How to Purchasing a Property in Mexico
Purchasing a Property in Mexico
The process for foreigners buying properties in Mexico is similar to the United States, yet some extra steps are required. The most notable of these extra steps are the requirements of registering and obtaining permission from Mexico's Secretary of Foreign Relations, and if you are buying in the "Restricted Zone·, which is the area within 100 kilometers of any national border and within 50 kilometers of any coastline, establishing a Bank trust
The Real Estate Bank Trust also known in Spanish as "Fideicomiso", is a trust agreement that you establish with a Mexican bank in order to hold title to a property (both you and the bank are named in the title documents) (works similar to a Family Trust or Living Trust entities known in USA, Canada or Europe. This trust deed assures foreign property buyers of all the rights and privileges of ownership while acquiring extra protection from the Federal government (Ministry of Foreign Affair Offices and the Secretary of Economy).
In a Mexican Real Estate Bank Trust, you are the sole beneficiary of your Mexican property, both you and a trustee entity are named in the deed. You can treat the real estate as if you held the title yourself; this includes building equity, renting, selling your home, passing it down to other beneficiaries,making changes to the home and having extra protection provided by a Fiduciary entity.
A very popular real estate product in Mexico is the option of purchasing properties during the pre construction phase. This option allows buyers to receive additional benefits such as substantial discounts and sometimes, the option to customize the home to the buyer's tastes and needs. The main difference in the process of purchasing a pre-construction property versus an existing structure focuses around the time of delivery.
The specific process will depend on factors like location, price, type of property, etc, but we can summarize the steps like this:
1. Find an agent, start looking for properties online.
2. Plan a visit to tour the properties.
3. If you find one that you love, make an offer! Together with the offer letter, a reserve of 5000 usd is normally requested, which in 99% of cases is refundable in the first 15 days.
4. It's important to have a Mexican attorney to validate the documents in advance, and support you with the legal terms. In Mexico, the seller part always pays full brokerage commission and the buyer pays the closing cost, attorney, fideicomiso and HOA.
5. Make a deposit of the down payment. (Developers normally ask for a down payment of 30% of the value of the unit, there are payment schemes in which the more down payment you give, a discount can be applied to you) The down payment is paid directly to the developer, and after having signed the promise to sell agreement.
6. Get permits, appraisals and all documents needed for the closing.
7. Sign the Title Deed at the Notary Public. (at the delivery)
In Mexico, real estate closings are handled by Notaries, which are government appointed attorneys, and they have the authority to handle the complete closing transaction. So, before closing, the Notary will revise all documents to make sure everything is in order, as well as do the title search to make sure the
property has a clear title. If everything is in order, the private purchase and sales agreement must be formalized through a deed issued by a notary public. After executing such deeds, the same will be recorded in the public registry.
It's also important to know that on top of the price of the property, there are closing costs. These costs are between 7 to 1O percent of the property value.
We look forward to assisting you with all your purchase and funding needs.
Best Regards,
Sergio Ramon
CENTURY 21 Real Management Los Cabos
Real Estate Advisor
Cellphone: +52 (624) 261 3257
Email: sergio.ramon@c21rm.com
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