[headline h=”1″]Negotiating an Offer[/headline]
Once you’ve whittled your search results down to type, price and location of properties interested, it’s time to go see them! Your realtor (me!) will assist in your research and offer advice on your selection as well as arrange viewings. When you find the right property, that is the one that matches your desires, needs and wallet, the next step then is to present an offer.
To buy property in Mexico you must be legally and financially capable of making an offer including having a legal presence in the country. Being here legally means no more than proving you entered the country with a tourist visa and a passport.
Obviously, the details of any offer will be specific to each property. Most realtors use a standard boiler plate contract modified with each sale’s particulars. These contracts are typically in Spanish in one column and English in another. Spanish is the legal language of the contract while English is considered a “courtesy translation.”
Typically, in the United States and Canada, an offer is accompanied with a check representing a good faith deposit while demonstrating the buyer’s seriousness and ability. Here, there is a difference. Once an offer is accepted, then within short order the buyer wires such good faith deposit into an escrow account specifically established for that sale. We’re usually talking within 72 hours. If it’s a new development, sales are often first established with a reservation deposit typically about $10,000 followed by a larger deposit once the sales contract is agreed upon.
Oftentimes there will be counteroffers and counter-counteroffers before the two parties agree (or the buyer chooses to continue looking elsewhere). Once an offer is accepted and a good faith deposit made, it’s time to work our way toward the closing, nominally 45 days away but can be completed sooner if one’s in a rush. The immediate concerns before closing would be a property inspection and the fulfillment of any other contingencies agreed to in the sales contract.
The closing will take place in front of a public notary. Unlike their Canadian and American counterparts, Mexican notarios are of an elevated legal position over lawyers and in reference to a property transfer work on behalf of both buyer and seller “to bring faith to the operation” as well as record the land transaction to the government and collect any capital gains taxes possibly owed by the seller. Depending on the complexities of your purchase you may want to utilize your own personal lawyer but be sure to choose one who practices Mexican real estate law. I work with local lawyers who are available to assist in drawing up the contracts as well as for fielding any questions you may have.
[headline h=”3″]Understanding the bank trust[/headline]
Probably the most misunderstood aspect to foreigners buying property in Mexico is the bank trust requirement. Many confuse it as being a lease which it is not. All properties within 50 km of the country’s coastline are in the constitutionally-protected “restricted zone.”
Purchasing property further inland is like buying back home while all purchases within the restricted zone must be purchased through a bank trust, or fideicomiso as they are known, where the bank, a Mexican entity, is the owner by record, with the purchaser, you, listed as the bank trust’s first beneficiary.
This restriction of land sales was put into the Mexican constitution after the loss of half their country, i.e. Texas, California, Nevada, Arizona, etc., in the middle of the 1800s. It was meant as a means to protect what was left of Mexico when invaders would then come by land or by sea. The only invaders today are tourists flying down to soak up the beaches and margaritas.
The fideicomiso happens to be a very flexible and safe purchasing instrument that does not circumvent the country’s constitution while enabling North American baby boomers to stake out their piece of paradise. It smartly permits an inflow of capital into the country that in turn generates thousands of jobs for the local economy.
What’s important to understand about the bank trust is you’re making a real land purchase. The reality is they’re exceptionally flexible and safe instruments for purchasing property that operate not unlike a living will as the bank trust substitutes the need of probate since it has hereditary clauses.
You are the first beneficiary of the trust; your children (for example) are listed as the trust’s second beneficiaries to whom the land transfers when you pass on. Where it can get messy is if something happens to you while no second beneficiaries have been listed. It would then be resolved in a Mexican court. (Your children can check back in a few years.)
Next: After the Sale
[hr]
[headline h=”3″]The Concise Guide to Buying Property in Mexico[/headline]
[numbered_list style=”number-pad”]
1. Introduction
2. Before the Purchase
3. Upon an Accepted Offer
4. After the Sale
5. FAQ
[/numbered_list]
[hr]