Welcome to my new blog from Mérida. My goal is to help you better understand how real estate works in the Yucatán and the dynamics of the real estate market in Mexico.
Let’s begin by looking at the socio-economic conditions that have developed in Mexico over the last several decades. A large middle class has emerged to create a more robust market. Additionally, with the growing foreign interest in living and investing in Mexico, the market is becoming more dynamic and secure for investment and ownership.
Historically, Mexico was a country of basically two large economic groups; the rich and the poor. The poor rarely owned real estate and the rich tended to subdivide what real estate they had and pass it to their heirs.
The current real estate market, where two previously unknown parties come together to buy/sell real estate, is still a relatively new business in many regions of Mexico. This is the reason why, in most of Mexico, there is no MLS, no real estate licensing requirements for agents, no governmental oversight, limited institutional financing, few large organized real estate companies or real estate professional organizations, like the NAR (National Association of Realtors) in the U.S.
There is an organization known as AMPI, which partners with the NAR. However, they do not have the membership strength and discipline power in Mexico that the NAR wields in the U.S.
It is important to remember that Yucatán has been like an autonomous region, separated from Mexico for decades. Yucatecos tend to think of themselves as Yucatecans first and Mexicans second. Rules, regulations and new business practices have tended to evolve here more slowly than in other regions of Mexico.
Historically in Yucatán, when two individuals come together in an agreement to buy/sell real estate, the parties have utilized a promise to buy/sell real estate agreement, called a “Promesa de Venta.” The agreement is typically drawn up by the buyer’s notario and the buyer is responsible to pay the notario and the closing costs. Upon signing, the buyer gives the seller a deposit to hold as “earnest money” to seal the deal. In return, the seller provides the notario with current and notarized escrituras (title documents), cedulas (tax statements), planos (lot plan), personal data and corresponding information.
The Promesa de Venta is still popularly used in Yucatán. It is not unusual for a seller not represented by a real estate agent to require this contract, with the understanding that the seller will hold the earnest money deposit. Should the buyer fail to buy, through no fault of the seller, the buyer will forfeit the deposit. Should the seller, through no fault of the buyer, refuse to sell, there is a penalty clause in the contract stating the seller must return the amount of the original deposit and pay a penalty equal to the amount of the deposit to the buyer. If the seller does not return the deposit and pay the penalty, the buyer will have a very strong document for filing a lien against the property, and quite possibly gain title to the property after the legal process terminates.
Next time, I’ll discuss buying property on the Yucatán Peninsula. See you then.