| This was written for brief informational purposes only | | | | it would be next to impossible for you to find that |
| and is not meant as legal advice. Please consult with a | | | | dream home on your own unless, you had lived in |
| QUALIFIED Realtor® or attorney before you | | | | that area for many years, spoke Spanish well and |
| even start the process of purchasing property in | | | | understood the laws and terminology of Real Estate |
| Mexico. | | | | in Mexico. As it is, you are most likely looking for |
| The myth that an American or Canadian can't own | | | | your dream home in a tourist coastal town like |
| property in Mexico is a misconception! You can OWN | | | | Puerto Vallarta which has a local MLS. The process of |
| it, not just lease, rent, have a time share or | | | | looking can start in the comfort of your home but |
| temporarily own it. Read on... | | | | remember that once you are ready to buy you |
| As, with all real estate transactions whether in the | | | | should contact a Realtor. |
| United States, Canada or anywhere for that matter, | | | | Placing the Offer - The agent will put together the |
| proper steps and procedures are required in order for | | | | sales agreement and, if he/she is a true professional, |
| your investment to be a sound one. Without writing | | | | have it checked by a licensed real estate attorney. |
| an entire book, I will try to give a reasonable | | | | Your agent's fiduciary (first) responsibility is to |
| understanding of the process and give you some tips | | | | protect you and your rights (whether your agent |
| on protecting your investment and interests. I | | | | knows that will depend on how well you interviewed |
| strongly recommend seeking professional guidance. | | | | him/her). One other thing to consider - make sure |
| More often than not, it costs you nothing but it can | | | | you are working with an agent that knows the |
| save you headaches, time, money...or even your | | | | property's true market value and can negotiate. Just |
| entire investment! Mexico, especially Puerto Vallarta, | | | | because something seems like a good value doesn't |
| Jalisco is one of the most beautiful and charming | | | | mean that is what it is worth. It's only money but it's |
| places in the world. Puerto Vallarta, Mexico is like | | | | your money, right? After the Sales Agreement Is |
| Hawaii in climate, beauty and friendliness but it's closer | | | | Accepted - Your agent should give you an estimate |
| to home (for most anyway) and a lot cheaper than | | | | of closing expenses - based upon the actual |
| vacationing or living in Hawaii! It's no wonder that | | | | accepted purchase price. Closing expenses can be |
| upon people's first time visiting Puerto Vallarta, they | | | | anywhere from 4 to10 percent of the purchase price |
| fall in love with this tropical paradise! We sure did! We | | | | (more if financing is involved). Some expenses are |
| are not surprised that many other Mexico lovers | | | | fixed and some are percentages of the purchase |
| uproot their families (as we did) and move to this | | | | price. The fixed expenses can be the same whether |
| amazing country. What does amaze us, however, is | | | | the property is 150K USD or 950K USD and that is |
| when they decide to invest in real estate and work | | | | the reason for the spread. Generally, the more |
| with the first person they meet that says they sell | | | | expensive the property, the lower the percentage of |
| real estate. | | | | the sale price the closing expenses will be. These |
| There are literally hundreds of people in Puerto | | | | costs will cover setting up the trust, the first year's |
| Vallarta, Mexico that say they sell real estate. Very | | | | trust fee, permits, the property acquisition tax, legal |
| few of them do this as their full-time job and even | | | | expenses, and more. None of this is paid to the |
| fewer are trained in the BASICS! First thing that you | | | | agent or the seller, only the Notario's office (more on |
| should know is that a license to sell Real Estate or | | | | him later) and the government. A quick side note - if |
| act as an Agent is not legally required in Mexico. To | | | | the seller or agent asks you to declare a lower |
| those of us coming from other countries we | | | | amount for the property than what was agreed to, |
| understand the implications of this! Would you allow a | | | | don't do it or you could end up in hot water! |
| waitress to perform open heart surgery on you or a | | | | Escrow - Your agent should ALWAYS recommend |
| loved one? How about allowing a gardener to do | | | | you set up an escrow account for the purchase. It is |
| your taxes? That would be ludicrous, right? There is | | | | around $550-$650 USD but it is the safest way to |
| hope though, as the Mexican government and | | | | buy and probably the best money you will ever |
| educational system has just begun to recognize Real | | | | spend. The agent will set up this account for you. |
| Estate as a Profession and I'm sure that over the | | | | Americans are very familiar with the escrow concept |
| next five to ten years they will start implementing | | | | but it is mostly unknown to Canadians. In a nutshell, |
| legal requirements for Realtors. In the mean time, the | | | | the initial deposit and remaining purchase amount are |
| first thing you need to do before buying or selling | | | | deposited into a U.S. escrow account. The money is |
| property in Mexico is to verify that your Realtor or | | | | only disbursed when the buyer, seller and Notario |
| Real Estate Specialist is truly licensed by the National | | | | agree that all conditions have been met and there is |
