What is a Contrato de Promesa?
Contrato de Promesa
/kon-TRAH-toh deh pro-MEH-sah/
Quick Definition: A Contrato de Promesa (Promise Contract) is a legally binding pre-sale agreement in Mexican real estate that commits both buyer and seller to complete a property transaction under specified terms and timeline, typically requiring a 10-30% deposit from the buyer.
The Foundation of Mexican Property Transactions
A Contrato de Promesa serves as the bridge between offer acceptance and final property transfer in Mexican real estate. Unlike the US system where earnest money agreements are relatively informal, the Contrato de Promesa is a formal, legally enforceable contract that creates binding obligations on both parties. This document establishes the purchase price, payment schedule, closing date, and conditions that must be met before the final transfer of ownership through the escritura.
For international buyers in Mexico, understanding the Contrato de Promesa is critical because it's the point at which you commit significant funds (typically 10-30% of the purchase price) and legally obligate yourself to complete the purchase. This contract provides legal recourse if either party fails to fulfill their obligations, making it an essential protection mechanism in the Mexican property buying process.
Why Contrato de Promesa Matters for Bajío Buyers
In Mexico's Bajío region, the Contrato de Promesa protects international buyers by legally binding sellers to agreed-upon terms and prices. This is particularly important in hot markets like San Miguel de Allende where property values fluctuate and sellers might be tempted to accept higher offers. Once signed, the seller cannot back out or raise the price, and your deposit is legally protected if the seller defaults. The contract also gives buyers time to complete due diligence, secure financing, and arrange legal documentation before final closing.
Key Elements of a Contrato de Promesa
How Contrato de Promesa Works in the Bajío
In Mexico's Bajío region, the typical timeline from Contrato de Promesa to final closing ranges from 30 to 90 days, depending on the complexity of the transaction. During this period, buyers conduct due diligence (including title searches and property inspections), secure financing if needed, and work with their notario público to prepare the final escritura. The seller uses this time to ensure all property documentation is in order, resolve any outstanding liens or encumbrances, and prepare for the final transfer.
The deposit paid at signing is held in escrow (typically by the notario público or a trust account) and applied to the final purchase price at closing. If the seller defaults without valid reason, they must return double the deposit to the buyer. If the buyer defaults, the seller typically keeps the deposit as compensation. These penalties create strong incentives for both parties to complete the transaction as agreed.
Example: Contrato de Promesa for San Miguel Property
María, a Canadian buyer, finds a colonial home in San Miguel de Allende listed at $350,000 USD. After her offer is accepted, she signs a Contrato de Promesa with the following terms:
- Purchase price: $350,000 USD
- Deposit: $70,000 USD (20%)
- Closing date: 60 days from signing
- Condition: Seller must provide clear title and water rights documentation
- Remaining payment: $280,000 USD at closing
During the 60-day period, María's attorney conducts title searches and confirms the property has no liens. The seller provides all required documentation. On day 60, they meet at the notario's office, María pays the remaining $280,000 USD, and receives her escritura (property deed). Because the Contrato de Promesa was properly executed and both parties fulfilled their obligations, the transaction closes smoothly.
Legal Protections for Foreign Buyers
The Contrato de Promesa provides several critical protections for international buyers in the Bajío region:
Contrato de Promesa vs. Escritura
Understanding the difference between these two critical documents is essential for property buyers in Mexico:
Contrato de Promesa (Promise Contract)
Binding pre-sale agreement that commits both parties to complete the transaction under specific terms. Creates legal obligations but does not transfer property ownership. Typically requires 10-30% deposit. Executed before final closing, usually 30-90 days in advance.
Escritura (Property Deed)
Final legal document that actually transfers property ownership from seller to buyer. Must be executed before a notario público and registered with the Public Registry of Property. Represents the official transfer of title. Buyer pays the remaining purchase price and takes legal possession.
Frequently Asked Questions
Yes, a Contrato de Promesa is a legally binding contract in Mexico that can be enforced through the court system. Both parties have legal obligations to fulfill the terms, and there are financial penalties for default. This makes it much stronger than a simple letter of intent or offer letter.
Deposits typically range from 10-30% of the purchase price, with 20% being most common in the Bajío region. The exact amount is negotiable between buyer and seller. Higher deposits (25-30%) are sometimes required for off-plan or pre-construction properties, while established properties may accept 10-15%.
If the seller defaults without valid legal reason, they must return the buyer's deposit plus an equal amount as penalty (effectively double the deposit). The buyer may also pursue legal action to force completion of the sale or seek additional damages through the courts.
Absolutely. Foreign buyers should always have an independent Mexican attorney review the Contrato de Promesa before signing. The attorney can verify the terms are fair, ensure all necessary conditions are included, confirm deposit protection mechanisms are in place, and explain any clauses that may be unclear or unfavorable.
You can back out, but you will forfeit your deposit to the seller as compensation for the failed transaction. The contract may also include additional penalties. The only exception is if the contract includes specific contingencies (like failure to secure financing or discovery of title problems) that allow you to cancel and recover your deposit.
Related Terms
Escritura
Final property deed that transfers ownership
Notario Público
Mexican public official who executes property transactions
Anticipo
Initial deposit or down paymentInitial deposit or down payment
Due Diligence
Investigation process before finalizing purchase
Fideicomiso
Bank trust for property in restricted zones
Title Search
Investigation of property ownership history
Understanding Mexican Real Estate Contracts?
Navigate the Mexican property buying process with confidence. Our bilingual team guides international buyers through every step, from Contrato de Promesa to final escritura, ensuring your investment is protected throughout the transaction.