Procuring title insurance has become common practice in real estate transactions for both lenders and owners. As title insurance is a type of indemnity insurance which covers financial loss from title defects, it protects policyholders from past events which could affect the property's transfer. However, certain aspects of real estate development which are unique to Mexico must be taken into account in this regard.
Convention 169 – Indigenous and Tribal Peoples Convention establishes that indigenous peoples or communities must be consulted on any legislative or administrative act that may directly affect them. Companies that intend to develop or invest in real estate projects in Mexico should therefore consider community consultation as part of their feasibility criteria.
Acquiring real estate in Mexico can be cumbersome and time consuming, particularly for foreign investors. The Constitution forbids foreign individuals and entities from holding direct ownership of land or waters in the geographic area known as the 'restricted zone'. However, Mexican law allows foreign individuals and entities to use a foreign trust to acquire beneficial interests in real estate that is located in the restricted zone where it is intended to be used for residential or commercial purposes.
In determining the feasibility of a real estate project, an evaluation of the relevant financial and statistical analyses is not enough. Due to the complex and extensive legislative scope that developers now face, they must also consider the legal factors that will affect a project's implementation and operation, including with regard to the authorised use of a property, environmental zoning and ownership requirements, as well as the rights of indigenous communities.