IBG Due Diligence Protocol: Checklist, Standards and Timelines

Regulatory Framework and IBG Quality Standard for Real Estate and Corporate Due Diligence

This protocol constitutes the binding internal standard of IBG Legal for conducting legal audits in real estate and corporate transactions. Its application is mandatory for all attorneys and associates of the firm, regardless of the office of origin. The protocol is structured on three axes: federal and state regulatory compliance, processable time metrics, and quality criteria verifiable by the supervising partner.

Regulatory Basis of Legal Audit

Due diligence in Mexico is not codified as an autonomous legal procedure, but its minimum content derives from obligations dispersed throughout different legal instruments. Article 2014 of the Federal Civil Code establishes the general rule of consensual transmission of property: with respect to certain and determined property, ownership is transmitted by mere effect of contract. However, this rule does not operate in isolation for real estate: article 2317 of the same code requires a public deed for the transmission of real property, and article 3042 establishes that such transmission is only enforceable against third parties through its registration in the Public Property Registry. This regulatory chain, articles 2014, 2317 and 3042 of the Federal Civil Code, is what grounds the obligation of precise registry verification as a condition of enforceability and not merely as an internal formality between parties. Article 2270 of the same code regulates hidden defects and the obligation of warranty, the direct basis for documentary review prior to any acquisition.

In the registry sphere, the Civil Code for the State of Quintana Roo (Decree published in the State Official Gazette, with last relevant reform in 2023) provides in its articles 997 to 1012 the effects of registry publicity and enforceability against third parties. Article 3007 of the Federal Civil Code and its state correlative establish that unregistered acts do not prejudice third parties in good faith who have registered first: this principle determines the order of priority in registry review.

For transactions involving federal maritime-terrestrial zone, the General Law on National Property (last reform published in the DOF on May 18, 2022), in its articles 119 to 132, regulates concessions and permits over public domain property, whose verification is a non-negotiable component of the audit in coastal projects in the Riviera Maya.

In corporate matters, the Commercial Code (last reform DOF May 29, 2024) and the General Law on Mercantile Corporations (LGSM, last reform DOF May 20, 2021), articles 6, 10, 178 and 182, regulate the requirements for incorporation, corporate representation and statutory limitations on the transmission of shares or partnership interests, all of which are central objects of corporate audit.

IBG Legal Standard Checklist: Phases and Components

Phase I: Property Identification and Registry Status (Days 1 to 5)

• Obtaining the current certificate of freedom from encumbrances from the Public Property and Commerce Registry of the State of Quintana Roo, with validity no greater than 30 calendar days at the time of signature.
• Review of the chain of ownership transmissions for the last 10 years, identifying deeds, merger or subdivision acts, and encumbrance cancellations.
• Verification that the physical description of the property in the title corresponds with the registry inscription and with the cadastral certificate issued by the corresponding Municipal Cadastral Office (Benito Juárez, Solidaridad, Tulum or the applicable municipality), in accordance with the regulatory chain of articles 2014, 2317 and 3042 of the Federal Civil Code that conditions registry enforceability to the precise identification of the property.
• Identification of preventive annotations, attachments, pending litigation or limitations of ownership registered in accordance with article 3043 of the Federal Civil Code.
• In coastal zone: confirmation of the existence, validity and conditions of the federal maritime-terrestrial zone concession before the General Directorate of Federal Maritime-Terrestrial Zone and Coastal Environments (ZOFEMAT) of SEMARNAT.

Phase I-B: Restricted Zone Regime and Acquisition by Foreigners (Days 1 to 5, in parallel with Phase I)

Any transaction in which the acquirer is a foreign natural or legal person requires a specific analysis prior to closing, given that the Riviera Maya is entirely located within the constitutional restricted zone. This analysis is not optional nor can it be deferred to later stages of negotiation.

