Ability of Good Faith Purchasers to Take Precedence Over Community Property Rights

June 23, 2007
Ability of Good Faith Purchasers to Take Precedence Over Community Property Rights

The various civil codes of Mexico´s states provide that in the case of a marriage entered into under the community property marital regime, ownership ofall assets lies with both spouses. However, this principle has exceptions as set forth in the matrimonial agreement entered into by the married partiesand, according to applicable civil code sections; for example, it is common that the goods acquired prior to entering into the marriage, and thosereceived from a family member by donation or inheritance, do not form part of the marital property estate. With that said, Mexican courts haveconstantly debated whether or not a community property estate may take precedence over a third party purchasers in good faith. Such a situation couldoccur when only one of the two spouses appeared as owner of real property as recorded in the Public Registry of Property. In this regard, Mexican courtjurisprudence recognizes that in the sense the community property estate may be opposed against liens or encumbrances on the common assets, even ifit is not registered in the Public Registry of Property. The current trend provides that a real property right acquired by a third party in good faith takesprecedence over the lien or encumbrance relating to the property when such real property is not registered in the corresponding Public Registry ofProperty. The predominating view looks to protect the property rights of the acquiring good faith purchaser, which brings up the point of alwaysverifying the marital property regime of the seller and requiring the spouse to appear when the property is considered to form part of the communityproperty marital estate.

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