Mexico Real Estate transactions for Foreign Investors:

Every purchase does not have the same procedures and rarely the same situations occur equally.

As in any real estate transfer, of any western country, there are many factors and parties involved, and when dealing in Mexico, with Mexican foreign buyers or sellers, the variables only increase.

Thus, there is a high probability that when you go to buy a Mexico real estate property, the transaction will be unique and have its own unique obstacles; the key is to follow a common and legally protected process.

Hereby you have a beginner’s guideline that explains the phases involved in buying a Mexico Real Estate property; these phases leads many first time buyers and sellers to a safe and secure Mexico real estate transaction.

When buying Mexico real estate as a foreigner, then Mexico’s Purchasing Process has several additional conditions that are required by law when the buyer or seller is not a Mexican citizen.

First of all, the Mexican constitution provides for a “Restricted Zone” where the foreign buyer will need to establish a Bank Trust.

If you purchase outside of the restricted zone you can hold the property outright but just need to receive a simple permit from Mexico’s Ministry of Foreign Affairs.

Mexico real estate purchasing process First tip – find a very well qualified real estate agent and broker to work with. When you are hundreds of miles away back in your home country, simple obstacles can easily become headaches if you have not taken this first intelligent step.

If they are not Mexican, how long have they lived in Mexico, working in the real estate industry? Do they speak Spanish?

Financing Second, define the amount of money you plan to invest in your Mexico real estate property. If you plan to finance the purchase, begin investigating if you qualify for such resources. Do you plan to finance using the Mexican property or raise money from your home country?

Define these issues before investing time and money in your Mexico real estate property search.

Define the closing costs Third, understand all the costs that will be involved in the real estate acquisition. Mexico real estate closing costs include several extra items that most people are not accustomed to or aware of.

Although the entry costs may be a little higher, the carrying costs (property taxes, maintenance fees etc.) are much less here in Mexico on average than in other parts of the world.

With the above three items defined and understood, put your Mexico real estate agent to work on finding and identifying qualified properties that match your criteria search.

Review the options, have your agent prepare visits to the properties. Make your own comparisons and evaluations based on the info your agent gives you.

Most importantly, enjoy it!

Choosing an agent and a neighborhood to buy Mexico Real Estate.

Mexico is an exciting place to live for those who are retiring, for those who are working from home over the internet with their company, for those who are looking for a vacation home or an outstanding investment… above all, for those who dream of a better quality of life!

When thinking of buying a Mexico Real Estate property, it may create stress, worry and, at times has been associated with financial loss.

This does not have to be the case. Procedures in searching titles and transferring property are similar to those of the United States and Canada.

The buyer of a house, condominium or lot in Mexico must ask the same questions, and should receive answers similar to those received when buying a property elsewhere.

Choose the community and the company that fits you: In considering the purchase of something so important as a home, it is necessary to have the right people representing the buyer and his interests.

This can be accomplished by first selecting the general area where you think you’d like to live. A review of the local newspaper or telephone directory will give a listing of the real estate companies in the area.

Once the area is selected and a real estate agency is chosen then interview the owners and operators of the companies.

Interview carefully the persons that most impress you. The person you select should be familiar with area, with basic real estate principles… and should impress you with his or her honesty and drive to find what YOU are looking for.

Once you have found the person you feel comfortable with, stick with him or her and let him do his job. The sales person who knows you aren’t shopping around will generally work harder to find exactly what you are looking for.

Remember, it is your money and your commitment. Do not be pressured by someone who is charming but who does not listen carefully enough to understand your special needs.

Always examine the neighborhood: Once you have selected the right community, an agent with whom you feel comfortable, and a possible property, check out the neighborhood.

Is it new? Is it old? What will it look like in ten years? Are highways or other development projects planned for the future? Where are schools, churches, shopping facilities? Are there homeowner fees for maintenance of common areas?

If so, how much are they and when are they paid? Are all the utilities in and paid for? What does the developer have left to do? What building restrictions are there? Are there covenants and conditions registered for the usage of the land?

In many parts of Mexico there is no enforcement of a master plan or building codes. This can affect the changing face of the neighborhood you have selected.