• Verification that the property is located within the 100-kilometer strip along the borders or 50 kilometers from the coastline, in accordance with Article 27, Section I, of the Political Constitution of the United Mexican States, which prohibits foreigners from directly acquiring ownership of land in said zone.
• Determination of the applicable acquisition structure: for foreign individuals and entities, the ordinary method is a banking trust with an authorized Mexican fiduciary institution, in accordance with Article 10-A of the Foreign Investment Law (LIE). The trust grants the foreign beneficiary the rights of use, enjoyment and benefit of the property, without transferring direct ownership.
• Verification of the permit from the Ministry of Foreign Affairs (SRE) required pursuant to Article 11 of the LIE for the constitution of a trust over properties in restricted zone: the permit must be obtained prior to execution of the definitive instrument and its absence renders the transaction void.
• In the case of Mexican entities with majority foreign participation seeking to acquire properties in restricted zone, verification that such acquisition complies with the assumptions of Article 10-A of the LIE and, where applicable, with the provisions concerning activities subject to specific regimes regarding foreign investment.
• Review of the trust agreement to confirm that the fiduciary bank is duly authorized by the National Banking and Securities Commission (CNBV), that the trust term does not exceed the applicable legal limit, and that the beneficiary’s powers over the property are defined with sufficient precision for the purposes of the transaction.
• Identification of prior renewals of the trust or changes of fiduciary in the chain of ownership, verifying that each modification was granted the corresponding SRE permit and was duly recorded in the Public Registry of Property.

Phase II: Tax Situation and Tax Obligations (Days 3 to 7)

• Certificate of no outstanding Property Tax obligation before the Municipal Treasury, covering the last five tax periods in accordance with Article 115, Section IV, of the Political Constitution of the United Mexican States and the municipal fiscal legislation of Quintana Roo.
• Verification of compliance with the Tax on Acquisition of Real Property (ISAI), regulated by the Tax Law of the Municipalities of the State of Quintana Roo, in prior transactions.
• Review of the tax situation of the seller before the SAT: certificate of tax status, and confirmation of the absence of tax lien on the property through verification of annotations in the Public Registry of Property originating from the administrative tax execution procedure regulated by Articles 151 to 163 of the Federal Tax Code (CFF, last amended DOF January 1, 2025). In particular, Article 151 CFF establishes the authority of the tax administration to attach property of the taxpayer in the execution procedure, therefore the registry review must identify any tax lien notification recorded pursuant to such provisions.
• For acquisitions in which the seller is a legal entity: review of compliance with obligations under the Income Tax Law (LISR, last amended DOF January 1, 2025), specifically Article 18, Section V, which regulates the accrual of income derived from the transfer of property by legal entities within the general regime of Title II of the LISR.
• For acquisitions in which the seller is an individual: review of compliance with Article 126 of the LISR, which establishes the mechanism for provisional payment of income tax applicable to gains from the transfer of real property by individuals, including notarial withholding and authorized deductions.

Phase III: Urban Planning and Environmental Situation (Days 5 to 10)

• Obtaining the certificate of land use from the Municipal Department of Urban Development, verifying conformity with the Urban Development Program of the Population Center in force in the corresponding municipality, issued in accordance with the Law on Human Settlements, Territorial Planning and Urban Development (LAHOTU, published in the Official Gazette of Quintana Roo, last amended 2024).
• Verification that there are no affectations by declarations of protected natural areas in accordance with the General Law on Ecological Balance and Environmental Protection (LGEEPA, last amended DOF May 8, 2023), Articles 44 to 76.
• Review of the Environmental Impact Statement (MIA) in projects with existing or planned construction, and the Resolution of the competent environmental authority, federal or state as applicable.
• In tourism or mixed-use projects: verification of the declaration of tourism use and construction licenses in accordance with the Tourism Law of the State of Quintana Roo (last amended 2023).

Phase IV: Corporate Audit of the Seller or Target (Days 5 to 12)

