The importance of having legal counseling for real estate transaction in Mexico
As a legal firm specializing in Mexican real estate, we have witnessed countless cases where clients, in the absence of good legal counsel when drawing up a contract, are affected by situations related mainly to breach of contract or clauses of little benefit to one of the parties.
On this occasion we will analyze a particular case where the plaintiff has made a promissory purchase in which use of arbitrations was included, with rules agreed upon by both parties, but without the right to request legal intervention.
The controversy is very “square” since in this type of obligation, such as a promissory purchase agreement, there are only two reciprocal obligations, one from the seller to hand over the property under the agreed terms, and the other from the buyer, who must pay the agreed price. A study of the case and the defendant’s conduct clearly showed malicious intent on the part of the seller by including this clause to prevent the other party from taking legal action in court.
The main purpose of arbitration is for the parties to agree on how they will solve any dispute. Therefore, the arbitration agreement or clause should be clearly defined by both parties, otherwise they will have to conduct the arbitration under international rules.
Another common obstacle in these malicious arbitration clauses, is how to use mediation before resorting to arbitration, serving notice to the defendant, and replying to or settling the case within 30 days. If a settlement is not reached or the defendant does not respond to mediation, a solution will be sought through arbitration. At this stage, if the opposing party refuses to name a mediator, legal action can be obtained so the judge can name one to join the arbitration tribunal.
Once the arbitration tribunal has been set up the defendant will be subpoenaed, and evidence will be presented so the tribunal can make its judgement. The parties involved will have 45 days to hand in the lawsuit and the corresponding answer.
A favorable solution is usually reached in this kind of dispute in Mexico, as long as the contractual relationship, payment by the purchaser and breach of contract by the defendant are proven.
This is one example of why appropriate counseling can avoid us from having this kind of dispute. At MexLaw our team of Mexican lawyers will provide you with a professional and effective service to ensure your transaction is executed as agreed. If you find yourself in a breach of contract situation or find execution clauses that are harmful to your agreement, our legal team can help you settle this kind of dispute in a professional and trustworthy manner, as well as help you with legal services in Mexico in general.