MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
(g) management, licensing and operation agreements. • Environmental – to be performed by the attor - neys and environmental specialists for phases I and II, and authorisations reviews. • Tax matters – to be performed by the tax advisers. • Disputes – to be performed by the attorneys. • Surveys, usually under American Land Title Association standards – to be performed by professional surveyors, ALTA surveys, zoning confirmations, analysis to determine if the real estate is in an archaeological zone or histori - cal monument, etc. 2.5 Typical Representations and Warranties The most common representations and warran - ties agreed in sale and purchase agreements typically involve the seller’s faculties, legitimate ownership of the real estate, absence of liens or limitations affecting the real estate (includ - ing archaeological limitations or easements), no outstanding payments (including taxes), no land use issues, existence of permits, and no agrarian issues. In relation to the environmental representations, these often pertain to the exist - ence of certain permits or licences as well as the absence of any contamination, which is fre - quently qualified by the seller’s knowledge. This is one of the reasons why a phase I is required, and, depending on the asset or the results of the other studies, a phase II study may also be required. COVID-19 pandemic representations and war - ranties, even if not required in all cases, relate to running businesses such as hotel/office build - ings and include the non-existence of health sit - uations, claims, procedures by the authorities, and the existence of sufficient insurance cover - age, mainly business interruption.
In transactions involving corporate combina - tions, such as mergers or share purchases, typical M&A representations and warranties are included. It is important to mention that, in some cases, where transactions are structured as an asset acquisition (real and movable property, assignment of permits and licences), there is a risk that some authorities may treat the transac - tion as a business acquisition. In such cases, the seller’s obligations, such as tax or labour-relat - ed liabilities, may carry forward to the acquiring entity if the seller has breached their obligations with relevant authorities, like tax authorities. In real estate transactions, there are certain stat - ute indemnification provisions that arise from the law, where the seller shall guarantee the qualities of the thing sold and respond in case of evic - tion, meaning the seller is liable to the buyer if the purchased property is taken away from the buyer by a third party claiming to have a prior and preferential right of ownership over the pur - chased property. To protect against seller misrepresentation, purchase agreements often include indemni - ties and/or provisions for payment of damages. Similar to common law jurisdictions, a variety of negotiated provisions address remedies and misrepresentations (such as maximum cap, survival period, basket, joint liability, anti-sand - bagging clauses, etc). Typically, indemnities are supported by an escrow account or other types of holdback arrangements, or by joint liability of parent companies. While representations and warranties insurance is available in Mexico, it is not commonly used in transactions. 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 tax aspects (mainly determined by the Federal Tax
619 CHAMBERS.COM
Powered by FlippingBook