• Review of the constitutional instrument and all its modifications registered in the Public Commercial Registry: corporate purpose, clauses on the transfer of shares or social interests, and voting restrictions in accordance with articles 6 and 91 of the LGSM (last amendment DOF May 20, 2021).
• Verification of the legal representative’s powers: that the power of attorney is sufficient for the specific act, without statutory restrictions or shareholder resolutions that limit it.
• Review of the shareholder or stockholder registry book, relevant assembly minutes from the last three years, and board of directors resolutions related to the transaction.
• In structures with trust arrangements: review of the trust agreement, identification of the trustee, settlor and beneficiary, and scope of the technical committee’s powers in accordance with articles 381 to 407 of the General Law on Commercial Paper and Credit Operations (LGTOC, last amendment DOF June 22, 2023).
• Verification of compliance with the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (LFPIORPI, last amendment DOF January 22, 2024) and identification of the controlling beneficiary in accordance with articles 32-B Ter to 32-B Quinquies of the CFF, incorporated by the 2022 tax reform and enforceable as of 2023. This verification comprises the following specific elements:
  1. Registration with the SAT: confirmation that the selling legal entity or target has submitted to the Tax Administration Service the information regarding its controlling beneficiary (ultimate beneficial owner) in accordance with articles 32-B Ter to 32-B Quinquies of the CFF, whose initial compliance deadline expired in 2023. Non-compliance with this obligation generates direct sanctioning exposure on the acquired entity.
  2. Exposure due to non-compliance: article 84-M of the CFF establishes fines of up to two million pesos for the omission or incorrect presentation of controlling beneficiary information, a risk that the purchaser must quantify and transfer contractually.
  3. Contractual representation and warranty: it is recommended to include in the acquisition agreement or in the final instrument an express declaration from the seller or target stating that it has complied timely and properly with the obligation to register the controlling beneficiary with the SAT, with an indemnification clause for non-compliance revealed after closing.

Phase V: Litigation, Contingencies and Registral Origin (Days 7 to 14)

• Review of the consultation systems of the Federal Judiciary (PJF) and the Superior Court of Justice of the State of Quintana Roo to identify lawsuits linked to the property, the seller or the target.
• Verification of domain extinction proceedings: the National Law on Domain Extinction (published in the DOF on August 9, 2019, last amendment DOF May 1, 2023) in its article 17 provides that the domain extinction action proceeds over assets related to illicit acts regardless of who their owner is, which makes imperative the review of the chain of transfers and the lawful origin of the acquisition funds prior.
• Analysis of ejidal origin of title: when the property borders, has been part of, or derives from ejidal lands, the audit requires a detailed review of the process of removal from ejidal status in accordance with articles 81 to 83 of the Agrarian Law (last amendment DOF June 25, 2020). This review comprises the following elements:
  1. Certificate from the National Agrarian Registry (RAN): obtaining the document that certifies the adoption of full ownership by the ejidatario and the cancellation of ejidal rights over the specific parcel, confirming that the transfer to private ownership was carried out in accordance with the procedure established in the Agrarian Law.
  2. Ejidal assembly minutes: verification that the assembly that approved the adoption of full ownership and, where applicable, the incorporation of the lands, was held with the qualified quorum required by article 24 of the Agrarian Law for this type of resolutions, and that the corresponding minutes were registered in the RAN.
  3. PROCEDE or FANAR Certificate: confirmation that the parcel was properly surveyed and certified by the Program for Certification of Ejidal Rights (PROCEDE) or, where applicable, by the Support Fund for Unregularized Agrarian Nuclei (FANAR), as a prerequisite for the valid adoption of full ownership.
  4. Post-adoption restriction period: verification of compliance with the restriction period applicable after the adoption of full ownership. During the first thirty years following the adoption of full ownership, the parcels have alienation limitations that must be traced in the chain of title to confirm that no prohibited transfers were carried out.
  5. Agrarian boundary conflicts: inquiry with the Unitary Agrarian Courts and the RAN to identify the existence of boundary conflicts or boundary disputes between ejidal nuclei that may affect the physical certainty of the title to the property to be acquired.

IBG Legal Quality Metrics and Timelines

The IBG Legal protocol establishes the following mandatory internal compliance standards:

1. Standard total due diligence time: 14 business days from the complete delivery of documentation by the client. Operations with complex environmental component, multilevel corporate structure, or analysis of restricted area with bank trust: up to 21 business days.
2. Delivery of preliminary report: no later than business day 10, to allow negotiation of suspensive conditions before closing.
3. Final report format: executive summary of no more than three pages followed by section-by-section analysis with risk traffic light (green, yellow, red), concrete recommendations, and list of pending or insufficient documents.
4. Supervision: every due diligence report must be reviewed and signed by a partner of the firm before delivery to the client, without exception. This partner review guarantees to the client that each finding has been evaluated with transactional experience criteria and not solely with associate-level technical review.
5. Checklist update: the real estate and corporate practice committee will review this protocol in the months of January and July of each year, or extraordinarily in the event of relevant legislative reforms.

