Notarios in Mexico, as we have previously mentioned, are attorneys who oversee the transition of title on properties who cannot represent you in litigation but can advise you in preventing litigation. These attorneys give up private practice to become agents of record. They are required by law to assure that the property in question is free of liens “Certificacion Libre de Gravamen” and that the true property owner is the seller. The notario must receive an appraisal by a licensed appraiser to determine the tax obligations in transferring title. He assures the state that the foreign buyer is properly represented by a Mexican bank in a property trust or that the foreign owned Mexican corporationthat acquires the property is duly constituted and registered.
With the assistance of a competent Notario the foreign buyer can be reasonably assured that the process will be completed properly. However mistakes do happen and you may want a consultant, accountant or attorney, experienced in foreign investment, to oversee the proper completion of title transfer. What to look out for:
1. That the property title at completion of sale in the Notario’s office in fact gets registered at the Department of Public Records, it is not automatic and a failure to follow through can result in the property not changing owners with the possibility of future liens against the seller affecting your right to clear title. A lack of follow through by busy Notarios is not uncommon and can have disastrous results.
2. If it is a trust the buyer should receive a copy of the bank trust document. Unless requested the buyer is usually not given a copy of the completed trust and told they have the trust they ordered with both primary and secondary beneficiaries listed properly. On occasion the names are in error or a husband is named as a single primary beneficiary and the wife listed as the secondary beneficiary along with the heirs, usually their children. We have a case pending in which the wife should have been listed as the co beneficiary with her husband but was listed instead as the secondary beneficiary with an individual, unknown to the family or the bank. Since the husband died in testate two court trials will be required to unravel the bank error at a cost to the widow of eight thousand dollars in legal fees.
3. Since reasonable financing is difficult to secure in Mexico many properties are purchased with a mortgage held by the seller. Therefore, it is important that the buyer has a mortgage registered at the department of public record and not simply a contract of sale. The risk of postponing title transfer until the mortgage is paid off is that the property is subject to liens for credit problems of the seller before actual transfer of property is completed. A mortgage, called a Hipoteca, sp., registered in the Department of Public Records, safeguards the buyer from potential seller credit problems.