| Association of Realtors (NAR) and the | | | | a legal sale at the closing. Before the close, if a seller |
| Asociación Mexicana De Profesionales | | | | or agent asks you to give them any of the purchase |
| Inmobiliarios (AMPI). | | | | amount to hold in trust in their "trust account", no |
| Basic Introduction to Ownership in Mexico | | | | matter how sincere they are, DON'T do it. |
| The Mexican constitution states that foreigners may | | | | Title Insurance - Depending on the circumstances of |
| not directly own land in the restricted zone. Although | | | | the sale or property, title insurance may be a good |
| this name sounds ominous, the restricted zone is | | | | idea. Title insurance rates are in the $5-$6USD / |
| simply all the land up to 100 km (around 60 miles) | | | | $1,000 of the property's value plus added Attorney |
| from the borders, all the land up to 50 km (around 30 | | | | fees of around $900. Talk to your agent about the |
| miles) from the Mexican coastline, and the entire Baja. | | | | value of title insurance. Until the closing, there is not |
| All other Mexican lands may be owned outright (fee | | | | much else to do. The Notario or attorney will ask you |
| simple) by foreigners. To save the problem of having | | | | to complete a beneficiary statement (a great |
| to change the constitution (a bad proposition for any | | | | concept as it avoids estate taxes and/or probate...if |
| politician), but still allow secure foreign investment, | | | | you happen to leave this world) and ask for assorted |
| the Mexican government introduced a land trust | | | | paperwork and I.D.s. You will also have to decide if |
| system called a fideicomiso (pronounced | | | | you are going to be in Puerto Vallarta (or where ever |
| fee-day-ee-co-me-so). The fideicomiso is created | | | | the Notario is located) for the closing because, if not, |
| through a Mexican financial institution (bank) and this | | | | a power of attorney may be needed so that |
| bank holds the deed to the property...in trust. You | | | | someone can sign on your behalf. Closings generally |
| and/or other persons that you specify are sole | | | | take 30-60 days on a cash sale and 60-90 on |
| beneficiaries to the trust (and therefore the | | | | financing. |
| property). You have full rights to do whatever you | | | | Closing - All parties are represented. The Buyer and |
| like with your property: it can be developed (within | | | | Seller sign where they must and verify that all |
| the law), rented, leased, sold, or given away. In other | | | | information is correct. The Notario signs off and the |
| words, fee simple ownership in all but name. The | | | | property is transferred to the buyer once the Notario |
| great news is that the property is not an asset of | | | | verifies that the funds have been wired to the Seller. |
| the bank. If the bank fails...the trust is transferred to | | | | The Notario is the only person that can transfer |
| another financial institution. | | | | property from one owner to another. |
| Overview of the Process | | | | Bank Trust Fees - Paid yearly and run $400-$650 |
| Agents - One of the most important steps is to | | | | USD/year depending on the bank. For the most part, |
| make sure your agent or his/her Broker has the | | | | there is no differentiation between institutions, other |
| following qualifications; a minimum of 1-2 years | | | | than the price. Your first year is covered in the |
| experience practicing real estate in Puerto Vallarta or | | | | closing fees. |
| Mexico, a minimum of 10 completed transactions, | | | | Property Taxes - Currently they are around $50 for |
| belong to Mexico's professional real estate | | | | every $100,000 of the appraised value. |
| association, A.M.P.I., certified by the National | | | | Property Insurance - Most people don't have |
| Association of Realtors® (NAR), and another plus, | | | | property insurance in Mexico (concrete doesn't catch |
| is CONOCER certification (a standards based | | | | fire easily) but it is worth exploring. |
| competency certification given by the Mexican | | | | What is a Notario? The Notario is the ONLY entity in |
| government). You will want to verify this with the | | | | Mexico that can transfer title in Mexico. The Public |
| agency or associations listed or ask your Agent for | | | | Notario is not like a public notary in the U.S. and |
| copies of their certifications. | | | | Canada. To become a certified Notario, the person |
| Financing - Although, many of the foreigners | | | | must have a Mexican law degree, be at least 35 |
| purchasing in Mexico do so with 100% cash, there | | | | years old, and have at least 3 years experience |
| are a growing number of those that secure financing | | | | working in a public notary office, pass a stringent |
| through Mortgage companies in their country. Not all | | | | exam, and be appointed, for life, by the state |
| American or Canadian mortgage companies and | | | | Governor. The Notario's fiduciary (first) responsibility |
| banks will lend on property in Mexico so, you will | | | | is to the federal government so don't assume that |
| need to ask around. It is critical to have your | | | | they are working for you as an Attorney would in |
| financing in place prior to placing an offer as most | | | | the U.S. or Canada. A qualified Real Estate Agent |
| sellers in Mexico will not accept a "subject to | | | | ("qualified" as stated above) is required by the |
| financing" in the agreement. Your agent should be | | | | certifying associations to work in the best interest of |
| able to connect you to some lenders in your country. | | | | their clients. |
| Finding your Dream Home - In some areas of Mexico | | | | |