How to Buy a Mexico Real Estate property: Selecting Your Property

When selecting your Mexico real estate property, it is indispensable to start with interviewing and selecting a professional Mexico realtor. This realtor will best represent you during a real estate transaction and will help you put together a list of qualifying properties.

During your conversations with your realtor, you should share all of your dreams, likes, lifestyle, budget, and the type of property amongst other items with him. With this information, he can get to work and help find you good options.

First, it is important to understand that finding Mexico real estate options have various more steps involved than what we are accustomed or what we would expect from the normal procedures from our home countries.

Below are some steps that you can take to put together a good list of options:

Know Common Problems and Avoid Them: You need to realize that some properties Lack title on the property – There exist some properties in Mexico which do not have the title.

Although there are steps that you as a buyer can realize to manage such a situation and obtain a title at a later date, the sooner you understand the status of a property, the sooner you can decide whether to qualify or disqualify such property from your overall list.

Poor History of Performance from seller or history of quality issues in the building – A building might have been constructed with various problems in the pipes, floors, or wiring.

Deteriorating neighborhood – Some neighborhoods might have seen their glory days years before and the future demand might be in a different part of the city or community. It is good to hear the opinions of people who live and work in the area.

Put Your Realtor to Work Have him send you properties that fulfill your criteria. Review the options. Put them in order from best to worst, giving any feedback to your realtor about how you rated the properties.

Search the Internet: Do some online searching yourself if you have time. When you find a property that looks interesting, share this information with your realtor.

Put your realtor to work and allow him to research, investigate and find the status of the property and if any of the above concerns arise, he will disqualify the property as a good option.

In all cases, the property you choose will help your realtor further understand your tastes. Let Your Family Participate Allow your partner or your family members to participate with you.

If they will be sharing and enjoying your new home in Mexico, it is important to hear their feedback on the properties as well.

They might even bring up questions that you have otherwise overlooked. In order to help you have an efficient process of buying a Mexico real estate property, putting together an overall list of property options is recommended.

Having a well-experienced realtor from the area is an important factor in organizing this agenda. Finally getting your partners opinion will add more valuable input in the decision-making process and will make the overall purchase process more exciting and fun.

Central Contracts to buy a Mexico Real Estate Property:

Once a suitable Mexico real estate property has been identified for the correct price, in the right neighborhood, etc., a buyer is ready to move into the phase of making offers and eventually the contracts which will transfer the property to their name.

If the buyer is non-Mexican, and buying within the restricted zone, the normal flow of contracts to finalize the transfer of Mexico real estate are as follows:

The “Offer to Purchase”, the “Promissory Contract”, and the third and final instrument, the “purchase-sales contract”, which will be drawn up and legalized by the notary public, and subsequently registered and filed at the public registry as the title.

This flow of contracts, however, is not necessarily always the same.

If buying outside of the restricted zone (in the country’s interior, more than 50 km/30 miles from the coast, or 100 km/60 miles from the border), and the protocol can be executed immediately, the Offer to Purchase and the Promissory Contract might be avoided.

Different regions or different agents have their own practices, adapted to suit the needs of different property and client situations. Varying approaches can lead to safe and efficient legal transfer of properties.

 

1. The Offer to Purchase

 

The Offer to Purchase is basically the first document utilized to begin the process of transferring a property from seller to buyer. The offer to purchase can also be prepared as a Reservation Agreement or an Earnest Money Deposit, and lists the main points of a future transaction.

It can be as complex or as simple as the buyer feels is necessary. Any money released at this time such as “earnest money”, should be refundable during this phase, and a reasonable amount of time should be allowed so that buyer and/or legal counsel can research the property documents.

The following is a fairly exhaustive list of what can be included in this contract:

• Names and personal info of the parties,
• Description of the subject property,
• Price and payment terms Provisions for escrow,
• Indispensable conditions,
• Terms and conditions of the offer,
• Name of Notary Public Closing date,
• Name of person responsible for closing costs (typically buyer),
• Real estate fees and capital gain tax (typically seller),
• Responsibilities of the parties,
• A clause indicating that the title shall be passed free and clear of liens or encumbrances,
• Penalty clause in case of non-compliance,
• Property condition,
• InclusionsTerm of effect,
• JurisdictionSignature of the parties and witnesses.

