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 orSCJN) met in private session to approve decision 1a./J.58/2010, titled “Purchase and sale with reservation of title. Thecontract constitutes equitable title to demonstrate possession of property in the capacity of an owner in order to asserta claim for adverse possession.” In such decision, the SCJN held that a purchase and sale agreement with reservationof title constitutes equitable title that allows a party to assert a claim for adverse possession “given that the purchaseris in possession of the property as an owner or titleholder and the possession is absolute and not derived.” Theforegoing applies notwithstanding the provisions in Mexico’s Federal Civil Code, in the sense that insofar as legaltitle has not been transferred to the purchaser, the purchaser will be considered a lessee since the payment ofcorresponding rent is intended to protect the seller in case of a rescission of the agreement.