5 Most Important Points to Review in a Promissory Agreement
Once an offer to purchase has been accepted, the next step is to complete a promissory agreement. The promissory agreement in Mexico is a formal and legally binding document that outlines the details and terms of the real estate transaction once all negotiations are final. It outlines details such as the legal description of the property, the final price, any penalties and other clauses agreed on by both parties. This agreement is the foundation of the transaction as the details of this contract will be used later to complete the sale and transfer the Title Deed.
In the process of purchasing a property in Mexico, it is imperative to have a lawyer review the promissory agreement before you sign on the dotted line. It is of the utmost importance that the information in such contracts is accurate, concise and complete to avoid future disputes.
The main points that should be reviewed in a promissory contract are the following:
- Confirm the legitimacy of the corporation or physical person who sells the property, reviewing the documentation in the Public Registry of Commerce to corroborate that proxy or legal representatives have the necessary powers to sign the agreement on behalf of the corporation or by their own and personal right.
- Confirm the legitimacy that the seller is the owner of the property, requiring the necessary documents to review it in the Public Property Registry.
- Searches in the Public Property Registry are critical, as it will be possible to verify if the property is free of liens. In case the property has a lien, it should be mentioned in the clauses of the contract that the seller will be obliged to cancel it before both parties sign the Title Deed.
- The penalties, in case of termination or rescission of the contract, must be equitable for both parties. Be aware that some developers do not accept any changes or modifications to their agreement.
- Confirm that the buyer’s general information (name, marital status, address, any others.) is the same as that which is mentioned in their identifications. In the same way, it must be confirmed that the payment schedule, selling price, dates of physical and legal delivery of the property, furniture or decorations included, and any other clauses are the same as what was written in the Offer to Purchase signed by both parties.
The information mentioned above is only the most important items to be reviewed in the contract, but there are many others factors that need to be analyzed before you sign. That’s why we suggest you hire an attorney to be legally advised in the process of purchasing a property in Mexico. Before you sign a contract of any type, consult the professionals at MexLaw.