Operational Implications: Delivery Standards and Client Benefits

No transaction may close without a complete due diligence report in accordance with this protocol. This rule operates directly for the client’s benefit: the purchase agreement or final instrument will incorporate suspensive conditions drafted in terms that reflect the findings of the report, so that no identified risk is left without contractual coverage at the time of closing.

Any risk classified as red in the risk traffic light is reported to the client in writing and requires express documented instruction before proceeding. This practice ensures that the client makes informed decisions about material contingencies and that the advice provided is documentally supported. The client thus receives not only a technical analysis, but a roadmap for negotiating representations, warranties, and indemnifications in the final instrument.

The mandatory partner review prior to all deliveries means that the client receives the accumulated expertise of the firm’s specialized practice and not solely the result of a first-level document review. This supervision standard is the primary guarantee of methodological consistency across transactions.

Applicable Judicial Criteria

The First Chamber of the Supreme Court of Justice of the Nation has developed a repeated interpretive line to the effect that the good faith of a real property purchaser cannot be presumed absolutely when objective elements exist that should have generated a diligent investigation by the buyer. This interpretive tendency, present in various precedents of the Tenth Epoch accessible through the Federal Judicial Gazette, imposes on purchasers the burden of conducting prior documentary review as a condition for invoking registration protection. It should be clarified that, given that the specific registration number of jurisprudential thesis or isolated thesis identifiable with official alphanumeric key is not available, this criterion is described as a consolidated interpretive tendency and not as a formally citable binding thesis. Its practical relevance in structuring due diligence is direct: the omission of verifications that a reasonably diligent purchaser would have conducted may vitiate the presumption of good faith in subsequent replevin actions. For verification and formal citation in court filings, search is recommended in the IUS system of the Federal Judicial Gazette using the following search terms: good faith, purchaser, real property, investigation burden, replevin action.

The Collegiate Courts of the XXVII Circuit (Quintana Roo) have issued criteria regarding nullity of legal acts due to defects in representation, to the effect that subsequent ratification does not retroactively cure acts executed by a representative without sufficient powers when the third party with whom the contract was made had reasonable means of verification. As with the preceding criterion, this interpretive tendency of the circuit is not cited with a registered thesis key, given that its specific alphanumeric identification could not be independently verified. It is described, therefore, as an orienting criterion of circuit practice in matters of representation, whose formal confirmation requires direct search in the Federal Judicial Gazette filtering by Collegiate Courts of the XXVII Circuit and the topics of insufficient representation and nullity of legal acts. Its practical relevance is direct: it reinforces the obligation to comprehensively review notarial powers before any transaction closing.

Sources and References

Legislation

• Political Constitution of the United Mexican States, articles 27 (section I, restricted zone) and 115 (section IV, municipal treasury). Latest amendment published in the DOF on March 22, 2024.
• Federal Civil Code, articles 2014, 2270, 2317, 3007, 3042 and 3043. Latest amendment published in the DOF on January 11, 2024.
• Commercial Code. Latest amendment published in the DOF on May 29, 2024.
• General Law of Mercantile Companies, articles 6, 10, 24, 91, 178 and 182. Latest amendment published in the DOF on May 20, 2021.
• Federal Tax Code, articles 32-B Ter to 32-B Quinquies, 84-M and 151 to 163. Latest amendment published in the DOF on January 1, 2025.
• Income Tax Law, articles 18 (section V, accrual of income from transfer of assets in legal entities, Title II) and 126 (provisional payment for transfer of real property by natural persons). Latest amendment published in the DOF on January 1, 2025.
• General Law of Negotiable Instruments and Credit Operations, articles 381 to 407. Latest amendment published in the DOF on June 22, 2023.
• Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin. Latest amendment published in the DOF on January 22, 2024.
• Foreign Investment Law, articles 10-A and 11 (trust in restricted zone and SRE permit). Latest amendment published in the DOF on May 18, 2018.
• General Law of National Assets, articles 119 to 132. Latest amendment published in the DOF on May 18, 2022.
• General Law of Ecological Balance and Environmental Protection, articles 44 to 76. Latest amendment published in the DOF on May 8, 2023.
• National Law on Extinction of Domain, article 17. Published in the DOF on August 9, 2019; latest amendment published in the DOF on May 1, 2023.
• Agrarian Law, articles 24, 81, 82 and 83 (disenrollment and adoption of full ownership). Latest amendment published in the DOF on June 25, 2020.
• Civil Code for the State of Quintana Roo, articles 997 to 1012. Latest amendment published in the Official Gazette of the State of Quintana Roo in 2023.
• Law on Human Settlements, Territorial Planning and Urban Development of the State of Quintana Roo (LAHOTU). Latest amendment published in the Official Gazette of the State of Quintana Roo in 2024.
• Municipal Finance Law of the State of Quintana Roo. Latest effective version published in the Official Gazette of the State of Quintana Roo.
• Tourism Law of the State of Quintana Roo. Latest amendment published in the Official Gazette of the State of Quintana Roo in 2023.

