What Bayside’s Real Estate Agents Wish Buyers Knew About the Buying Process in Mexico – Part 2
Considering a real estate development purchase? Congrats! It’s an opportune time and an exciting ride. We went through the process years ago and have streamlined the process for buyers working with us. When you partner with us, our team guides you every step of the way because we want you to enjoy the process of owning your new home in Mexico!
We are often asked what the top pieces of advice are for those looking to buy property in Mexico. We answer a lot of those questions in our “How To” Guide for Owning Mexico. We cover real estate topics like Tips for Buying Property in Mexico and practical and lifestyle topics like How To Take Your Pet to Mexico.
We asked Fabiola Limon, Bayside’s Sales Director, what she wishes buyers knew about the buying process in Mexico. Fabiola knows all of the ins and outs of purchasing property. She shares some great thoughts with us in this article.
Meet Fabiola Limon, our Bayside Sales Director
Fabiola was born and raised in Mexico City, however since her mother is from Huatulco, she feels like it’s her true home. She studied Finance and Accounting in Puebla and worked for multi-national companies including Holcim Ltd and Mars Inc. Fabiola joined Bayside after obtaining her diploma in Business Administration in Sydney, Australia. Fabiola loves her home in Huatulco and feels lucky to have been able to travel the world.
What Fabiola Wishes Buyers Knew
An escrow account is not necessarily needed for the purchase transaction.
A real estate transaction has standard protocols that follow all the Mexican practices recognized by AMPI, Asociación Mexicana de Profesionales Inmobiliarios (https://ampi.org/). Generally, in Mexico, the buyer transfers directly to the seller’s account. Although this is a common practice, Bayside has adapted to international, American and Canadian models for our foreign customers. Bayside provides an escrow account service for down payment deposits to secure the deal. This a way to protect the transaction and a secure option for all parties involved.
Then, the final payment goes directly from the buyer to the seller. In some cases, a buyer or seller may request to use an escrow account for the final transaction. This also depends on the complexity of each deal.
It is not mandatory to hire lawyers for buying property in Oaxaca, Mexico.
In the majority of our deals around the Oaxaca coast, we do not use lawyers to complete the transaction. In Mexico, notaries are used for buying and selling property. 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. Notaries have higher legal competencies and responsibilities than in the U.S. or Canada. It is really up to the buyer if they want to hire a lawyer at their own expense. Buyers are guided by the broker and the Notario Publico. In some cases, in other parts of Mexico, it may be advisable to hire a lawyer.
Spanish language is the legal language of Mexico.
Since we are in Mexico, Spanish is the legal, business language. Contracts and legal documents are drawn up in Spanish. However, all sales agreements that Bayside produces are provided in Spanish and English as a courtesy to our clients and because of our level of service. Signed contracts will have one side in Spanish and one side in English where the Spanish section is the one that will prevail legally speaking. And communications with our agency are in English for English speakers. Same with the currency; the Mexican peso is the legal currency, and the property will be registered in Mexican pesos even if the buyer has paid with a different currency.
Processes and procedures may take time.
All countries have their bureaucratic particularities and Mexican administration is no exception. Different entities are involved in a purchase process and each entity has its own times and stages. A permit from the Ministry of Foreign Affairs office must be obtained to set up the Fideicomiso. It takes 10 business days plus the processing and collection of closing certificates. An average closing process in Mexico might take 30 days to 2-3 months to close.
Mexican banks do not provide mortgages or loans to foreign people.
Check out our extensive article about How To Finance Your New Home in Mexico.
If you earn a profit upon the sale of your property, you will pay capital gains tax called ISR or impuesto sobre la renta
When a buyer becomes a seller, some obligations will need to be covered like “Capital Gains”. The exact amount is determined through a national authorized software program that has tabulators taking into account the original purchase price and other factors like appreciation and depreciation rates, tabulator values, number of sellers, the monthly national consumer table index, among others.
Notaries or accountants depending on who is selling (persona física o moral), are responsible for calculating and reporting this tax to the Mexican authorities.
On any preconstruction project, the buyer partners directly with the developer.
Basically, the buyer gets financed by the construction period. The developer will need funds to start the project. The construction period could go from 8 to 24 months. Also, by purchasing a pre-construction project there are some things that will not be completely defined by the developer at the beginning like rules and regs, common areas, HOA fees, condo equipment etc. Sometimes these items are defined during the pre-construction process. We love seeing buyers taking advantage of pre-construction prices with a happy and satisfactory result at the end of the process.
Homeowners Insurance is available.
If you own a private home, it is up to you to get insurance. If you own a condo, you will check with the HOA about insurance stipulations. They may or may not require homeowners insurance. Most banks provide homeowners insurance options and other companies like GNP, AXA and Sura offer a range of affordable products.
Throughout the buying process, you may have one power of attorney.
If you cannot travel to come down and sign your title, you can set up a Power of attorney. The buyer goes through a specific process for this. You may not sign a new POA or change the existing POA. You or the original person with the POA will need to sign.
This is why it is extremely important to choose a good agent. Their representation, sales management and dedication are critical to helping you navigate this complicated-but-rewarding journey. Our agents are dedicated to helping you work out the financials and file the necessary paperwork to get you into your new home as efficiently – and as accurately – as possible.
We specialize in unique coastal destinations: Huatulco, Puerto Escondido and Yucatan, Mexico. If you want to learn how to save money with your upcoming real estate purchase, contact us today.