Home Purchase Agreement in Mexico: What It Must Include

The purchase agreement (contrato de compraventa) is the contract that sets the rules of a real estate transaction before the deed is signed (escrituración). A good agreement protects both buyer and seller, defines deadlines, amounts and conditions, and prevents disputes. In this guide we review the essential clauses, the role of earnest money (arras), the suspensive condition, and the mistakes you should avoid.

What is it and what is it for?

The purchase agreement is the document in which the seller agrees to transfer ownership and the buyer agrees to pay a price. It is usually signed as a step before the public deed (escritura pública), especially when you need to wait for a loan, gather documents or meet certain conditions. Although a well-drafted private contract is binding between the parties, keep in mind that ownership is only perfected with the registered public deed (escritura pública).

Clauses it must include

On how expenses are split, remember that by custom the buyer covers the deed and closing costs (escrituración) and the seller pays the ISR (income tax); it's best to put this in writing.

Earnest money, deposits and contractual penalties

Earnest money (arras) is an amount the buyer hands over as a sign of good faith and a guarantee of performance. It is essential to make clear in the contract what nature it has and what happens if either party backs out.

Contractual penalties (penas convencionales) are agreed amounts paid by the party that defaults. When well drafted, they encourage both sides to comply and avoid arguments over damages.

The suspensive condition

A suspensive condition (condición suspensiva) makes the transaction take full effect only if a specific future event occurs. The most common one is mortgage loan approval: the contract is made contingent on the bank or INFONAVIT authorizing the financing.

Including a well-drafted suspensive condition protects the buyer: if the loan isn't approved, they can recover their deposit without penalty, as agreed.

Promise to sell vs. purchase agreement

It's common to confuse the promise-to-sell contract (contrato de promesa) with the purchase agreement. In a promise, the parties commit to signing a final contract in the future; in a purchase agreement, the transfer is already agreed. Which one to choose depends on your situation: if requirements are still pending, a promise with earnest money and clear deadlines may be the right vehicle.

Common mistakes

Before signing any document or handing over money, verify the legitimacy of the transaction. Our guide to avoiding real estate fraud will help you spot warning signs.

Frequently asked questions

Is a private purchase agreement valid?

Yes, it is binding between the parties. However, it does not replace the public deed (escritura pública) for proving ownership against third parties. The recommended approach is to sign the contract and then complete the deed before a notary public (notario público).

Is it mandatory to give earnest money?

It is not mandatory, but it is a common practice that lends seriousness to the transaction. If you include it, clearly define its nature and the consequences if each party backs out.

Do I need a lawyer to draft the contract?

It is not strictly required, but having legal or notarial advice reduces risk. A poorly drafted contract can leave you unprotected right when you need protection most.

What happens if the buyer doesn't get the loan?

If the contract includes a suspensive condition for loan approval, the transaction can be voided and the buyer can recover their deposit, as agreed. Without that clause, they could lose the earnest money. That's why it's so important to include it.