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What You Don’t Know to Ask

Three factors currently exist in the Riviera Maya that, together, make it more important than ever for buyers and sellers of Mexican property to protect themselves. They are:

1. The Mayan Riviera, including Playa del Carmen, Cancun, Akumal, Tulum, is one of the hottest and, most lucrative, real estate markets in the world. Consequently, people come from all over the world to get into the land business without having ever lived or worked in Mexico and without having any experience with Mexican land transactions.
2. Real estate agents are not regulated in Mexico.
3. The Internet allows anyone to claim to be an expert in Mayan Riviera land sales whether or not they have any actual experience.

The Truth About the Business

Since around 2003, people who have never been in the real estate industry have flocked to the Mayan Riviera, specifically Cancun, Playa del Carmen, and Tulum, to get into the land business. Those who do have experience in real estate, generally do not have experience in Mexican real estate. They may have worked in land transactions in their home countries, but that does not mean they understand Mexican transactions.

The last several years, the internet has provided a way for people from all over the world to get into the Mexican beach property market without experience in, or knowledge of, Mexico. The internet provides the ability for these types of people to make money from the Mexican land industry without the authorization or oversight of the government, without knowing what they are doing, and with little or no responsibility to you, the client.

The result is a closing process that funnels you, as the buyer or seller, through a system without any true legal representation. The system is in place to get your money into the hands of the people running the system, as quickly as possible.

Why does this matter to you? Because if you end up working with someone like this, you may not be able to ask a court to hold them responsible for any errors they make.

Why I Should Choose My Own Lawyer (Why can't I use the guy I met at the bar?)

Why is it important that you take the time to investigate and hire a lawyer rather than just use the one recommended by someone else? Because if the lawyer is not operating with the authority of the Mexican government, you may not be able to hold them responsible for the work they do for you. Most people you meet will not understand this and will not have asked the important questions.

How do you know whether an attorney, or any other business, is operating legally with full authorization of the Mexican government? Look beyond the presentation. Ask the right questions. Don’t let yourself be funneled through a process you don’t understand by someone who has an inherent conflict of interest with you. Remember, all the people you come in contact with will make lots of money when you close. You must realize that there is a chance they are thinking about themselves, not about you.

What Questions Do I Need to Ask?

The first thing you have to know before hiring a professional is whether they have the legal authority to provide the service. Individuals will have a Cedula Profesional which will identify them as a registered professional. The Cedula Profesional will probably be hanging in a prominent place in their office. If you don’t see it, ask for it.

If the service is provided by an organization, the organization is responsible for the work. In order to hold the organization responsible, you have to know who the organization is. You have to know it’s legal name. The legal name will be followed by a series of letters identifying what type of organization it is. For example, Folsom y Asociados, S.C., is a legal designation telling the public what type of organization it is.

By law, all legal organizations are required to use and prominently display their legal corporate name at all times. Frequently, companies will do business and advertise under a commercial or trade name. For example, our trade name is CancunLaw. Professionals advertising and doing business with a trade name, however, are still required by law to display their legal name. Without it, the public cannot know who they are dealing with. Failure to so this, means that they are not following the law and it is impossible to know whether the organization is truly a legal company.

If the organization is not a fully registered legal company, you will not be able to hold it responsible for the work it does for you.

Similarly, if you, as the client, only have the trade name of the person or business representing you, you probably won’t be able to protect yourself in court. To bring suit, you will be required to use the legal name of the organization.

When deciding whether to hire an attorney, or other professional, be sure you know who is legally responsible for the service provided and ask for their Professional Cedula number and/or their RFC number. Anyone who cannot or will not provide these documents to you, is not who you want representing you.

Run, very fast.

Who is Responsible for My Work and a Word About Translations

In Mexico, when you sign a document, your signature means that you have read it and understood it and that you are responsible for what it says. You; not the lawyer. If the lawyer messes up, too bad. You signed it.

Under Mexican law, only the Spanish version of a contract controls. The English translation has no legal validity. This is all the more reason to have an attorney who explains every detail to you and who can translate the documents directly from the Spanish. Based on lots of experience, we can tell you that most translations of contracts we have seen are not accurate. Some of them are so bad they seem to be intentional for the purpose of deceit. Being a fully bi-lingual firm, we work with the original Spanish language documents to ensure they are correct and enforecable and to be sure that your understanding of them is correct.

Why All This Matters

The Mexican government is undergoing a complete transformation of land sales. Everything must be done exactly correctly. Laws that have been on the books for a long time, that have never been applied before, are all, systematically, being put into effect. It has never been more important for buyers and sellers to know that their lawyers and real estate agents are doing everything by the book.

At the same time, it is beyond crucial that you realize you are the one with the money, and the industry wants your money. In order to make that happen, the system is in place to get you to close your land deal as fast as possible. The faster, the better. The trend is to get the job done as fast and as cheaply as possible. This creates a closing process that leads to mistakes. You are funneled through that process without necessarily understanding the process.

Few professionals take the time to sit with you, listen to your questions and make sure you understand what is happening. You will likely never understand the documents, know if they are correct, or understand how they will affect you in the future. Nobody is going to tell you that. Nonetheless, you are responsible for all the work done on your behalf by your lawyers and real estate agents.

