Bank Trust: Under a bank trust, a Mexican bank holds the legal title to the property for the benefit of the buyer. The buyer, as beneficiary, has the equivalent of all of the rights of ownership including the ability to use, rent, modify, improve, encumber and sell the property. An additional advantage of a bank trust is the ability to name substitute beneficiaries. Under present law, bank trusts are created for fifty-year terms, renewable indefinitely. Buyers may also assume existing trusts using certain precautions. Contract: There are no set forms used for purchase offers in Mexico. A purchase offer, once accepted by the seller becomes a contract. Notaries: A buyer must formalize the purchase before a Mexican Notary Public. Under Mexican law, only Notaries are authorized to prepare and record a property deed. Notaries are attorneys appointed by the state government to specialize in various matters (including real estate transactions). Notaries are also responsible for collecting taxes at closing. Property Registry: The Public Registry of Property is the central recording entity for all public documentation concerning property. In order to ensure its ownership rights against the seller and third parties, a buyer must record all property transfers at the Public Registry of Property for the jurisdiction in which the property is located. Notaries typically handle registration. Valuation for Taxation Purposes: Buyers must obtain a Mexican appraisal to assist in determining the taxes for closing. The taxes will be based on the greater of the appraisal value or the purchase price. Buyers must not under-report the purchase price to the notary.
Safeguards for Purchasing Property in Mexico
Real Estate Professionals: Buyers should employ a real estate professional, with the Registry of Real Estate Professionals, to assist in the purchase of any real property. Disclosure Statement: Buyers should request that the seller provide a property disclosure statement. This document provides information concerning the current physical, legal and economic condition of the property. State Development Approval: Buyers should request a copy of any applicable Mexican state and municipal development authorizations in order to ensure compliance with local laws and ensure proper and timely completion of the development construction. Escrow: Buyers should require that any deposits or earnest money be placed in a neutral escrow account and should not pay any portion of the purchase price until the ownership or trust is transferred in the buyer’s name and title insurance is purchased. Although growing in importance, escrow is not commonly used in Mexico at this time. Consequently, verify the identity of anyone claiming to be an escrow agent with a title insurance agency. Due Diligence: Buyers should inspect the condition and suitability of the property with an independent investigation and due diligence before committing to a purchase. Buyers should also verify all relevant information that could affect the price or the decision to purchase, or both. •Title Insurance: Buyers should obtain a title insurance policy that will indemnify the buyer against damage or loss arising from a defect or lien upon the title to the property. Attorneys: Buyers should employ a Mexican or U.S. attorney that specializes in Mexican real estate transactions to handle the legal aspects of the purchase. Market Valuation: Buyers may contract a U.S. or Mexican appraiser to determine the market value of the property in question.
Information provided by Arizona Association of REALTORS |