MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
agreements regarding services, maintenance, repair or supply of assets or utilities; (e) permits, licences and cocessions relating to the use of the property and their assignability; (f) hotel management and franchise agreements; (g) insurance policies; and (h) management, licensing and operation agree - ments. • Environmental audits to be performed by environ - mental specialists for Phases I and II, and authori - sation reviews. • Tax matters. • Existing and past disputes. • Surveys, usually under American Land Title Asso - ciation (ALTA) standards, to be performed by professional surveyors, as well as zoning confirma - tions, analysis to determine if the real estate is in an archaeological zone or is a historical monument, etc. 2.5 Typical Representations and Warranties Sale and purchase agreements commonly include representations and warranties covering:
To mitigate misrepresentation risks, agreements include indemnities, damage payments and rem - edies like caps, survival periods, baskets and anti- sandbagging clauses. Indemnities are often backed by escrows, holdbacks or joint liability of parent com - panies. While representation and warranty insurance exists, it is rarely used in Mexico. 2.6 Important Areas of Law for Investors The main areas of law to which an investor must pay attention when acquiring real estate are as follows: • tax aspects (determined by the Federal Tax Code, the Income Tax Law and local real estate acquisi - tion provisions); • environmental aspects; • agrarian background and regularisation process; • urban development and construction limitations; and • limitations imposed on the use of the real estate – in leasing, for example, especially for residential purposes, the limitations depends on where the real estate is located (eg, federal zone residential restrictions). It is important for the investor to understand that spe - cific laws apply to Ejido property. 2.7 Soil Pollution or Environmental Contamination Although it is common practice to include provisions in agreements that hold the seller responsible for the environment, the buyer may also bear responsibility before the environmental authority for the condition of the land and its remediation. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law In Mexico, zoning and land use are regulated at the municipal level, subject to federal and state guide - lines. Determining land use requires analysing zoning and planning laws. At the state level, this includes State Partial Development Plans, while municipal reg - ulations involve Municipal Development Plans, Urban Development Plans and sometimes Detailed Plans. To confirm land use, purchasers must review the zon - ing certificates and licences issued by the relevant authority.
• the seller’s authority; • legitimate ownership; • absence of liens; • unpaid taxes; • land use compliance; • required permits; and • environmental matters.
Environmental warranties often involve permit exist - ence, compliance and contamination absence, sometimes qualified to the seller’s knowledge. Due diligence, including Phase I (and sometimes Phase II) studies, is crucial. In M&A transactions, standard representations and warranties apply. However, in asset acquisitions, authorities may treat the deal as a business acquisi - tion, potentially transferring tax or labour liabilities if the seller has outstanding obligations. Mexican law includes statutory indemnification, where sellers must guarantee the property’s condition and compensate buyers if eviction occurs due to a third- party ownership claim.
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