Sometimes real estate transactions in Mexico go bad. And they can go bad in ways an American or Canadian might never imagine.
When you buy or sell property here you go in front of a notary (notario) and show your ID, which in Mexico is your voter card if you are a citizen or passport. Mexican notaries have “Public Faith”, meaning they are in effect arms of the government. But not all real estate transactions are negotiated in good faith in Mexico. Here is an example of what could happen.
An individual purchases a large tract in the country. Passport and residency card are presented by the buyer. The seller, who is well known to the buyer, presents his voter card. Both signed at the same table at the same time.
What could go wrong? The seller could be approached by people who covet the property in question and are induced to claim that he did not sign the deeds of sale. But where could that go? His signature is there, plain as day, as is a photocopy of his voter ID. The notary asserts it was him, that he signed in front of him and the seller watched him sign.
But the seller could insist that it is not his signature. He might have arranged through some illegal means to acquire a second voter registration card. He could then claim a look alike signed the documents. If the seller was paid in cash there would be no paper trail.
This assertion by the seller would trigger a call for expert witnesses. One who the seller will pay will certainly assert that the signature is not his. The buyer will then be required to produce an expert witness of his own who will assert it is indeed the seller’s signature and then the court will require a third expert witness from the official registry of handwriting examiners who will decide who is correct.
Local well-respected attorneys have asserted that these examiners are often crooked and seek payoffs. The entire case would revolve around this final examiner. The judge or panel of judges has no power here. If the handwriting examiner claims it is not the signature of the seller, that would decide the case even if it is plain as day to the judge that it is an authentic signature. These people could retain a Mexico City law firm said to have a close relationship with these examiners and presumed to be adept at bribing them.
What should you do to avoid a scenario like this? First, use a good notary. Talk to other ex-pats for their recommendations. They can usually recommend someone trustworthy. It is customary for the buyer to select the notary; often your agent can recommend someone. Then demand that the signing be video-taped and keep multiple copies, including one with the notary. Talk with the seller and be sure to get an interpreter to have the conversation in Spanish, if appropriate. Have the seller identify himself/herself clearly with personal details. Get your own copy of the signature so you can compare. If the notary is unwilling to do these things, get another notary.
It is extremely unlikely such a thing could happen to you. This is a one in a million possibility. I lay out this hypothetical so that you might see how some of the horror stories you hear about buying property in Mexico can arise and how to protect yourself. If you are able to buy title insurance you would be protected in such a scenario, so do so if you can.
The takeaway is not that it is dangerous to buy property in Mexico. It’s not. But the system is different from what you are used to in the U.S., Canada and other countries. That’s why you need a real estate professional who knows how it all works.