Judicial Precedents

• First Chamber of the Supreme Court of Justice of the Nation: reiterated interpretive tendency regarding the limits of the presumption of good faith of the acquirer of real property against the burden of prior diligent investigation, in the context of recovery actions and nullity of legal acts on registered property. Tenth Epoch. Criterion described as interpretive tendency; alphanumeric key of thesis not independently verified.
• Collegiate Courts of the XXVII Circuit (Quintana Roo): guiding criterion on the impossibility of retroactive ratification of acts executed by a representative without sufficient powers when the co-contractor had reasonable means of verification. Criterion described as circuit tendency; alphanumeric key of thesis not independently verified.

Legal Doctrine

• Rojina Villegas, Rafael. Mexican Civil Law: Property, Real Rights and Possession. Porrúa, 9th edition, 2005. Note: for consultation of doctrinal developments following the 2000 Federal Civil Code reform and its subsequent amendments, it is recommended to verify the availability of updated editions after 2010.
• Ríos Hellig, Jorge. The Practice of Notarial Law. McGraw-Hill, 8th edition, 2011.
• Barrera Graf, Jorge. Institutions of Mexican Commercial Law. Porrúa, 1st edition, 1989 (reprint 2000). Note: classical reference work in Mexican corporate law. Since the author passed away in 2001 and the work has not been updated to incorporate amendments to the LGSM after that date, including the latest amendment of May 20, 2021, it is recommended to supplement its consultation with: Mantilla Molina, Roberto L., Commercial Law, Porrúa, 29th edition, 1990, and with more recent doctrinal commentaries on the amended LGSM, such as those published by the Private Law Review of the Legal Research Institute of the UNAM since 2021.

Official Sources

• Federal Official Journal (DOF): www.dof.gob.mx
• Official Gazette of the State of Quintana Roo: www.qroo.gob.mx
• Public Registry of Property and Commerce of the State of Quintana Roo: direct consultation at counter and official online platform.
• National Agrarian Registry (RAN): www.ran.gob.mx
• Secretariat of Foreign Affairs (SRE), permit procedures for trusts in restricted zones: www.gob.mx/sre
• Federal Judicial Power, case file consultation system and Federal Judicial Weekly: www.pjf.gob.mx
• Tax Administration Service (SAT), fiscal status consultation and ultimate beneficial owner registry: www.sat.gob.mx

Closing Note

The protocol documented in this article represents the methodology that IBG Legal applies in each real estate and corporate legal audit it conducts in the Riviera Maya and in the other markets in which it operates. Its five-phase structure with specific restricted zone component, its differentiated analysis of ejidal risks, the integration of ultimate beneficial owner compliance with the SAT, and the review of tax authorities by type of transferor, reflect the real complexity of the transactions that the firm closes in Quintana Roo: from direct acquisitions by Mexican nationals to bank trust structures with foreign investors and multilevel corporate vehicles.

To initiate a legal audit in accordance with this protocol, to request a preliminary scope meeting prior to beginning due diligence, or to inquire about the applicability of any of its phases to a specific transaction, the real estate and corporate practice team at IBG Legal is available through the firm’s contact email. The first scope consultation is at no cost and allows the client to determine with precision which phases of the protocol are applicable to their transaction and what timeframe is required to complete the analysis.