We are experiencing an increase in sales in the Bay of Banderas area this year, so now seems to be a good time to review how the Mexico real estate buying process works.
In our area, buyers seem to be interested primarily in condos, at least for now. Many are establishing a foothold in the market while they wait and see how world conditions and politics evolve in the future.
Whether you’re buying a condo or a house, expat home buyers in Mexico need to understand the real estate system. The following is the buying process:
- Interview and select buyer agent and discuss use of bilingual attorney to review all legal documents and give a legal opinion on the state of the property.
- Develop plan for viewing properties of interest.
- Discuss and write an offer. First go over details and ask questions.
- Negotiate an offer. Accepted offer and any addenda are initialed, signed and dated.
- Accepted offer and addenda have one effective date: when all parties have signed and nothing remains to be signed. Last agent receiving should enter effective date on the last signature page of the original offer and write: “Subject to all agreed and signed addenda.”
- Closing clock starts
- Listing agent has a period of time to provide docs or information on the conditions to be satisfied in the offer.
- Buyer has deadline to order, complete, review and accept or reject inspection.
- Buyer has deadline to have legal review of documents requested in the offer and to accept or reject the attorney report.
- Escrow contract should be signed by all parties and file number issued while due diligence is being conducted.
- If buyer accepts inspection and legal, he/she will have a deadline to wire a deposit (part of the purchase price) and the escrow fee.
- Estimate of closing costs should be provided during the offer being negotiated or during the due diligence period.
- Buyer will wire an additional payment toward closing costs to the notary.
- After removal of conditions and deposit into escrow both buyers and sellers will provide the notary transaction manager all documents requested such as IDs, proof of permanent address, Know Your Customer Forms and bank forms to set up trust, if applicable.
- Once a closing date is established, buyer will wire remaining purchase price to escrow and arrange a payment method for remainder of closing costs to be paid by the closing date.
- This period of time from accepted offer to closing may take as much as 60 days, normally. Delays may occur from lack of documentation requested, delay on sending closing cost funds to start preparations for closing, bureaucratic reasons and holidays.
- Seller existing bank trustee can take a long time for review and agreement to end trust in favor of buyer trustee.
- Buyers need to inform agent and bank new trustee if they are going to be present at closing. Bank paperwork is different if they are not attending.
- Sellers must attend closing or have a legal representative (with an acceptable power of attorney written and approved by notary and trustee.)
- A distribution letter addressing purchase funds is signed by buyer and seller authorizing escrowed monies to be sent (after notary closing) to pertinent parties.
- Prorations of utility, tax or other expenses owed between buyer and seller should be handled before or at closing.
- Keys and occupancy (unless formally changed) are given at closing.
- Actual registered legal escritura deed (fideicomiso for foreigners) is ready three or more months later. Notary should notify new owners or transaction manager it is ready for pick up. Keep original in safe place and have copies for other uses as needed.
- After closing buyers, will receive two important xml files and two pdf documents. These are receipts from the notary of costs paid for the property, which includes purchase price and notary closing costs. Buyer will need these records for tax purposes when the property is sold. Keep these records in multiple locations, like cloud, flash drive or hard drive for safety’s sake.
- Now enjoy your second or primary home!
This article is based upon legal opinions, current practices and my personal experiences. I recommend that each potential buyer or seller conduct his/her own due diligence and review.