Bank Financing:
Real estate financing in Mexico is difficult to obtain and very expensive when available. As a result, most transactions are handled on a cash-only basis. Qualifying buyers may find U.S. mortgage companies willing to finance 70% of the purchase price for a second home in Mexico. There are also a growing number of Mexican banks willing to finance under certain circumstances. Irrespective of any financing agreement, buyers should require that title to the property (or a beneficiary interest in a trust) be transferred into buyer’s name at the time of closing. Seller Financing: Sellers may be willing to finance all or part of the purchase price. The buyers, however, should require that title to the property (or beneficiary interest in a trust)be transferred into the buyer’s name at the time of closing. If not, buyers should be aware that all payments made prior to acquiring title transfer run several risks, including the following: risk of liens on the property by the seller subsequent to the purchase; risk of losing to seller’s creditors in case of insolvency or bankruptcy of the seller; risk of potential title defects; risk of multiple sales over the same property; risk of future litigation; risk of not obtaining a good and provable record of payments made and allocation and cost of taxes upon transfer, among others. Buyers should also be aware that title insurance is not available if title is not transferred. Types of Finance Transfer: Please consult your real estate attorney to review the options on providing security to the buyer and seller in a financed purchase. The most common options are issuance of a mortgage, guaranty title trust or a title retention sale. These three means all require the participation of a Mexican notary public and registry of the resulting document at the corresponding Public Registry of Property. Information provided by Arizona Association of REALTORS |