Properties in Mexico: Common Real Estate Terms – Part II

By Jorge Chávez
Mar. 30, 2022

Currently, there is an extensive language of terminology that is used during the process of buying and selling a property, so reviewing some of the basic concepts and terms involved in the process of buying and selling real estate is very useful and is an excellent way to improve sales skills. With this in mind, the Vallarta Real Estate Guide editorial team presents this second part of real estate terms.

Common Real Estate Terms

  • Área Restringida

The Área Restringida is the space of national territory within which foreigners are prohibited from acquiring direct ownership of any real estate property. According to the Constitución Política de los Estados Unidos Mexicanos, it is all land located approximately 62 miles from any national border and 31 miles from any ocean.

  • Amortizar

Amortizar means gradually paying off a debt through a series of payments that are usually the same and are made periodically. When a debt is settled with this method, a percentage of interest is also covered.

  • Avalúo

The Avalúo is a technical document that allows estimating the value of a property based on its physical characteristics, as well as location, use and market analysis.

  • CAT

The CAT or Costo Anual Total is the measure that defines how much money a loan costs you during the entire agreed term, including the nominal interest rate, opening fees, administration and insurance.

  • Certificado de Libertad de Gravamen

The Certificado de Libertad de Gravamen, also known as Certificación de Antecedentes Registrales, is a document that is issued to prove that a property has no debts and is free of all legal problems. It is used for different purposes, such as accrediting to an authority, person or institution the current legal situation of that property.

  • Depreciación

Depreciación is a wear or loss of value of a property caused by its use and/or function, which cannot be compensated by repairs, maintenance and even by the replacement of all its components. The Depreciación de Mercado o Comercial is the one that affects the entire property, since elements such as the standards of obsolescence of the Uso de Suelo, cyclical effects of the environment, new projections of Reglamentación Urbana and subjective elements of interpretation intervene.

  • Escrow

It is the legal concept that describes a financial instrument by which an asset or money is held as collateral by a neutral financial institution. This instrument is in the name of two or more parties who are currently involved in the process of completing a real estate transaction.

  • Fideicomiso

Foreigners who purchase property within the Área Restringida must use a Fideicomiso Bancario to maintain the property. However, as the property is not an asset of the bank, the buyer enjoys all its benefits of ownership directly.

  • Gastos de Gestión

Basically, the Gastos de Gestión are the fees paid to the Notario Público for the procedures and management carried out around the purchase and sale of a real estate property.

  • Gravamen

It is the burden that is imposed on a person or company for a property as a guarantee of the payment of a debt.

  • Parcela

It refers to a single portion of land that is part of a larger tract of land. This property is demarcated as its own portion. The Parcela can be used in different ways and for different purposes.

  • Penalización por Morosidad

Basically, the Penalización por Morosidad is the increase in the interest on a debt due to the untimely or non-payment.

  • Registro Público de la Propiedad

The Registro Público de la Propiedad is an office where the records of all the properties that are in the municipality are maintained. The Título de Propiedad is not valid until the Notario Público has registered it in this office.

  • Título de Propiedad

It is a document that serves to prove that a person is the owner of a property, which guarantees to the authorities that this property is already in the name of someone in particular.

  • UMA

The UMA or Unidad de Medida y Actualización is an index or measure that serves to determine the amount of payment of obligations and/or sanctions established by the federal laws of Mexico.