Understanding Key Legal Principles for Real Estate Investment in Mexico

Understanding Key Legal Principles for Real Estate Investment in Mexico

Investing in real estate in Mexico is an exciting opportunity for many foreign investors, especially those from the U.S. and Canada. However, like any real estate transaction, the legal framework plays a crucial role in ensuring that your investment is protected. In Mexican real estate law, there are several guiding legal principles that can significantly impact your property transactions.

In this article, we will explore three fundamental legal principles:

1. "Lo accesorio sigue la suerte de lo principal" (What is accessory follows the fate of the principal).

2. "Quien sabe y consiente no recibe injuria ni engaño" (He who knows and consents receives no injury or deceit).

3. "El que no hace lo que debe, hace lo que no debe" (He who does not do what he should, does what he should not).

Understanding these principles will help you navigate the complexities of property investment in Mexico while ensuring a smooth and legally secure transaction.

1. Lo accesorio sigue la suerte de lo principal (What is accessory follows the fate of the principal)

This legal principle means that anything attached to a primary asset (such as a piece of land) follows its fate. In real estate, this principle has significant implications when purchasing a property.

How This Applies to Real Estate Transactions

• Buildings and Improvements: When you purchase a property in Mexico, you are not just buying the land; you are also acquiring any structures, improvements, or natural resources attached to it. If the land is legally transferred, the buildings and improvements follow automatically.

• Liabilities and Encumbrances: If a property carries legal issues such as liens, debts, or legal disputes, these do not separate from the property itself. A buyer who does not conduct due diligence may end up inheriting these issues along with the property.

• Ejido Land Considerations: In Mexico, some properties exist on ejido (communal) land, which cannot be freely sold. If you unknowingly purchase such land, the legal status of the land follows the principal ownership rules and may not be transferred to you legally.

How We Can Help: Our legal team ensures that you are fully aware of all aspects of your property, conducting thorough title searches and due diligence to protect your investment.

2. Quien Sabe y Consiente No Recibe Injuria Ni Engaño (He who knows and consents receives no injury or deceit)

This principle emphasizes that a person who knowingly enters into an agreement cannot later claim they were deceived if they fully understood and accepted the terms.

How this applies to Foreign Real Estate Investors

• Understanding your Contracts: Whether you are signing a purchase agreement, trust contract (fideicomiso), or rental lease, it is essential to understand every detail. Ignoring key clauses can lead to unintended obligations.

• Escrow and Trusts: Many foreign investors purchase property through a bank trust (fideicomiso). If you consent to the trust's terms but later fail to comply with them, legal protections will not be in your favor.

• Negotiating with Developers: If you are purchasing pre-construction property, you must understand the terms of delivery, payment schedules, and any potential delays. If you agree to these conditions, you cannot later claim deception unless there was intentional fraud.

How We Can Help: We provide expert contract review and negotiation services to ensure you are fully informed before signing any agreements. Our legal team will explain all terms in clear language to protect your interests.

3. El que No Hace lo que Debe, Hace lo que No Debe (He who does not do what he should, does what he should not)

This principle highlights the importance of fulfilling legal and contractual obligations. If a party neglects their responsibilities, it can result in negative legal consequences.

How This Applies to Real Estate Transactions

• Property Taxes and Fees: As a property owner in Mexico, you are responsible for paying annual property taxes (predial). Failure to do so can lead to penalties or legal actions.

• Construction and Permits: If you plan to build or remodel, failing to obtain the correct permits from municipal authorities can result in fines or even the demolition of unauthorized structures.

• Closing Procedures: A property transaction must be formally ratified before a notary public in Mexico. If a seller or buyer fails to complete this process, the transaction may be legally invalid.

How We Can Help: We handle compliance checks, permit applications, and legal representation to ensure that all obligations are met, protecting you from costly mistakes.

Why Choose Us?

At Fajardo, Gil, Velarde & Asociados Real Estate Lawyers Mexico, we specialize in providing comprehensive legal services for foreign investors. Our expertise includes:

• Property Due Diligence: Ensuring clear and marketable titles before purchase.

• Contract Drafting & Review: Avoiding pitfalls in sales agreements and trust contracts.

• Public Registry & Notary Services: Handling all legal formalities for secure transactions.

• Escrow & Trusts (Fideicomiso): Guiding foreign investors through the trust process.

• Dispute Resolution & Legal Representation: Protecting your rights in case of conflicts.

We believe that knowledge is power, and our mission is to empower our clients with the legal confidence to invest in Mexico safely and successfully.

📩 Contact us today for a consultation!