Recent Case Decision – Purchase and Sale with Reservation of Title. Equitable Title

Recently, the First Chamber of the Mexican Supreme Court of Justice (Suprema Corte de Justicia de la Nación or SCJN) met in private session to approve decision 1a./J.58/2010, titled "Purchase and sale with reservation of title. The contract constitutes equitable title to demonstrate possession of property in the capacity of an owner in order to assert a claim for adverse possession." In such decision, the SCJN held that a purchase and sale agreement with reservation of title constitutes equitable title that allows a party to assert a claim for adverse possession "given that the purchaser is in possession of the property as an owner or titleholder and the possession is absolute and not derived." The foregoing applies notwithstanding the provisions in Mexico's Federal Civil Code, in the sense that insofar as legal title has not been transferred to the purchaser, the purchaser will be considered a lessee since the payment of corresponding rent is intended to protect the seller in case of a rescission of the agreement.

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