Rent to Own – A Transaction Agreement
If you are selling your property in Mexico, you may get an excellent offer from a buyer looking for a rent to own situation. The potential buyer may want to live on the property while making substantial payments.
How do you protect your investment and not waste time and money if the buyer defaults? You will need to take extra precautions to protect your interests. We recommend you hire a Mexican lawyer to draw up or at least review any legal agreement you make to ensure you and your investments are fully protected.
What type of agreement will protect the potential buyer and the owner?
A transaction agreement – The object of the transaction agreement is to protect both parties involved in a sales transaction, for the owner, who will grant possession of their property, provided the occupant make specific payments towards ownership.
It also protects the buyer by securing the current price, ensuring the owner does not back out of the offer and provides the legal possession.
How is this different than a rental agreement?
If the buyer defaults on payments, the eviction process is costly and time-consuming in Mexico; and can involve a litigation process. The transaction agreement will allow you to recover the legal possession of your property much quicker than a traditional lease agreement. If the occupant defaults, they are obliged and have already accepted to be evicted from the property on the agreed final payment date. The occupant must deliver the property without further delay. There is no litigation involved relating to the possession, only the payment obligation.
How do I initiate this type of agreement?
Consult a Mexican lawyer; once the agreement is drawn up, it will be ratified by a civil judge or in the presence of a public notary. In the event, there is a breach of the transaction agreement; only the execution would remain, the occupant will not have any right to delay the owner from taking possession of the property.
What other points should be included in the agreement?
- Payment schedule and consequences of nonpayment
- Buyers collateral as a guarantee in case they default on payments or cause damage to the property.
- Proof of property insurance
- Responsibility of utilities, taxes, and repairs
If the buyer/occupant does not fulfill his financial obligations, how long will it take to evict the occupant?
The timeline to recover the property under a transaction agreement depends on the workloads of the courthouse. Still, compared to a regular lease agreement, the time of litigation to get the execution is significantly reduced.
A transactional contract may be more expensive, but it will significantly reduce the court costs and other risks to your property.