the original purchase transaction, not the final transaction, which as indicated above needs to be finalized in a Public Deed, and in the case of foreigners, a public deed that will contain the bank trust. My opinion and criteria has indeed prevailed in different courts, where I filed lawsuits to enforce my clients private contracts. The courts have recognized the validity of the contracts, and the validity of my clients interests and rights.
In conclusion, having a private contract by which a property was purchased is definitely the main source of your rights to the property. However, do not stay exposed before any third party who may have a claim against the developer and, consequently, do not stay at the mercy of any creditor who may put a lien on the property or who may adjudicate the property from the developer.
If you are in the above mentioned position and feel exposed, or your property has been compromised by a lien, or has been adjudicated, do not risk your investment. Not seeking legal advice could result in losing your property, we can help regain your peace of mind. Please feel free to contact us for a free consultation and evaluation of your case at firstname.lastname@example.org or by calling us at (602) 266-0225.
Miguel A. Tapia
Attorney At Law Licensed in Mexico
with a Masters in International Trade Law for the University of Arizona