If you are demanding the fastest and cheapest closing, you are setting yourself up for problems down the road. It is like going to Walmart to get your legal work done and then complaining when it isn’t done right. You can’t hire a wholesaler to do custom work. It won’t happen and it is going to cost you more money down the road when you have to fix the problems.

I once asked a real estate agent who was looking out for the buyer’s interests. The answer I got was, “Who cares about them, they aren’t from here!”.

My free advice is that you get what you pay for. If you are willing to be “funneled” through a process you don’t understand by an industry that is getting rich on your back, be careful. In the end, it is you who is responsible and it is you who will pay.

We are a boutique law firm who does things one way - the right way. We are firmly and completely against taking as many clients as possible and funneling them through a process as fast as possible.

With CancunLaw, we are not simply an on-line presence employing young attorneys located elsewhere to do the work. We do all our own work, in-house. You will never be funneled through a process. You will never be referred out. You will never be railroaded.

Is it Safe to Buy Land in Mexico?

People have been asking us whether it is safe to buy land in Mexico for over two decades. We have always given them the same answer; “it depends”. It depends how well you understand what is going on and whether the deal is done correctly from the start. Some problems are nearly impossible to fix, and most of them were avoidable.

New buyers in Mexico have to realize that they are being “home courted”. What is going to happen is that your real estate agent is going to refer you to their attorney and then they are going to put you in the pipeline. You are going to be “funneled” thorough the closing process, understanding very little. If this is happening to you, then “no”, the answer is “no”. Buying land in Mexico isn’t safe under these circumstances.

The most important thing you can do is protect yourself. Use the same common sense you would at home. Do not be funneled through the process, blindly trusting, and signing contracts you do not understand. Do not check your brains at the border.

Do I need a Lawyer?

In a word, “absolutely!”

It is likely that you will be told that you do not need a lawyer because all land transactions are the same in Mexico. This is simply not true. No two land transactions are the same. There are many, many factors involved in each land deal that will determine whether any given piece of property is safe to purchase. Every transaction is different and each comes with its own risk. Nothing is more important than having an independent evaluation of the actual risk involved in your transaction.

In addition to accessing the risk of your land deal, at CancunLaw we will help you make an educate decision about which method of ownership is best for you. This involves a thorough understanding of your goals and of the legal and tax consequences and responsibilities of ownership whether in title, trust or a corporation.

Finally, at CancunLaw, it is our job to ensure that you are protected at the closing table. This requires us to work closely with the notary, bank and real estate agent to be sure that your documents contain the information you need so that you will be safe in the future. CancunLaw will be the only party at the table legally responsible to look after your best interest.

What is the role of the notary?

It is very common for real estate agents to advise new buyers that they do not need an attorney because the notary public will represent them. This is simply not true. The notary does not represent either party to the transaction. They have no legal responsibility to protect the buyer’s, nor the seller’s, interests. He is charged with keeping public records. He takes information provided to him, usually by the real estate agent, and together with the bank and the buyer´s attorney, creates the transfer document. He has no obligation to ensure that the information contained in the documents is correct or is in the best interest of the buyer. If you are not represented by an independent, ethical, attorney you cannot be sure that the information being provided to the notary is correct, in your best interest and will not have negative consequences for you down the road.

Mistakes made at this level are very difficult to fix. We once saw a case where two women, we will call them Mary Smith and Jane Jones, had gone together to buy a piece of property. The notary had accidentally joined their names and the final ownership document showed the property registered to Mary Jane Jones, an individual who did not exist. Fixing a problem of this magnitude is very difficult and will be expensive.

With CancunLaw on your side, you can rest assured that your ownership papers were drafted with your best interest in mind. You will understand them before signing them, before paying the purchase price, and you will have verified their accuracy before reaching the closing table.

Do I need Title Insurance and Escrow / Is a Mexican land deal the same as in the U.S.?

Mexican real property transactions are not the same as U.S. transactions. Many U.S. citizens and their US lawyers, however, approach the Mexican land purchase as if it were a U.S. transaction. Problems frequently result from attempting to “overlay” US laws and transfer procedures on the Mexico land sale.

A common misbelief is that all closing documents are standard documents not subject to review or modification. This is simply not true. Each transaction produces its own closing documents which must be studied in detail to ensure their accuracy.

The other imported concept is the idea that title insurance and escrow are necessary to do the transaction safely. Such a belief indicates a lack of understanding of the Mexican laws and many time is used to cover the backside of the professionals handling the case. To fail to understand this is to put unnecessary burden and expense on the shoulders of the buyer. It also exploits the new buyer’s fears of the unknown Mexican process.

Whether or not one needs title insurance and escrow is a decision that must be made on a case by case basis. It is imperative that you have an ethical, independent attorney who understands Mexican law and real estate transactions in order to determine whether you need title insurance or escrow. At CancunLaw, this is a standard part of representation of the client.

What contract do we sign in Mexico?

The contract that you sign for your Mexican land purchase, is one of the most important documents you will sign. It is very common for the real estate agent to have a purchase agreement prewritten which they will give you to sign. They will tell you that you must sign the contract before anything else can happen. You are being railroaded. DO NOT SIGN ANYTHING WITHOUT TALKING TO US FIRST. Mexico’s land transfer system is inherently reliable if the Mexican contracts are drafted correctly. There are standard clauses the contract should contain. Documents drafted by real estate agents or U.S. lawyers frequently fail to include the standard clauses, leaving the parties unprotected. The result is that it would be very difficult to enforce the contract.