What do I need to know when buying a house in or other real estate in Mexico?
Alfonso Galindo - I Go Yucatan
If you are a foreigner, buying a house or real estate in Mexico, you have to make sure that you are not buying in a restricted area. Whether or not you are in a restricted area determines if you can buy the property outright in your name or if you have to buy through a bank trust or a corporation. If you are in a restricted zone, you will have to buy through a bank trust or a corporation. If you are not in a restricted zone, you can buy the property any way you decide to purchase it. ...
If you are a foreigner, buying a house or real estate in Mexico, you have to make sure that you are not buying in a restricted area. Whether or not you are in a restricted area determines if you can buy the property outright in your name or if you have to buy through a bank trust or a corporation. If you are in a restricted zone, you will have to buy through a bank trust or a corporation. If you are not in a restricted zone, you can buy the property any way you decide to purchase it.
Once you figure out whether you are in a restricted area or not, you need to hire an attorney to double check on the property. I would also suggest that you get title insurance when you purchase a property just as an extra layer of protection but your attorney is supposed to check that there are no liens or fines or anything against the property before you end up closing a deal on it. You attorney will write up your purchase contract, which is a promissory contract to buy before you actually go to the notario (notary) and close the deal. The notario works as an escrow agent and closing agent here in Mexico so it is your option to hire an attorney to validate all the information on the property that they notary is still going to do anyway. My suggestion a lot of times is work with an attorney who is also a notary because it saves you the cost of having a middleman.
(Recently certified real estate consultants Yucatan, Mexico, pictured.)
Posted December 22, 2015
Ivan Castillo - Secure Title Riviera Maya
My first advice is to obtain as much information as you can. In general, the most important thing to do before making a commit to buy any property in Mexico is to conduct a small due diligence and verify what the property looks like from a legal perspective. Specifically, you must obtain documentation the proves ownership, verify that the property is free and clear of any liens and encumbrances, that the owner is the rightful owner recorded in the public registry and that the property is...
My first advice is to obtain as much information as you can. In general, the most important thing to do before making a commit to buy any property in Mexico is to conduct a small due diligence and verify what the property looks like from a legal perspective. Specifically, you must obtain documentation the proves ownership, verify that the property is free and clear of any liens and encumbrances, that the owner is the rightful owner recorded in the public registry and that the property is up to date with payments for items such as property taxes, water and sewage, electricity, etc.
Very importantly, I always advise especially foreign customers that if they are going to sign an agreement for purchase that they hire an attorney because the attorney will be the one that will be looking for basic information and will identify red flags.
You would request from the seller or the realtor that is showing the property the basic documentation of the property, including the title, and that title should be recorded in the public registry. So when your attorney receives that document in particular he or she would review the same, attend to the public registry offices and verify that everything is in order. And for those purposes as well, prior to the transaction closing, the real estate attorney will obtain certifications from the government that will reflect the current status of the property, meaning the description of the property is okay, that the rightful owner is your seller, the measures and boundaries, that the property is current with property tax payments, etc.
The closing costs can vary on a case-to-case basis. In Mexico, there are set fees that do not change even if you are buying a US $50,000 property or $1 million property. Those set fees include certification from public registry, certification from the municipality, certain permits at a government level, etc. In addition, there are other fees that are charged as a percentage of the purchase price, including notary fees, taxes and duties, among others. As a result of the fees that are charged as a percentage, the total closing costs as a percentage will be lower for a higher priced property. For example, if you buy a $1 million property more or less you will pay closing costs between 4% to 4.5% of the purchase price, while if you buy a $350,000 unit you’re going to pay closing costs equal to around 6.5% of the purchase price.
The closing cost is divided as well in multiple areas because we have to approach multiple service providers. For example, there are notary fees, taxes and duties. Foreigners cannot own land directly in Mexico, so if you as a buyer are a foreigner, you will have to form and maintain a trust, which means you will have to incur entrusted back fees and expenses. In addition, I can give you the costs of an attorney, using Stewart Title as an example. Stewart Title would provide multiple services such as escrow, closing legal support, title insurance, among others. When a customer wants to buy a property, we send them a closing cost estimate that will contain an itemized list of payments that they need to incur from closing because no one likes to be surprised by unforeseen costs. From the moment the client walks in, if he or she works with us, they will know exactly how much they are going to pay from beginning to end. We provide the level of comfort that everything will be done properly.
From a legal perspective, in Mexico, the seller pays capital gains and the buyer pays broker’s commissions and closing costs.
Very importantly, I always advise especially foreign customers that if they are going to sign an agreement for purchase that they hire an attorney because the attorney will be the one that will be looking for basic information and will identify red flags.
You would request from the seller or the realtor that is showing the property the basic documentation of the property, including the title, and that title should be recorded in the public registry. So when your attorney receives that document in particular he or she would review the same, attend to the public registry offices and verify that everything is in order. And for those purposes as well, prior to the transaction closing, the real estate attorney will obtain certifications from the government that will reflect the current status of the property, meaning the description of the property is okay, that the rightful owner is your seller, the measures and boundaries, that the property is current with property tax payments, etc.
The closing costs can vary on a case-to-case basis. In Mexico, there are set fees that do not change even if you are buying a US $50,000 property or $1 million property. Those set fees include certification from public registry, certification from the municipality, certain permits at a government level, etc. In addition, there are other fees that are charged as a percentage of the purchase price, including notary fees, taxes and duties, among others. As a result of the fees that are charged as a percentage, the total closing costs as a percentage will be lower for a higher priced property. For example, if you buy a $1 million property more or less you will pay closing costs between 4% to 4.5% of the purchase price, while if you buy a $350,000 unit you’re going to pay closing costs equal to around 6.5% of the purchase price.
