MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
trust institution responsible for realising those purposes; in an administration trust, the trus - tee maintains ownership of the goods or right, and the beneficiary is considered the holder of the trust rights; and • corporate combinations (mergers or purchase of shares). All transfers of title of real estate in Mexico are formalised before a notary public or judge, reg - istered in the Public Registry of Property (RPP) of the state where the real estate is located or in case of agrarian property in the corresponding agrarian registry. Protection of bad title is usually included in the purchase agreement as an indemnity in case of eviction. Although title insurance is available in Mexico, it is uncommon, as is insurance to cover contractual liability resulting from breaches of the seller’s representations and warranties in an acquisition agreement. Instead, indemnity is often supported by an escrow holdback, a price adjustment, or a combination of both. While the COVID-19 pandemic has not led to new processes or procedures for completing real estate transactions due to the Mexican civil law legal system’s requirements for a notary public and specific filings, it has significantly increased the digital execution of private documents. 2.4 Real Estate Due Diligence Buyers usually carry out real estate due diligence through their legal advisers. The matters typi - cally involved in real estate due diligence are as follows. • Ownership – to be performed by the attor - neys. 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. Pay - ment of real estate taxes and utilities for the past five years, which, generally, is the appli - cable statute of limitations for tax payments, are also requested. In certain cases, searches 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 were 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 attor - neys. Liens on the company through the request of a commercial folio from the Public Registry of Commerce of the area where the company is located. • Agreements – to be performed by the attor - neys. 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 pur - chase of real estate, the review should cover at least: (a) the last sale-purchase agreement that transferred 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 agree - ments, if the real estate is subject to a mortgage, trust or any encumbrance on the property; (d) agreements regarding services, main - tenance, repair or supply of assets or utilities;
(e) franchise agreements; (f) insurance policies; and
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