Making Sure My Agreement Has An Effect Against Third Parties.

Nov 1, 2012 by Miguel Tapia

It is very common, especially in times of an economic downfall, that properties or rights that are on record under the name of a specific person or entity, may have different claims by third parties, either because they are under contract with different parties at a different times, or because there are several creditors to whom the owner of the property or rights may owe one or more obligations. In such circumstances, it’s extremely important to be in a position where your interest in such properties or rights can legally have an effect against third parties in a priority mode.

Having explained the above, it’s fair to say that many transactions done by foreigners in Mexico, are done by one of the principles that is often respected and recognized in their native country, which is the principle of good faith, as opposed to the principles of law that regulate such transactions, this is, the principles of Mexican Law, which in most times have far more formalities than those of other foreign countries. If there was a bullet proof guarantee that there are no issues of potential problems with third parties and/or claims made by third parties that could affect the rights to the properties or affect the contractual rights that a specific person may have, then I could say that the principle of good faith is enough to keep the transaction in a somewhat safe position, however that is seldom the case, especially as I said, in situations of economic downfall.

In essence, when dealing with transactions where the subject matter of such are either property or rights located in Mexico, the general rule is that for such transactions to take effect against third parties, they must be registered in the Public Registry. Registered so that through such registration the general public can have access to the actual situation regarding such property, or such rights, and such a situation can be enforced and/or opposed by third parties who may also have a claim or a vested interest. Such registration of rights, or such mechanism of providing notice to third parties through the Public Registry, also gives the registering party a way to establish in many instances a preferential right against all parties that may have a claim or an interest not yet registered.

Sometimes the way the contracts are written and/or drafted does not allow the direct registration of the contract, making it impossible to then give proper notice to third parties through the Registry. However, the Law does provide other mechanisms to have your rights recognized, and to have them publicized in a way that they can take effect against third parties. In light of the above, if you have entered into a contract where things are not yet finalized, or where you simply don’t know if your rights can be enforced properly against third parties thus establishing some form of preferential right, we strongly recommend that you consult with an experienced Mexican Attorney so that you can make sure that your rights are enforceable against third parties, and thus are protected against any possible claims, or interests of third parties.

If you are in the above mentioned position and feel exposed, or do not know with certainty if you’re contractual rights are enforceable against third parties who may also have a claim against the seller, your contractual counterpart, or against the property or rights, do not risk your investment. Not seeking legal advice could result in losing your property, your contractual rights, or your investment. We can help regain your peace of mind, please feel free to contact us for a free consultation and evaluation of your case at mtapia@internationaladvisors.com or by calling us at (602) 266-0225. Miguel A. Tapia. Attorney At Law Licensed in Mexico with a Masters in International Trade Law for the University of Arizona.

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