The closing cost is divided as well in multiple areas because we have to approach multiple service providers. For example, there are notary fees, taxes and duties. Foreigners cannot own land directly in Mexico, so if you as a buyer are a foreigner, you will have to form and maintain a trust, which means you will have to incur entrusted back fees and expenses. In addition, I can give you the costs of an attorney, using Stewart Title as an example. Stewart Title would provide multiple services such as escrow, closing legal support, title insurance, among others. When a customer wants to buy a property, we send them a closing cost estimate that will contain an itemized list of payments that they need to incur from closing because no one likes to be surprised by unforeseen costs. From the moment the client walks in, if he or she works with us, they will know exactly how much they are going to pay from beginning to end. We provide the level of comfort that everything will be done properly.
From a legal perspective, in Mexico, the seller pays capital gains and the buyer pays broker’s commissions and closing costs.
(House in Riviera Maya, Mexico, pictured.)
Posted January 23, 2016
Mark O'Neill
If you are buying real estate in Mexico, I would encourage you do be sure that your title is free and clear. Make sure that whoever you are buying from has the legitimate right to sell the property and that there are no past owners or any liens on the property.
It’s my impression that title insurance is something that is needed if you were to secure a loan. If you are not borrowing the money, then title insurance is not needed. In the US, you...
If you are buying real estate in Mexico, I would encourage you do be sure that your title is free and clear. Make sure that whoever you are buying from has the legitimate right to sell the property and that there are no past owners or any liens on the property.
It’s my impression that title insurance is something that is needed if you were to secure a loan. If you are not borrowing the money, then title insurance is not needed. In the US, you don’t need title insurance if you purchase a property with more than 20% down payment. In Mexico, you typically pay a 100% down payment (in other words, you typically purchase real estate for cash) so title insurance is for naught.
This is one of the reasons why hopefully you have a good realtor to research who owns the title. In Mexico, just as in the US, you wouldn’t buy a property from someone who you weren’t certain was in a position to legally sell it to you.
If you are considering buying on the coastal areas, you might want to check if there are any water considerations and other items of that nature. Buyer beware. Make sure you are comfortable in your neighborhood. I would also look into the utilities, such as the source of power and water and Internet access.
(Bavarian style home in Mexico, pictured.)
Posted June 28, 2016
Ian T. Clement - Clement and Associates
In buying a house in Mexico, you should definitely consult with an expert to check the title, and to make sure that who’s selling you the property is indeed the person who owns the property. You also need to have an architectural structural engineer check the property.
When you move from the United States to Mexico, when it comes to houses, you have to realize that in Mexico, everything is made out of brick, adobe or stone, so you don’t...
In buying a house in Mexico, you should definitely consult with an expert to check the title, and to make sure that who’s selling you the property is indeed the person who owns the property. You also need to have an architectural structural engineer check the property.
When you move from the United States to Mexico, when it comes to houses, you have to realize that in Mexico, everything is made out of brick, adobe or stone, so you don’t have a lot of the situations you have in the States where you’re going to have a perfectly sound-looking house that’s full of mold, termites, or some completely silent enemy. You really have to investigate, work with somebody who knows what they’re doing, and consult on the residency, in order to have all of the implied rights as a homeowner, vis-à-vis capital gains entitlements, the ability to sell, the ability to buy, etc.
It’s really good to procure the resident’s status before you get in to purchasing property in Mexico. The most important thing to do is to consult with an attorney before you make an impulse purchase to make sure that you’re putting all the ducks in a row. You should do preemptive work so that you’re not trying to fix things that you should have done in a more step-by-step way.
Having said that, there’s great value in consulting. I always try to guide people away from an impulse purchase, but that’s a really personal matter. And then again, there are a lot of people who come down here to visit their sister, and bought a house a week later. Things transpire in all different ways.
(Tiles being laid in Rancho Los Labradores, San Miguel de Allende, Mexico, pictured.)
Posted January 3, 2017
Joan Silver
The most important thing to do before buying or even thinking about buying a house in Mexico is to see your friendly bank in your country. Talk to your banker that you're considering purchasing a home in Mexico and ask what their wire transferring instructions are. It’s very important that you are able to do wire transfers electronically and make sure that you have all the requirements and your requests on file.
Some expats will come to Chapala and...
The most important thing to do before buying or even thinking about buying a house in Mexico is to see your friendly bank in your country. Talk to your banker that you're considering purchasing a home in Mexico and ask what their wire transferring instructions are. It’s very important that you are able to do wire transfers electronically and make sure that you have all the requirements and your requests on file.
Some expats will come to Chapala and Ajijic and get very excited about buying a property without realizing they can't do a wire transfer because there was no request filed at their bank in their home country. Your banker knows who you are but can’t honor your request because of money laundering issues and they fear you may be pressured to do something you're not ready to do. I’ve known people who have had to fly back and sit in front of their bank to do a wire transfer. In Mexico you're not allowed to mail a check for more than $10,000. That's why talking to your bank and knowing what their rules are is very recommended by us and if you do so, you’ll be amazed how simple it is.
Also, when we sell a house the buyer should hire someone to inspect the house if there's something wrong and to change the keys to the doors as well.
To have a smooth real estate transaction, my recommendation is to get a real estate agent and a broker who will advise you to use the notary instead of hiring an attorney. You’ll end up doubling your fees if you hire an attorney. One of the specialties of notaries are real estate transactions, but notaries don’t sell houses or handle purchases. It will be the real estate agent who will help you with details that go with the transaction. In order to make it the best deal for the buyer and seller we write up the contract to purchase houses. You can’t have notaries have a power of attorney because notaries work for the government, not you.
(House on a half acre, Ajijic, Mexico, pictured.)
Posted February 3, 2017