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Taking Title to Mexican Property
Unlike the U.S. where the tracking and registration of property title is well established, tracking of property title in Mexico is in the infant stage. Rules and regulation have been put in place to track property title, however, many properties in Mexico do not have clean title. A small percentage of properties may have a claim on them by someone other than the seller. Sometimes buyers will find that the property they purchased was not legally held buy the seller. The true owner then comes forward and takes the buyer to court to in-force his/her property rights. Title companies such as Stewart Title Latin America will conduct extensive title searches and will register the property with the central repository of property title in the State of Sonora and the City of Puerto Penasco. The title company will also provide title insurance to help defend the buyers rights in Mexican court. If you have a loan on the property the bank will usually require that you pay for title insurance.
There are many parties involved in the transfer of property title in Mexico. They are as follows:
Buyer and Seller
Real Estate Agent
Notorio - (Government Approved Attorney)
Mexican attorney
Mexcian Bank to administer the bank trust
Government approved appraiser
Lending institutions
The Title company to coordinate the closing processes
Home Inspector
The title company will open an escrow account to hold deposits and the facilitate the transfer of payment. They act as a impartial third part. They will hire the appraiser. They will contact the notorio and arrange a time for his/her signature. An interesting piece of information of the notorio is that the notorio has extensive training on the transfer of title. The Notorio is much different than the notary in the United State. They are attorneys approved by the Mexican government to make sure all documentation is in order and the proper tax has been assessed.
If a lending institution is involved, they of course have a vested interest in confirming that the property title is in good order. Banks such as M&I Bank are accustomed to lending money to property buyers in Mexico and have specialists that know the system and the procedures involved to close the real estate deal. In most cases they will work directly with the title company. Lenders do consider investment in Mexican property high risk - they will charge a premium on the interest rate of usually 2-3% over and above the going rate in the states for a 30 year fixed loan. In some cases, only a 15 year loan is available.
A buyer obtaining a loan for the purchase of Mexican property can expect to pay when all is said and done closing costs of approximately 7-8 % percent of the purchase price. Fees include bank fees, government taxes and fees associated with title transfer. It is not cheep, and way above what you pay in the states.
The Closing Process Once all the the necessary documents have been completed, the bank is ready to lend the money, the title has been research and prepared, and the required closing cost have been calculated, the government approved notary must sign off on the documentation and title. The trust company will usually arrange a time and date for the review of the documents and signing by the Notorio. After the closing and after the payment has been wired you will receive a set of title documentation from the title company, all in spanish and approximately 100 pages long! These are legal documents, don't loose them.
So as you can see buying property in Mexico can somewhat overwhelming for the uninitiated. However if you hire an experienced Mexican realtor the process will go smoothly. Once the process is over, you can enjoy you house on the beach.
The Arizona Department of Real Estate has issued a Consumer Guide to Purchasing Real Estate in Mexico. It is very informative. Find it by clicking on the Arizona Department of Real Estate link below and then click on the guide in the left nav bar.For more information on Mexican real estate please see the AMPI website or Arizona Department of Real Estate.
Please contact Kyle Wood at Realty Executives Rocky Point for more information. [email protected]
****We have attempted here to present you with general information on the process of purchasing property in mexico. It is based off of personal experience and the process that was learned by individuals that have gone through the process of purchasing condominium in Rocky Point. The information presented is not legal or tax advise and shall not be used as such. Please consult a license agent, attorney and tax account.
