Under Mexican law a contract is defined as “an agreement between two or more parties to create, transfer, modify, or extinguish obligations.” Contracts are an essential element of any undertaking since they provide clarity and accuracy to the terms, conditions and obligations agreed between the parties involved in a transaction. In real estate matters, contracts are of paramount importance, especially in countries like Mexico where anything that is written in a contract has significantly more value than any verbal agreement reached by the parties.
So if I have a verbal agreement with my realtor, is that considered a valid contract in Mexico?
Mexican law does not specify that a contract for the provision of services (in this case real estate agency services) requires to be in writing to be valid. However, the ideal scenario would be for you to have a written contract with your realtor since in case of a dispute, the written contract would have more probatory value of the relationship between you and your realtor. A written contract will also be very helpful in determining the specific obligations of your realtor and the specific cases in which he or she would be in breach of contract.
And what about indemnity in case my realtor was negligent or acted in bad faith?
Article 2261 of the Civil Code for the State of Jalisco establishes that the provider of a service will be responsible towards the client for any negligence, lack of expertise or fraud incurred in the provision of the services. In this case, a written contract can also be very helpful in a Mexican court since it will provide a judge the documented evidence of a contractual relation and this will facilitate a ruling condemning your realtor to indemnify you by paying damages and lost profits. Furthermore, in case of criminal activity by your realtor, the written contract can be used as a piece of evidence in a Mexican criminal court.
There is a famous saying that goes: “Words are gone with the wind”. Nowhere has this saying more significance than in a legal dispute, especially here in Mexico. This is why a written contract with your realtor will not only be of use in court, but it will also be a preventive tool since your realtor will know that not honoring the contract can bring serious legal consequences.