 

2. The Promissory Contract

 

The Promissory Contract is one of the most important documents to be elaborated and reviewed during the real estate acquisition process. Many people know this document as the “hard copy” and will hold the details such as legal description of the property, agreed price, penalties and other items.

Of the contracts you complete, you will need to depend on this one the most, because it is the first document to outline the terms and details for the future execution of the real estate transaction.

If the buyer and seller are able to execute the sale immediately, the parties can bypass the promissory contract and go straight to the purchase sales document. The rule of thumb is if the closing cannot occur within 14 days, it is recommended a promissory contract.

 

3. The Purchase Sales Contract

 

The Purchase Sales Contract is in essence the last contractual document required to transfer the rights of the Mexico real estate property into the new buyer’s possession.

This contract may be structured in various models such as a real estate trust agreement, an assignment of real estate trust or a reserve title contract; the model depends on the details and method of how the property will be transferred.

It is important to note that the Offer to Purchase and Promissory Contract are intended to give the details and preparation for the transfer of the property whereas this final contract is the instrument exercising the actual, legal transfer.

The Purchase Sales Contract is the document which the notary public will use in following the protocol to transfer the property legally, and will become the legal title indicating new ownership.

The Mexico Real Estate Closing Process

So, you have found your dream home in Mexico. You have negotiated and signed a contract. You have paid your Mexico earnest money deposit and contracted a notary/attorney to handle your closing. You have decided either to utilize the Mexico bank trust (Fideicomiso), corporation or both.

Your attorney/notary has copies of your passport, visa, the contract, and perhaps a Power of Attorney from you, so he can sign on your behalf. The ball is now in your attorney’s court to prepare all the necessary documentation for closing.

This documentation includes checking to see that there are no debts or liens against the property; that the taxes are paid, the meets and bounds descriptions are correct, the title is clear, and the property is in the name of the seller listed in your contract.

He must also order the permission for your Mexico bank trust and/or create your Foreign Owned Mexican Corporation. Typical closing time from signing the contract to the actual transfer of title is a process of 4-6 weeks.

If there are problems with the title or meets and bounds it may take longer. Usually, the Offer to Purchase contract provides for an automatic extension of 90 days to acquire proper documents if there is a problem.

Should the documentation problem take longer to rectify, the seller and buyer will need to sign a contract to amend the closing date.

Most foreign buyers wire the proceeds for closing to the Mexico agent’s earnest money account a few days prior to closing. If the seller wishes to be paid in pesos, the realtor exchanges the proceeds into pesos on the day before closing and orders certified checks or cash to pay the seller and the notary.

The realtor issues a final closing statement for review by the seller, buyer, agents, attorneys, and bank the day prior to closing. The Mexico notary public will provide the buyer with a copy of certified title at closing after all signatures are collected.

Afterward, the notary will send the new title to the property registry office to record the new owner and title. The property registry office will then send the newly recorded title either back to the notary, the buyer, the buyer’s agent or his accountant.

The property registry office is notoriously slow. It is not unusual to wait many months for the new title.

The property registry office in the states of Yucatan and Quintana Roo is in the process of moving all the title and property tax information from paper files to electronic files that will be digitalized and stored electronically.

This process has caused additional delays in receiving new title documents.

Mexico Real Estate Acquisition Process – The Post Closing

Congratulations! You have signed and closed on your new home in Mexico. But now what? Before purchasing your Mexico real estate property, you found tons of information about the buying real estate in Mexico.

But what about after the closing?

Owning real estate in Mexico is very different from other countries. There are important issues that need to be taken care of. Here is a list of some important post-closing issues:

The Deed – Pick up the title when it comes out of public registry.

After the closing, you can request a certified copy of the title and it can usually be obtained in a few days to a week depending on the notary office. Your original title may take several or many months to come back from the registry office so it is a good idea to have at least the certified copy.

If you want to know more about Tulum Real Estate, this information may be useful for you.