Closing the Deal – Real Estate in Mexico
Did you know foreigners can buy property in Mexico without holding resident status?
Although visitors to Mexico can purchase real estate without applying for temporary or permanent residence, holding a resident card will benefit you when it comes time to sell. Claiming the property as your principal residence may exempt you from any capital gains tax on the sale. Obtaining Mexican citizenship will allow you to purchase property in the restricted zone, which refers to properties that are 100 kilometers from the border and 50 kilometers from the coastline, without a fideicomiso, bank trust or a Mexican corporation.
You have found your dream home in Mexico: What is the next step?
From making an offer to closing the deal, a lawyer here in Mexico can guide you through the process and provide sound advice about purchasing real estate in Mexico.
Discuss your plans for the property with your lawyer. Are you buying to retire? Live in Mexico full or part time? Do you plan to start a business or use your property as a rental? These important facts will help your lawyer determine your best strategy regarding the purchase. In any case, be sure to consult your attorney before signing a sale contract or make the contract offer conditional to a lawyer’s review.
Choose a reputable, international lawyer who is governed by and accountable to a professional order in Mexico to assist you will the purchase contract and provide an estimate of the closing costs. If you can not be present for the closing, you may provide the law firm with Power of Attorney to act on your behalf.
Closing The Deal: What does closing mean?
Closing, also known as completion is the final step in executing a real estate transaction. On the closing date, the ownership is transferred to the buyer. The closing date is the day the property becomes yours, and the title deed is signed. The date is previously agreed on by the seller and the buyer but also determined by the notario, as the notario will review the certificates of non-debt and other documents related to the sale of the property.
Who will be involved in the real estate closing?
- Buyer and the seller
- Substitute trustee, Your benefactor, will be named in the fideicomiso as a substitute trustee in the event of death, but it is imperative to have a Mexican will as there are no rights of survivorship in Mexico.
- The Notario Público (Notary Public) is a licensed attorney, certified and appointed by the government as an official representative of the government. A Mexican notary has much more responsibility than a notary in the US or Canada. They are responsible for ensuring the legality of the title deed transfer and registering the deed in the Public Registry. It is their legal responsibility to verify the facts regarding the property, record the transaction in the Public Registry and withhold fees and taxes. The notario does not solely represent the buyer, in this case, they are a neutral counsel and represent the buyer, the seller, and the government.
- The Trustee Bank is the Mexican bank authorized by the federal government to act as trustee (Fiduciario). The majority of foreigners buy Mexican property through a fideicomiso which is held in trust at the bank with the buyer as the beneficiary. As a fideicomiso property owner, you have all the rights and privileges of property ownership. You are free to renovate, rent, mortgage or sell. Properties held in trust are not considered assets of the bank.
- The buyer’s lawyer: It is strongly recommended that the purchaser has legal counsel during a real estate purchase. Not only will the lawyers ensure your investment is secure, but they will do the leg work, and you avoid the runaround to various government offices collecting and verifying certificates, documents paying fees. Let the lawyers at Mexlaw take care the closing. Dealing with official agencies will be very difficult if you are not fluent in Spanish. Experience and the right connections enable the lawyers to achieve these requirements quickly and efficiently.
Although the state property registries will issue certificates of no encumbrances, stating there are no liens on the property, if a discrepancy is found after the fact, the buyer will have no recourse against the government for any human errors. Coordinating with the bank officers, the notary public, and the seller’s documentation will be supervised by the buyer’s lawyer. Your lawyer will conduct their due diligence revealing any liens, ensuring a clear title.
- Your lawyer will submit the permit to the Mexican Ministry of Foreign Affairs on your behalf.
- Research and confirm clear title with title history.
- Gather non-debt certificates.
- Set up appointments with the bank regarding your Fideicomiso.
- Confirm the property is not Ejido land.
- The title of property or Public Deed with registration.
- Property tax paid up to date.
- Active cadastral certificate (survey of the property)
Will I need to buy Title Insurance? A common misconception among foreign investors is that you need title insurance. When you hire MEXLAW, you will not need to buy title insurance. Due diligence performed by our team ensures a clear title deed.
What will a closing lawyer do for me? The closing attorney reviews & coordinates all the legal steps, follow ups with the notary, the bank, and the buyer ensuring all documentation required to complete the sale and deliver the Title Deed.
What expenses do I pay during closing?
The buyer is responsible for the Impuesto Sobre Adquisiciones de Bienes Inmuebles (acquisition tax) of 2%, closing costs, including the notario fees and lawyer fees, the bank’s trust set up charge, and annual maintenance fee.
How long will the closing process take, and when will I have possession of the property?
From making the deal to taking possession of the property will be approximately 40 to 45 days. The closing date depends on many factors; whether the property is pre-owned or presale construction or if there are any obstacles in verifying title and non-debt certificates. It is also dependent on the bank and the notary’s workload.
When will I receive the Title Deed on my new property?
The title is official the day that the title is signed by all parties. You will receive a certified copy of the deed one week later, the Notario will record the deed in the Public Registry. This process may take up to three months. Mexlaw will follow up to ensure the buyer receives the registered title deed.
The MEXLAW Real Estate Legal team will provide an estimated closing cost, an insured escrow service, and a guaranteed title deed.