There is a saying that “God is in the details.” Certainly details neglected can create problems later. The small O rings on the “Columbia” space shuttle froze and cracked, and causing leaks and an explosion: the entire crew lost their lives. A judgment was made of what the impact there would be to the project if the small rings were not tested for temperature changes of the type they would experience.
In my practice of real estate in Mexico, I have noticed details, which, when ignored, create big problems for owners, and even in some cases, for their heirs.
Number 1:
Whether you are buying in a trust, or a direct deed, you should list substitute or secondary beneficiaries. When the primary beneficiaries die, who will inherit the property? The simple escritura or fideicomiso guarantee deed becomes the will for the property. No probate is required to establish who is to inherit the real estate. If you change your mind, you can change the secondary beneficiaries. Just be sure to change them correctly and get the bank or notary to file the corrected last named beneficiaries. Making out a separate will to change your trust or deed on the property will not work. The deed on the property is superior to the will and the deed is where you must name your heirs.
One foreign gentleman thought leaving his house in Puerto Vallarta to his new wife and child in a Mexican will would override the fideicomiso. It was discovered after his death, that foreigners cannot inherit real estate in a will in Mexico. The person named secondary beneficiary in the trust, is inheriting the property and it is not the wife and young daughter.
Number 2:
There is confusing language between Spanish and English translations about how title is taken. Don’t get side tracked by similar or misleading words in English, or any other language, except Mexican legal Spanish. There is a concept in the Roman law that when there are two or more partners, each one can own 100% of the property. That is not what is meant, but when it is sometimes explained in a translation, this is how it is described. What this concept of law means is that either party can sell without the approval and permission of the other party. It would be rare indeed, in my opinion that any buyers would want to use this form of legal ownership. Two cases, of which I am aware, had great problems for divorcing couples who had chosen this form of ownership. I believe they misunderstood, or failed to ask for a full explanation. In these two cases, the two men sold the properties without the wives permission. They took the initiative and claimed the 100% rule, selling the property to a third party. Lives were damaged, in one case to a degree that was unbelievable. So don’t take this form of “solidaridad” ownership unless you really understand it and, it has a value to you beyond any potential damage which one party can cause upon the other.
Number 3, Original recorded Escritura:
Keep your original deed in a safe place. Your original is the one recorded and sent back to the notary who did the transaction. It takes months to get it back, so be sure to follow up after closing. The original receipt from the notary and the closing expenses are noted in the back of the document. When you are selling, a portion of these expenses are deductible against capital gains tax. You must have the original receipt to get the deduction.
This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review.
