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The Mexico Real Estate Learning Curve

16 September 2008 1,010 views No Comment

By: Andrew Colon
In 1995, Jim Erhark of Rockford, Illinois, tired of long commutes and long, windy winters, visited Cancun and the Mexican Caribbean. During his stay, he befriended a "real estate guy" who showed him a beautiful home on Nichupte Lagoon, for what Jim considered a steal in the post-devaluation Mexican economy. He took the proceeds from a recently sold property back home, and dove headfirst into the purchase. Jim loved his new home and new life, that is, until the real owner of the property came back to Cancun on vacation, only to find a stranger living in his home. Jim lost his entire investment in the ensuing chaos. This might have been avoided. Jim trusted his new friend and broker to act as his representative in the purchase of the home. He was clearly conned by this phantom broker, a practice not limited to Cancun or Mexico. There are thousands of stories of people who find their utopia when they acquire property in Mexico, but unfortunately there are also stories like Jim's. By following a carefully outlined plan of due diligence, however, you can keep from becoming a cautionary tale, and you can become another satisfied property owner in Mexico. Much of the legwork to be done, and questions to be answered, can and should be performed by your representative. Brokers can earn commissions of between two and seven percent on the sale, and are prepared to earn them and undertake the processes involved. These processes include the inclusion of lawyers, notaries, title insurance and finance companies, bank trust agents, municipal governments and accountants, among others. For all property purchases, make sure you always receive originals and copies of all documents in the transaction. Reputable agents will hand you a sizable, oftentimes bound, package of the documents, including copies. The principal document upon purchase is your original title deed (escrituras in Mexico), and in the case of a previously owned property, a history of ownership. You´ll also need a copy of the property's registration from the public registry of property (registro publico), where you can also get a certificate of good standing and absence of liens against the property. You'll also need to know what type of land your property sits on, its authorized use and zoning compliance (known as uso de suelo), specifying it as legal for residential, commercial or other use. You´ll need physical documentation specifying the physical identification of the property (croquis and topographical plan), and compliance with environmental regulations if the property is located in a protected area. Outstanding mortgages, contracts, past-due tax bills and utility payments need to be in order as well, before you buy. A certified real estate broker (certified by AMPI, the Mexican Association of Real Estate Professionals) is the first step in making sure you have someone on your side to perform the due diligence before you put your money into the purchase of a property. The benefits of putting together a checklist of the items mentioned, along with others as per the suggestion of your realtor and owners in your area can pay off handsomely in both tangible and intangible ways later on. And Jim?  Jim moved back to Rockford after his experience in Cancun. He was back seven years later though, after the call of the Caribbean became too strong to ignore, and he was able to recover financially. With the help of a professional this time, Jim is enjoying life with his new family by the water in Playa Del Carmen.

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