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How a Real Estate Agent Operates


The Real Estate Agent is the individual or legal entity, committed to mediate the acquisition, transfer or otherwise disposal of land, houses, apartments, commercial premises and any other type of real property.  In exchange for consideration (the payment for provision of the service contracted therein), which is usually a percentage of the value of the transaction, the Agent seeks to find the ideal buyer of the real property for a seller he/she is representing, or assists the buyer in finding the ideal property at the best market price.



The corporate aspect talks about how to correctly structure the real-estate business.

Individual (Persona Física)

When an individual wishes to open a business committed to the acquisition, transfer or otherwise disposal of real property in his/her own name or in the name of his/her principal.  In order to act as Agent, said individual shall:

1. Be authorized to perform commercial acts. They cannot perform commercial transactions with: A) Brokers; B) Bankruptcies that have not been discharged; and C) Those who through a final judgment have been convicted of crimes against property, including amongst others, misrepresentations, embezzlement, bribery and extortion.

2. Obtain a Federal Taxpayers’ Registry.

3. Open a bank account.

4. If they have employees, obtain an Employer Registration Number with the Mexican Social Security Institute

5. Have tax receipts (invoices).

6. Obtain an Operating License from the Municipality where the offices are located.

7. Keep and maintain an appropriate accounting system.

Articles 16, 17 and 35 of the Commercial Code in force, set forth the following obligations in addition to those already mentioned:

a) To publish, via the press, the business status with its essential circumstances, and, at the proper time, publish the modifications which they may adopt;

b) To record in the Public Registry of Commerce those documents whose tenor and authenticity should be made known;

c) Maintain an accounting system pursuant to Article 33.

d) To preserve the correspondence relating to the business of the merchant.

e) To give notice of the opening of the establishment or office belonging to them, by a dependable means of communication directed to the plazas where they maintain an address, those plazas where their branches are located, or those plazas where they have commercial relationships or stewards.  Said means of communication shall contain: the name of the establishment or office as well as its location and purpose; if there is a person in charge of its management, said person’s name and signature; if it is a company, its nature, and the name of its manager or managers, the company’s registered or business name, and the person or persons authorized to use one or the other, along with the designation of the houses, branches or agencies, if any; 

f) To give notice, through the same means of communication, of the modifications which any of the foregoing circumstances may undergo; and

g) Keep a General Ledger which should list at a minimum, and with entries made at least once a month, the names or designations of the financial (bookkeeping) accounts, the balance at the end of the immediately prior recording period, the total number of debit or credit transactions made in each account for the period as well as the closing balance.

Legal Entity (Persona Moral)

When two or more individuals associate for the purpose of opening a business committed to the acquisition, transfer or otherwise disposal of real property on behalf or in favor of third parties.

In order to establish a legal entity, the following should be carried out:

1. Obtain a Permit from the Ministry of Foreign Affairs in order to establish a legal entity of a commercial nature.

2. Appear before a Notary Public to formalize the Articles of Incorporation and register same with the Public Registry of Commerce.

3. Obtain a Federal Taxpayers’ Registry for the legal entity.

4. In the event the legal entity relies on foreign investment, it should register with the National Registry of Foreign Investment.

5. Opening of Corporate Books.

6. Keep a Minutes Book of the Assemblies as well as a Minutes Book of the Board of Directors’ Meetings, if applicable.

7. Issuance of Stock or Certificates of Contribution (partnership shares, i.e., participation or other forms of equity).

8. Open a bank account.

9. If there are employees, obtain an Employer Registration Number with the Mexican Social Security Institute.

10. Have tax receipts (invoices).

11. Obtain an Operating License from the Municipality where its offices are located.

12. Keep and maintain an appropriate accounting system.

Regardless of the manner in which the real estate business will function, the Real Estate Agent should bear in mind two extremely important ambits:  

I. The Internal Ambit: This refers to the relationships the Real Estate Agent shall have with the people who will assist him/her in the organization and proper functioning of the company.  Within the internal ambit we can include:

  • Landlord/Lessor: An individual who grants the Real Estate Agent the right to use, enjoy, or derive fruits from the real property where his/her offices will be located, in case the latter is not the owner of the real property.
  • Workers: Individuals who provide the Real Estate Agent with personal subordinate work. “Work” is understood to be any human, intellectual or material activity, regardless of the extent of technical preparation needed for each profession or occupation.
  • Labor Agents: Individuals who render a subordinate and personal service to the Real Estate Agent, said service being related to such activities as the sale of goods or services in exchange for a wage/salary which is either premium-determined or set as a percentage of the value of the goods sold. These are persons who perform their activities permanently and personally as commerce agents, insurance agents, sales agents, commercial representatives (travelling salesmen), propagandists and others similar.
  • Commercial Agents: Independent individuals or independent legal entities, known as agents, who are granted a mandate by the Real Estate Agent so they can carry out a commercial activity consisting of the promotion and sale of real property, among other activities. The independent individuals or independent legal entities shall render this activity either personally or through a third party; the latter acting under the jurisdiction of the Agent.  

