MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
Code, General Law of Commercial Companies, Stock Market Law and General Law of Securities and Credit Transactions will apply. For the transfer of title to Ejido property, the applicable law is the Agrarian Law. 2.3 Effecting Lawful and Proper Transfer of Title In Mexico, the legal methods for acquiring property are: • by transfer, whether onerous (such as a sale and purchase agreement) or gratuitous (such as a donation agreement); • usucapion; • accession; and • succession by reason of death. The most common way to acquire property is by entering into one of the following agreements: • a purchase agreement, as defined in Article 2248 of the Civil Code for Mexico City, whereby one party agrees to transfer ownership of goods or a right, and the other party agrees to pay a specific price for it; • a trust agreement, as defined in Article 381 of the General Law of Securities and Credit Transactions, whereby a trustor, by virtue of a trust, transfers the ownership of one or more goods or rights to a trust institution (trustee) for lawful and specified purpos - es, with the trust institution being responsible for realising those purposes (in an administration trust, the trustee maintains ownership of the goods or right, and the beneficiary is considered the holder of the trust rights); or • corporate combinations (mergers or purchase of shares). All transfers of title of real estate in Mexico are formal - ised before a notary public or judge and registered in the Public Registry of Property ( Registro Público de la Propiedad – RPP) of the state where the real estate is located or, in case of agrarian property, in the cor - responding agrarian registry. Protection of bad title is usually included in the pur - chase agreement as an indemnity in case of eviction. Although title insurance is available in Mexico, it is
uncommon, as is insurance to cover contractual liabil - ity resulting from breaches of the seller’s represen - tations and warranties in an acquisition agreement. Instead, indemnity is often supported by an escrow holdback, a price adjustment or a combination of both. 2.4 Real Estate Due Diligence Buyers usually carry out real estate due diligence through their legal advisers. The matters typically involved in real estate due diligence are as follows. • Ownership: To be performed by the attorneys. Encumbrances on the real estate (including liens and some litigation aspects) may be identified through the request of a real estate background folio from the RPP. Payment of real estate taxes and utilities for the past five years, which generally is the applicable statute of limitations for tax pay - ments, is also requested. In certain cases, search - es are conducted to determine the existence of agrarian issues, mainly by reviewing the title chain and determining if the process to have the property become private property was completed. In the case of agrarian properties, there are other aspects to be reviewed, such as the records of the property in the Agrarian Registry. • Corporate: To be performed by the attorneys (liens on the company through the request of a commer - cial folio from the Public Registry of Commerce of the area where the company is located). • Agreements: To be performed by the attorneys. The scope of the review of agreements in the context of a real estate business combination (ie, merger, purchase of shares) varies depending on the structure of the transaction. • Assuming the transaction is the direct purchase of real estate, the review should cover at least: (a) the last sale-purchase agreement that trans - ferred the property of the real estate and the chain of title; (b) any agreement that may affect the property, such as leases, commodatum, usufruct and easements; (c) federal zone concessions (credit agreements, if the real estate is subject to a mortgage, trust or any encumbrance on the property); (d) the availability of and access to services and
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