It does not provide sufficient security. Just protecting your property in a private purchase contract implies several risks:
1 That someone else may seize it for debts owed by your seller. As long as the property is not deeded in your favor, it remains in the public registry in the seller’s name. And if there is someone with collection rights against your seller, they could seize it.
The way you can protect yourself from this is to make sure that your private purchase contract has a ” certain date” (which can be acquired with a certified copy before a public notary). In this way, you can prove to the lien creditor that the property has already been transferred to your ownership. But you are not saved from having to enter into a litigation procedure to defend your right.
2 The seller acts in bad faith, and sells it or gives it as guarantee to someone else. Of course, in this case there are actions (including criminal actions) that could be brought against whoever has acted in bad faith. But this will imply time and trial costs.
In addition, whoever has acquired the property from the seller in bad faith, could claim that “he is a third party with good faith”. Therefore, even if your legal actions against the seller in good faith proceed, you will not be able to take the property from the “third party in good faith”. And the only thing you will have left are the criminal sanctions against the seller in bad faith, and the right to be compensated by the seller for what you had paid (hoping that he has sufficient assets to compensate you for it).
3 That the seller does not deed the property to you. Either because he does not want to, or because something happens to him. Of course, if this happens, the private contract allows you to demand the deed in a lawsuit. But it will imply time and costs.
Evidently the circumstances of life expose us to constant risks. And it is impossible not to be exposed to them. But what is possible is to reduce them. For that reason the advice for private contracts of sale and purchase is as follows:
1 Previously make sure that the person who appears as your seller is the registered owner of the property, and that the same one does not have encumbrances (seizures, mortgages, annotations of judgments, etc.). The ideal method is with a certificate of freedom of encumbrances.
2 Make sure that the amount of the price you are paying at the signing of the private contract is not significantly high. So that as much of the price as possible is left at the signing of the deed.
3 Ideally, at the signing of the private contract, a “cautionary notice” should be registered in the Public Registry of Property. This is an immobilization of a real estate property that can be ordered by a notary, because a public deed is about to be executed. In Jalisco these cautionary notices last 45 business days. But in each state this may vary.
4 That the private contract clearly states that “the property is transferred to you”, and give ” certain date” to your contract (for this, it is enough to take a certified copy before a notary public). That way you have the possibility to assert your rights if someone repossesses your seller.
A private purchase contract could only give you the right to ask your seller to deed the property to you. But in order to fully enjoy, dispose of, and defend your property, it is indispensable to have a public deed.
