Buying Property in Mexico: The Major Steps Revealed
9 February 2009
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9 Comments
By: Charles Sipe
We talked to Mexico real estate expert Mario Restrepo, who specializes in Baja Real Estate and offers property management services in the Baja, Mexico area. His site Baja Open House has articles on Mexico real estate, Baja property listings, and property management services.
Can you walk us through the major steps in the process of buying property in Mexico? How long does the process usually take?
Buying a property in Mexico can be similar to buying a property in the USA if you approach it as such, as we do here in northern Baja.
First you locate a property, then make an offer. If there are counter offers, then they will go back and forth just like you would expect until there is an accepted offer.
With an accepted offer, escrow opens with a good faith deposit check written in the name of the escrow company. It is not recommendable to write the check of the good faith deposit in the name of the seller or the listing broker, even though it is done on occasion.
During the escrow period, which here in Baja can be 1 to 3 months, it is the sellers responsibility to provide a letter of instruction which will allow the bank and the Notario to prepare the transfer of title.
The seller is responsible to have all their bills current, and have their immigration status up to date if the seller isn't a Mexican national. The seller will provide copies of all property documentation to the Notario to help close the transaction.
The buyer usually has one or more representatives who coordinate a property survey, an appraisal, title search, buyer's permits, property inspection, and the gathering of the documentation to include certificates proving that there are no liens on the subject property.
Two days before the transfer, or whatever amount of time is agreed upon, the buyer will deposit into the escrow account the balance to complete the sales price.
Once the title is able to transfer, both the seller and buyer, by appointment, will meet the at the Notario's office, which is much like a common legal office.
The Notario will identify all parties to the transaction. The Notario will then collect capital gains tax from the seller if there is any, acquisition tax from the buyer, left over closing fees, and Notario fees.
Then all parties will sign to allow for the transfer. Title has now transferred. Immediately after, the escrow company receives a copy of all the signatures to the transfer, then they will release funds to the seller's bank.
The Notario will record the transaction in the public record, and deliver all taxes collected. The Notario is usually able to deliver a certified copy of title to the buyer in about two weeks time.
The seller, whether Mexican national or not, and whether they paid capital gains tax or not, should report taxes for the year of the sale to not have future tax liabilies.
You can read more articles by Mario Restrepo on Mexico real estate or view Baja Properties at www.bajaopenhouse.com.
Can you walk us through the major steps in the process of buying property in Mexico? How long does the process usually take?
Buying a property in Mexico can be similar to buying a property in the USA if you approach it as such, as we do here in northern Baja.
First you locate a property, then make an offer. If there are counter offers, then they will go back and forth just like you would expect until there is an accepted offer.
With an accepted offer, escrow opens with a good faith deposit check written in the name of the escrow company. It is not recommendable to write the check of the good faith deposit in the name of the seller or the listing broker, even though it is done on occasion.
During the escrow period, which here in Baja can be 1 to 3 months, it is the sellers responsibility to provide a letter of instruction which will allow the bank and the Notario to prepare the transfer of title.
The seller is responsible to have all their bills current, and have their immigration status up to date if the seller isn't a Mexican national. The seller will provide copies of all property documentation to the Notario to help close the transaction.
The buyer usually has one or more representatives who coordinate a property survey, an appraisal, title search, buyer's permits, property inspection, and the gathering of the documentation to include certificates proving that there are no liens on the subject property.
Two days before the transfer, or whatever amount of time is agreed upon, the buyer will deposit into the escrow account the balance to complete the sales price.
Once the title is able to transfer, both the seller and buyer, by appointment, will meet the at the Notario's office, which is much like a common legal office.
The Notario will identify all parties to the transaction. The Notario will then collect capital gains tax from the seller if there is any, acquisition tax from the buyer, left over closing fees, and Notario fees.
Then all parties will sign to allow for the transfer. Title has now transferred. Immediately after, the escrow company receives a copy of all the signatures to the transfer, then they will release funds to the seller's bank.
The Notario will record the transaction in the public record, and deliver all taxes collected. The Notario is usually able to deliver a certified copy of title to the buyer in about two weeks time.
The seller, whether Mexican national or not, and whether they paid capital gains tax or not, should report taxes for the year of the sale to not have future tax liabilies.
You can read more articles by Mario Restrepo on Mexico real estate or view Baja Properties at www.bajaopenhouse.com.
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Nice article..what about Ejido Land?
can you contact me please?
WHAT ABOUT THE BANK TRUST (FEDEI COMISO). Lot of my friends are buying vacant ocean front lots on 30 year leases. Do 30 year leases exist in Mexico or is only 10 yrs max.. Do such a thing as “option to renew a lease exist” by Mexican Law?
I am a Prudential realtor in Cabo San Lucas and will try to answer your questions. First of all Ejido land. Ejido land is similar to the land grants given to native people in Canada and the US. The people living on the land do not own it. It is owned by the government and cannot be sold by them. Having said that Ejido land can be privatized. The process is lengthy. I would be very careful about getting involved in Ejido land.
Fidecomiso’s are basically bank trusts. You cannot own land as a foreigner In Mexico withing 50 km of the ocean or with 75 km of an international border. The government has gotten around this by setting up Fidecomisos. A bank of your choice holds the deed in trust for you. You have the right to develop, subdivide, construct a home, and sell the property just as you could in Canada or the US. It’s really no different than having a mortgage in the countries to the north. In that case the bank also holds the deed. Fidecomisos are for 50 years and are re-newable.
Yeas, you can lease land in Mexico but it has nothing to do with a Fidecomiso. If you want more information contact me at Peter@PruCaboGold.com
Be careful about buying property in Mexico
Hotel owners in Tulum are learning the hard way that Titles and deeds don’t mean a thing in Mexico if someone big and powerful wants the land you thought you owned.
These articles read like something out of the wild west
http://www.ireport.com/docs/DOC-27544 (from 2008)
http://www.pressreleasepoint.com/violent-raid-paradise-tulummexico
(just this past November 2009)
some insurance companies are very specific when quoting property damage, some won’t even pay a dime..’.
property management is sometimes a tedious task,-:
For those asking for more info on Ejido Land, I just found that Mario Restrepo, the same Broker interviewed in this article, wrote more details about Ejido and other types of ownership in Mexico.
You can read Mario Restrepo’s article aboutOwnership in Mexico. here.
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