A Promise to Trust or commonly referred to as, a sale contract, pre-sale contract, or private contract has various uses for Real Estate in Mexico.
All pre-sale purchases of property in pre-construction will have a draft of this document prepared by the developer of the project you are purchasing in as their promise to sell to you, until the condo regime has been completed and the property can then transfer the legal title to the property.
It can also be a formal draft of your purchase and sale agreement for Real Estate leading to the transfer of the legal title to the property.
We also see this document used after the offer to purchase has been accepted and agreed upon and all conditions to the offer have been met, when a purchaser would like to have possession of the property before the title is ready to be transferred. The closing process in Los Cabos Mexico typically takes about 90 days or if there may be special circumstances that could lengthen the closing time frame or if the sellers title is held in a Fideicomiso (fee-day-e-co-me-so) by HSBC or Scotiabank the time to transfer the title will lengthen quite a bit.
The Promise to Trust will be the legal agreement that will contain the sellers and purchaser’s information, the legal description of the property, terms and conditions of the sale, and terms of the release of funds. With a purchaser receiving early possession of the property the seller will want compensation of the sale proceeds which is usually from 50 to 80% of the purchase price released to the seller on the possession date and a hold back of 50 to 20% in a 3rd party escrow account until the title is ready to be transferred to the purchaser and then is released with the title transfer.
The purchaser should also have deposited 100% of closing costs into the escrow account and all parties should execute an irrevocable power of attorney. All of the financial elements for the sale are there protecting the seller with the confirmation all of the funds have been deposited in return for early possession. And protection for the purchaser with the irrevocable POA that all documents for title transfer will be signed either by the seller or the POA and insurance that the title will be signed and transferred when ready. It’s recommended that purchaser and seller have an attorney draft the Promise to Trust so that it contains all of the necessary legal elements protecting both parties in their agreement.
