Claims chronicles: Mexico
13 December 2010
Real Estate Ownership and Mortgage Security Insurance (title insurance) is still a relatively new product available in the growing Mexican real estate market. When, fueled by international investors, it made its first appearance some years ago, local attorneys, Notarios and real estate professionals used to agree with one dry statement: "title insurance, whatever it is, is not necessary in México." Such a statement overlooked a tangible fact: while buying real property in México can be a safe avenue for foreign investors, land litigation is a frequent occurrence in Mexican courts. Title claims and disputes are constantly filed in México, and even Notarios and Public Registrars, the gatekeepers of the system, are usually named co-defendants in legal actions that challenge their participation in the transactions at issue.
Tony Anton, Director General of FAF International Mexican office reviews some of the more recent examples of disputes affecting real property owned by foreign investors in México.
An active public sewer goes unnoticed
A well known leader of the United States retail industry was aggressively expanding to Mexico, buying, constructing and beginning to operate all over the country, anchoring many new shopping centers. One location faced an unforeseen problem- an active public sewer went unnoticed by the contractor in charge of the engineering due diligence prior to the closing. After months of planning, the schedule for opening was in jeopardy. Attorneys retained by FAF International entered into an agreement with the city to relocate the sewer line.
The Disgruntled Stepmother
Another big name in the U.S. retail industry was challenged when judicial action was made by the stepmother of the sellers of the property under the claim that her stepchildren had gained ownership over the land by forgery of their terminally ill father's signature. The plaintiff is currently seeking avoidance of that transfer and all transfers made after a point in time approximately 40 years ago. Should she prevail in her claim there will be a total failure of the title. The challenge is a complex multiparty litigation involving the current owners of this shopping plaza, the sellers and Notarios Públicos that participated in the transactions.
FAF International have retained top Mexican trial attorneys and the litigation is expected to last several years while working its way up through the complicated Mexican judicial process, involving both state and federal courts. Our client may rely on FAF International to provide for these costs while the other co-defendants who also bought land affected by the claim must pay for this unforeseen risk themselves.
Should the plaintiff succeed in proving her case resulting in a total failure of the title, a second level of protection will be triggered under the policy: FAF International will provide for the actual loss incurred by the insured, up to the amount of the policy.
Tony Anton, Director General of FAF International Mexican office