II.  External Ambit: Establishes the type of relationship the Real Estate Agent shall maintain with the sellers or buyers he/she represents.  The most common contracts that substantiate said relationship, are the following:

  • Commercial Agency Agreement: Contract between the Real Estate Agent and a third party, whereby a mandate for specific commercial acts is granted to said third party in order for the latter to acquire, promote, transfer or otherwise dispose of, and lease property for the purpose of commercial speculation.
  • Promissory Contract to Execute a Public Notarial Instrument for the Transfer or Otherwise Disposal of (Property) (Purchase-and-Sale, Trust Transferring Ownership, etc.): This is the contract in which it is agreed upon to execute a transaction for a future transfer of property. The Real Estate Agent may execute such contracts when expressly authorized to do so.
  • Contract of Mandate: Contract whereby the agent agrees to be legally bound on behalf of the Real Estate Agent (principal) to execute the legal acts the latter may require.
  • Lease Contract: A contract whereby one person grants another the temporary use or enjoyment of something by means of a certain price, even when the parties were to give this contract any other denomination. Generally, the Real Estate Agent negotiates and draws up these types of agreements and engages the parties (lessor and lessee) in order to execute this Contract.
  • Mediation Agreement: Contract whereby the Real Estate Agent employs a third party so that the latter increases the client portfolio of the former and seeks business opportunities bringing the parties closer.
  • Agency Agreement: Agreement whereby the Real Estate Agent employs a third party in order for the latter to open a branch, or names an individual as agent, so as to obtain increasing clientele, commercial exposure, and in general, to act in the name, stead and on behalf of the Real Estate Agent.  
  • Contract for Timeshare Services Rendered: A legal instrument whereby a person is granted the use, enjoyment and other duties as deemed appropriate on a property or part thereof, whether it be a certain unit, considered individually, or a varying unit within a given class, for a specified period at previously established, determined or determinable intervals. As in the Lease Contract, the Real Estate Agent negotiates and draws up this type of agreement and engages the parties (lessor and lessee) in order to execute this contract.
  • Irrevocable Trust Agreement Transferring Ownership, which includes “Fractional Ownership”: Agreement whereby  through a Trust Agreement transferring ownership, the owner of a real property grants the use and enjoyment thereof to a third party, for a time certain and determined, subject to compliance with the conditions stipulated in the aforementioned Trust Agreement.



Within the relationships the Real Estate Agent maintains with third parties, he/she shall invariably have a labor and commercial relationship. Inasmuch as the Labor Agency Agreement and the Commercial Agency Agreement are easily confused, I believe it necessary to talk at length about the topic.

The Commercial Agency Agreement should evidence the following elements:

a). - That the acts executed were transitional, isolated, and only created an ad interim dependency between the agent and the principal;

b). - The duration of the Agreement was limited to the time necessarily used for the execution of the acts;  

c).  -  That the acts cross-referenced were precisely commercial; and

d). - In the event this not have been so, that the activities contracted had not been realized by someone claiming to be the worker, but rather by other persons independently contracted by the Agent.[1]

Therefore, if the update of the transcribed elements is not demonstrated, it is evident that we are face-to-face with a labor relationship.

As such, the Real Estate Agent should execute an Employment Contract for a given or indefinite time period with the Labor Agent, since the latter shall perform permanent and subordinate activities within the organization, said Contract stipulating, among other things:

1. How, when and where to carry out his/her duties;

2. The form of the premium payment, the amount or percentage of the premium; and  

3. The determination and payment of legal and contractual benefits that the employer agrees to be legally bound to, such as vacations, vacation pay, bonuses, and profit sharing among others, as well as handing over a client portfolio, the assignment of a schedule (time), among other aspects that limit his/her scope of performance. 

The commission-only salary may be determined by means of payment of a premium on:

  • the product sold or placed,
  • the down payment,
  • periodic payment (installment), or
  • two or even three of the above

The labor agent should become affiliated with the Compulsory Regimen of Social Security, submit his/her salary changes, as well as cancelation due to terminating the employment relationship, in addition to paying the worker-employer contributions within the timeframes duly established by the Mexican Social Security Law. 



In order to open a real estate business, it is necessary to take into consideration all the aspects that this activity involves.

To ignore or omit them would result in penalties that could be avoided if relying on the proper advisory services.



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