A documented “Offer to buy Real Estate” is only used in Mexican cities where usually buyer and seller are foreign (such as Puerto Vallarta, Cancun or Cabo). In the rest of Mexico, the contract that is used when you are planning to buy or sell real estate is called a “Promissory Contract”, and this contract (unlike the Offer) is specifically regulated under Mexican Law.
Is an Offer to buy Real Estate, a binding contract under Mexican Law?
After reading an Offer for the first time, I decided to study the document in more detail in order to determine if it was a valid and binding contract under Mexican Law and not just the product of what I like to call the “Conquistador Complex”. I concluded that even though it is an “atypical contract” in Mexico, the Offer does have the elements of a binding contract: there is consent of the parties (signature), there is a purpose (the commitment to buy and sell) and there is an agreed price. If the offer you are signing contains these elements, then it will be a valid contract.
What other elements should the offer include?
It is important that the offer includes, just like the “Promissory Contract”, a time limit to sign the final purchase deed (closing date). It is paramount that the wording in Spanish is clear and precise enough, otherwise the offer could lack legal validity. It is also advisable that the Offer is drafted and revised by someone with a certain knowledge of Mexican law so that it includes specific clauses such as early termination, penalties, escape clause, liabilities and enforcement. Also the jurisdiction in the offer (where a controversy will be resolved) should be the city and state in Mexico where the property is located and the applicable law should be Mexican law since the property you are buying is located in Mexico, otherwise the enforcement of the offer can turn out to be extremely complicated.
In summary, the “Offer to Purchase Real Estate” is a legally binding contract in Mexico, but you still have to make sure that it contains certain elements, otherwise it can be declared null and void.
Lic Roberto Ortiz Montellano is a member of the Mexican Bar Association and the Mexican Association of Corporate Attorneys. Check his website here.
