I receive many questions from readers on how to buy a home in Mexico because the process is different from home buying in the U.S., Canada and many other countries. I’ve put together a few recommendations below on how to buy a home in Mexico that may help reduce your stress if you are buying a home or thinking about it.
First, your offer should include time for you to conduct due diligence, which should include an inspection of the property, legal review and other key concerns you may have. Do not put your deposit into the escrow company before contingencies are removed.
The notary attorney, who will be the official to transfer the property in Mexico, will not check the HOA rules and regulations, so due diligence is up to you as the buyer. And by the way, all the information will be in Spanish.
You will need to use someone to review and report the status of the legal ownership and the condo regime, if applicable. This should be a very qualified real estate agent or a qualified attorney who will be your advocate.
Mexico does not require funds to be put into escrow to be a binding offer. In fact, Mexico does not require escrow. But for you, as a foreign buyer, contingencies and escrow are important to understand for your safety.
You can put your escrow deposit into the escrow company chosen once you have accepted the results of your due diligence. Don’t be convinced to do otherwise. Our contracts are written so that when you send in funds to escrow, you have become committed to the purchase.
If you withdraw from the offer, then you don´t have to fight to get your funds back from escrow, because you did not deposit them until you accepted legal and the inspection.
if you have opened escrow and not removed the contingencies, the title company may require your signature and the sellers. This is to protect their company from legal issues, but it may take a lot of time and these procedures are not the same as you would expect.
You will send the second deposit, or balance of the purchase price, into the escrow company several days ahead of closing.
We have recently seen problems and delays because of the lack of understanding of some of the international banking laws.
Typically for us, escrow purchase funds are kept in the U.S. in dollars. When funds are sent into escrow, you will most likely be sending from your bank in the U.S. or Canada. For the U.S., this is a domestic transfer. From another country, this is international.
Here is where you need to pay attention: Your bank and the receiving bank must agree on what the transfer is, as the codes are going to be different. International wiring instructions are not the same as national. Receipt of funds can be delayed if the wiring instructions are not correct for the sending and receiving banks.
You should also consider title insurance. A few of the reasons to consider title insurance are: if the property you are buying is adjoining the federal maritime zone, the purchase price is over US$1 million or your due diligence research discovers the property has had problems in the past.
Buying real estate in Mexico, like in any foreign country, is a very serious step to take in any country. Make sure you have an experienced and knowledgeable real estate broker to guide you through the process.
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.