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Buying a Dream Home in Mexico

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Buying a dream home in Mexico is, well, the dream of most expats when they plan their move to this country. If you are one of those expats who decides to purchase a home in Mexico, here are a few basics to know:

Understand the Scope of Work of the Notary

First, you need to understand the role of the “notario publico.” The Mexican notario is an experienced, specialized attorney who decides if the seller has the authority and ability to transfer his/her property. The notary is required to file the fideicomiso, or deed, with the public registry, and the notario is a neutral party to the transaction.

The notario should, however, inform a buyer or seller if there are material issues that may cause harm to one of them.  The notario does not have the responsibility to hold or disburse purchase funds and is not your advocate as a buyer or a seller. You need your own attorney advocate in addition to your agent.

A Notary Coordinator Is a Good Thing

A notary coordinator is an outside professional who is authorized and paid by the notary and can coordinate the closing. The actual closing will be with one specific notary for a specific buyer and seller. In my experience, there is a conflict of interest if the buyer’s or seller’s attorney acts as the transaction coordinator. I have found one of the two principal parties can be put at a disadvantage. The transaction coordinator normally speaks English and helps make the transaction more understandable to foreign buyers and sellers. Since they are paid by the notary, you do not need to pay them. They should work with your attorney and agent to make the sale go smoothly at the closing.

Use a Bilingual Mexican Real Estate Attorney

No, all agents are not educated or experienced enough to take the place of an attorney for you.  A client needs to be told what is happening and how it is different from what he/she is expecting.  A good attorney can help explain the important legal differences to you. Many transactions have closed because a good attorney solved the legal problems of the sale.  A good attorney charges a fair fee for his/her expertise and skill.

Understand the Use of Escrow for Purchase Funds

Escrow is not common in Mexico and there are few laws on how to operate under escrow. Title companies with offices in Mexico or the United States can be authorized to hold purchase escrow funds. Most foreigners want the use of escrow.

Be Aware That Pre-Construction Commonly Has the Buyer Pay

You should be aware that pre-construction commonly has the buyer pay funds directly to the developer, who most often uses these funds for construction. You should require your agent and attorney to negotiate the builder contract to give you the best terms and conditions possible. You need to evaluate your amount of risk with pre-construction and with a particular builder.

Know How Expenses and Funds Are Handled at Closing

Buyers assume that all prorations of utilities and expenses of the property will be paid at closing. This may not be the case. The escrow company only holds the purchase funds and disburses them at closing.

The notary is not required to make sure any bills are paid except the property tax, water and the condo fee. The real estate agents need to make sure the utility bills, bank trust and services are paid. The bank trustee will not approve the transfer of the property until the bank trust fees are current. The agents (or client’s attorney) write the escrow instructions to wire funds to the different parties receiving payments. Net proceeds go to the seller.

This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas.  I recommend that each potential buyer or seller conduct his/her own due diligence and review.