Mexico Property Ownership

This information can be found at Public Registry of Property.

Mexico Transaction Information

In Mexico, private firms collect transaction information on a sale or lease of real property. MLS exist in Mexico, these listings are prepared every 3 months in Mexico; nevertheless, they are 6 month-old in many cases, and they only list commercial, farm, ranch and luxury properties.

Mexico Trade Associations

Asociación Mexicana de Profesionales Inmobiliarios, A.C. (AMPI)
Rio Rhin nº 52
Colonia Cuauhtemoc
México
D.F.
06500
Mexico

Phone : +52 55 55664260
Fax : +52 55 55664323
e-mail : ampi@infosel.net.mx
Web : www.ampidf.com.mx

AMPI (the Mexican Association of Real Estate Professionals) has a mission to offer its members world class services through certification, training programs and new technologies. It maintains close relationships with all government bodies involved in the real estate market and works with them to obtain better services for property owners and investors.

Mexico Land Rights

Gov't - Eminent domain: In Mexico, the government can take private property for a necessary public use with just compensation paid to the owner.

Gov't - Escheat: The reversion of property to the state or county, as provided by state law, in cases where a decedent dies intestate and there are no heirs capable of inheriting or when the property is abandoned, is not found in Mexico.

Gov't - Police power: This constitutional authority and inherent power of a state to adopt and enforce laws and regulations to promote and support the public health, safety, morals, and general welfare is not found in Mexico.

Fee Simple Estates (Freehold estates): The owner of real property owns the surface and whatever exists thereunder, subject to servitudes, police regulations, the mining laws.

Leasehold estates: Tenancy at will is predominantly used in Mexico. It is a tenancy in which is terminable at the will or unilateral decision of either party, with no designated period of duration.

Mexico Forms of Ownership

Community property: There may be a separation of property either by a public document entered into before or during the marriage or by judicial decree in certain cases. In such case each may administer his own property subject to certain limitations.

In Mexico, there are four legal categories of land tenure:
1. Private Ownership by:
1.1.- General partnership (sociedad en nombre colectivo) is a partnership in which all partners have unlimited and joint liability towards third persons.
1.2.- Limited partnership (sociedad en comandita simple) is one in which one or more of partners are subject to unlimited joint liability for partnership obligations, and one or more of partners are responsible for debts and losses only to amount of capital which they have subscribed.
1.3.- Corporations (sociedades anonimas) are formed either by public subscription or by articles of incorporation executed by at least two persons and each should subscribe at least one share.
2.- Tenure held communally without private ownership rights (ejido lands.)
3.- National, state, or municipal government lands that are defined as public domain, and therefore are cannot be sold or otherwise transferred.
4.- National, state, or municipal lands that are defines as private domain land, and therefore can be sold, otherwise transferred, and legally are regarded as private property.

Mexico Real Estate Info Summary

Deeds: Sales of real property may be made by private documents signed by parties before two witnesses. If value of real property exceeds value set forth in Commercial Code, sale must be in form of public document.
adverse possession: Real property may be acquired by adverse possession: (1) In five years when held in good faith; (2) in five years when possession has been recorded in public registry; (3) in ten years even though held in bad faith.

All contracts transferring or modifying ownership, possession or enjoyment of real property or rights in them must be registered in order to affect third person. For a sale to legally occur, the title deed, a certificate of no property tax liability, a property appraisal and a topographical survey must have been certified by a notary public, who then record them within the title.

Certain contracts must be in writing, such as contracts agreeing to make a future contract, sales of real estate, leases, pledges, mortgages, etc. Writing must be in form public instrument depending on value of real property sold or mortgaged calculated according to formula set forth in Commercial Code.
A letter of intent is accepted as a valid contract or agreement for a sale. The most commonly transfer agreements used for a sale are a general purchase sales agreement and a reserve title and installment sales agreement. A general purchase sales agreement is the simplest and most common way to transfer the title; it is formalized by a notary public and recorded at the Public Registry of Property where the property is located.

The reserve title and installment sales agreement reserves the ownership of the title to the seller until the buyer fully pays the price agreed; however, the buyer has the right to use the real estate while still making payments. If the buyer defaults, the property reverts to the seller, but while payments stay current the seller is not allowed to sell, encumber or transfer the property to a third party.

Prepared by: Contracts and conveyances between private individuals which are required to be in the form of a public document when entered into in Mexico, should be prepared by and executed before a notary public. Mexican notary is a public official whose duties are much more important than those of the notaries under the U.S. system of law are. Notaries in Mexico are both accredited attorneys specially trained in contract law and agents of the government. They conduct title searches, write the legal documentation for the transaction, register the deed with the Public Registry of Property, and explain the legal consequences of the real estate transaction.

Property Taxes:

Ad valorem: Annual taxes on real property are levied by the Federal District and all the states at widely varying rates applied to values shown by the tax rolls, which, in some cases, are based on the rental income from land and buildings held for rent to third parties.

Transfer: There is 2% Real Estate Acquisition Tax. Transfers of real estate, almost without exception, are subject to title transfer taxes, which, however, have usually been coordinated with the federal tax on acquisition of real estate, in which case the federal tax is not collected.

There is also a value-added tax, known as the Impuesto al Valor Agregado (IVA), at the federal level that is 15% of the transaction price.

The notary is the key legal official for any property transaction. The negotiating process typically consists of a simple request for proposal, then direct negotiations between buyer and seller. When agreement on price is reached, the buyer pays anywhere from 10% to 50% down on execution of the contracts, with the balance due at closing. The notary handles the money.

Land Use & Control:

Zoning and permitting restrictions are relatively tight, especially in interior sections of Mexico. With increased environmental problems and controls the government is stressing that manufacturing projects be located within industrially zoned and approved areas. Local controls are often enforced on a state level for instance La Paz the capital of Baja California Sur,, Mexico may enforce Baja Real Estate land use regionally.

Mexico Mortgages & Financing

Typical: Mortgage must specifically designate the property they affect. Only a person able to alienate may make a mortgage and only property subject to alienation may be mortgaged. If the debt exceeds amount calculated according to formulas set forth in Commercial Code, mortgage must appear in public instrument. If it is less then there may be private instrument signed before two witnesses. But in any case mortgage has no effect as against third persons unless recorded.

Foreclosure: Foreclosure is effected by a summary action. A formal announcement of the institution of the mortgage action is published by the court and recorded in the registry and debtor is given five days to present his objections.

Governmental:
"Infonavit", a public organization, supports mortgages for low- income families. It deducts 5 % of monthly salary paid to more than 11 Million workers; however, 1/3 of its loans are in default, which has created a door-to-door collection scheme to improve the situation. If that scheme succeed, the next year (1999) it is expected an increase of 50% in the amount of loans issued.
"Fovi" is a fund of the Central Bank that provides low-interest mortgages financing to low- to or moderate-income home buyers earning between three and six times the monthly minimum wage.

Commercial:
The mortgages interest rate averaged 16.5% from 1989 to 1993, due to dual index mortgage rates that faced an inflationary market. Two rates existed as of 1994; the payment rate and the debiting rate. The payment rate calculates basic installments and is inflation liked, while the debiting rate is short-term and calculates the interest on the outstanding balance. Through this method, banks can refinance their loans monthly; when loan debits exceed the payments. Conversely, when the payment is higher than the real interest of the debit amount, then the principal of the loan is reduced in real terms.
Most of the Mexican population are affected by high barriers to buy their houses, so they have to buy a piece of land, save for the amount of construction material needed, and then built as much as they can, until new funds are available to keep on with their projects. This process, also common in other parts of Latin-America, is called "pay and build as you can plan".