At a first glance, there seems to be complexity surrounding Mexico real estate contracts, since there are no set rules for which ones are necessary and what should be included. However, with a brief introduction to each of the possible contracts, where there is flexibility, and where there is not, a buyer can be fairly confident in working with this system.
The Offer to Purchase is basically the first document utilized to begin the process of transferring a property from seller to buyer. The offer to Purchase can also be prepared as a Reservation Agreement or an Earnest Money Deposit, and lists the main points of a future transaction.
- Names and personal info of the parties
- Description & location of the subject property
- Property condition
- Price and payment terms
- Provisions for escrow
- Closing date
- The expiration date
- Indispensable conditions
- Terms and conditions of the offer
- Term of effect
- Jurisdiction
- Name of person responsible for closing costs (typically buyer), real estate fees and capital gain tax (typically seller)
- Conditions to be met prior to purchase including as applicable, home inspections, title investigation and commitment
- All other Responsibilities of the parties
- A clause indicating that the title shall be passed free and clear of liens or encumbrances
- Penalty clause in case of non-compliance
- Name of Notary
- Space for signature of both parties
The Promissory Contract is one of the most important documents to be elaborated and reviewed during the real estate acquisition process. Many people know this document as the “hard copy” and will hold the details such as legal description of the property, agreed price, penalties, etc.; while the Offer to Purchase contract is fairly flexible, this one is not. Of the contracts you complete, you will need to depend on this one the most, because it is the first document to outline the terms and details for the future execution of the real estate transaction.
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The Purchase Sales Contract is in essence the last contractual document required to transfer the rights of the property into the new buyer’s possession. This contract may be structured in various models such as a real estate trust agreement, an assignment of real estate trust or a reserve title contract; the model depends on the details and method of how the property will be transferred. It is important to note that the Offer to Purchase and Promissory Contract are intended to give the details and preparation for the transfer of the property whereas this final contract is the instrument exercising the actual, legal transfer. The Purchase Sales Contract is the document which the notary public will use in following the protocol to transfer the property legally. It becomes the new deed for the property.
