Buying a property in Mexico may seem like a good idea these days as their market is not currently red hot as it is in the USA. Although inventory moves quickly, there is no shortage of homes for sale. Additionally, they are not addicted to cheap 30-year mortgages like we are in the US. (The current 5 percent rate is still historically lower and cheaper than rates in Mexico).

One thing to be aware of when purchasing property is that any home that is within 50 Kilometers of the coast is required to be registered in a trust (called fideicomisos). This applies to non-Mexican citizens. They are renewable 50-year trusts that designate to whom the ownership of your property will transfer if you were to pass away. Your beneficiaries will be noted in the trust, which will then be transcribed into the deed. This does help mightily in transferring ownership of the asset in the trust without having to go thru complicated inheritance procedures that are common in the USA. These trusts are renewable every 50 years.

This is a concern to many buyers who are afraid that the government will seize their property should relations sour with the United States. However, this fear is unfounded for many reasons. As we can see in current events, western governments have no compunction seizing Russian assets no matter how those assets are registered.

Once you find a home that strikes your fancy, you may find yourself wanting to make an offer. You would tell your agent the amount that you would like to offer and when you would like the sale to close (closing generally requires 45 days or so, but can be longer if both seller and buyer agree to a longer closing period). Your agent will contact the seller’s agent for specific information on the escritura (deed) to include in the offer (seller’s name, specifics of the property, etc.). Your agent writes up the offer, and generally includes a number of contingencies. These may include, for example:

• An inspection (we have qualified folks in the area who do these)
• Your review of the condo association documents (financials, by-laws, annual meeting notes, etc.)
• Acknowledgement by the seller of any legal issues related to the property or staff

You review the offer, and sign (unless there are changes to be applied.) Your agent then sends it to the listing agent, who will forward it to the seller for review. No money passes hands at the point of the offer (unlike the deposit check that’s typically written in the US, for example.) There may be a counter-offer or several counter offers involved, similar to the US.

Once your offer (or a counter-offer) is accepted, the contingency period begins. This is the period of time where the inspection takes place, you receive and review any condominium documents, etc. Generally, this is a smooth process, although there could potentially be “deal breaker” items or items that will require further negotiation. Such “deal breakers” and negotiations aren’t very common, but they can occur. There is an “out” (non-removal of a contingency) in case these cannot be resolved.

Once all contingencies are removed, we move to escrow. Escrow companies are generally based in the US if the transaction is in USD. It’s common that your funds will remain in a US bank and be distributed from there. These companies handle the acceptance and transfer of funds to the receiving parties (the seller, the government if there are taxes associated with the sale, the real estate agencies brokering the transaction, etc.). Although the terms of your escrow deposit are subject to the contract, it generally involves:

• A wire transfer of 10% of the purchase price from your bank to an escrow account
• The escrow fee (as outlined in your contract) – generally around $750 or so
• A deposit toward your closing costs (generally, a $3000 deposit)

Your agent will work with the closing coordinator and notario (a government official) to determine the closing date for your new home. The date is listed in the contract, but (unlike the US) is definitely subject to change by a few days or a few weeks (rarely, but occasionally more than that), as several government agencies (and more importantly – the banks related to the trusts) are involved. If you can’t attend the closing, there is also a power of attorney process available.

Just prior to the close, you will be asked to wire the remaining balance of the purchase price and the balance of the closing costs. You will probably be asked to wire transfer a sum a bit above those amounts to account for pro-rated prepaid items (taxes for the remainder of the year, HOA for the rest of the month, with an offset for anticipated utility bills that are due to be received, etc.)

Your agent will attend the closing with you (or your power of attorney.) This occurs at a notario’s office. The notario in Mexico is not the same as a notary public in the US. The notario is a government-appointed position that is responsible for all of the legal transactions related to a property transfer. That individual is a lawyer, and is up to date on all of the related laws.

At the closing, the closing coordinator can review the new escritura with you. You and the seller will both sign the escritura and place your fingerprints on the document. You then receive the keys and a “congratulations!” from all!