Use the Lexology Navigator tool to compare the answers in this article with those from other jurisdictions.

Rights and registration

Rights

What types of holding right over real estate are acknowledged by law in your jurisdiction?

Mexican law provides the following rights over real estate:

  • ownership;
  • use and occupancy;
  • usufructs;
  • easements; and
  • mortgages.

In addition, a feature that differentiates the Mexican market from other jurisdictions is that real estate developers commonly use trusts (where Mexican banks act as trustees) as vehicles of ownership and collateral for the development of projects. Mexican trusts allow for the creation of a bankruptcy remote vehicle (ideal for collateral purposes) and also have the benefit of acting as either transparent tax entities or tax contributors.

Are rights to land and buildings on the land legally separable?

Yes; however, Mexican law provides a legal presumption in favour of the landowner, which states that all constructions on a landowner’s property are owned by the landowner and were constructed at its cost. The legal consequences for building on someone else’s real estate will depend on whether the constructor or the real estate owner acted in good or bad faith.

Which parties may hold and exercise rights over real estate? Are there restrictions on foreign ownership of property?

Anyone with legal capacity may hold and exercise rights over real estate.

As a rule, foreigners may invest in real estate before obtaining the corresponding permit from the Ministry of Foreign Affairs or a record from such ministry that the corresponding notice was provided before acquisition, as provided by the Foreign Investment Law.

However, there are certain exceptions to this rule. First, foreigners cannot hold the status of ‘ejidatarios' (as defined in the Agrarian Law) and therefore cannot be assigned rights over such real estate under the agrarian regime.

Further, foreign ownership of real estate is limited to land outside the designated restricted zone – that is, any area within 100 kilometres of any neighbouring border or 50 kilometres of any coast. However, the Foreign Investment Law provides that foreigners may acquire interests in real estate located in the restricted zone through a trust, subject to the following provisions:

  • a permit must be obtained from the Ministry of Foreign Affairs; and
  • the trust must have a maximum duration of 50 years, which may be renewed for another 50 years.

How are rights, encumbrances and other interests over real estate prioritised?

Rights, encumbrances and other interests over real estate are prioritised depending on their registration in the corresponding public registry of property. Although each state has a registry and the effects of registration are declarative (except Quintana Roo), registration provides the registered title holder a good-faith assumption which is extremely valuable under Mexican law. Mexican law also permits the creation of second and successive mortgages.

Registration

Must real estate rights, interests and transactions be registered in your jurisdiction? What are the legal effects of registration?

Most real estate rights, interests and transactions (eg, not minor term leases) must be recorded in the corresponding state’s public registry of property in order to be effective against third parties. As aforementioned, in all real estate public registries (except in Quintana Roo), the registration of a certain right, encumbrance or interest over real estate is for informative purposes only and therefore the registration does not constitute any rights. That said, registration awards the real estate rights with publicity and prioritisation.

What are the procedural and documentary requirements for entry into the national real estate register(s)? Can registration be completed electronically?

There is no national real estate register. Instead, each state has its own real estate public registries and these may be divided into several internal jurisdictions according to the different municipalities.

Registrations are typically made using public notaries, since state law requires their intervention for most real estate transactions and that they be made by way of a public deed (depending on the amount of the transaction). However, original or certified copies of the agreements or titles must be delivered to the public registry of property and registration rights must be paid in anticipation of the corresponding registration.

Unfortunately, although most public registries are transitioning to electronic databases for registrations, originals of the agreements or titles are required in order to perform a registration.

What information is recorded in the national real estate register(s) and to what extent is such information publicly available?

Since the goal of public registries of property is to provide the public with information about the legal status of the real estate in their jurisdiction, all transactions, rights and interests affecting real estate may be recorded in the corresponding registries and such information is publicly available.

Is there a state guarantee of title?

No.

Click here to view the full article.