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The Real Estate Closing Process in Mexico

View of Los Arcos in Puerto Vallarta, Mexico
Credit: Harriet Murray

The real estate closing process in Mexico is similar to closing in Europe and South American countries. A notary, who is a specialized attorney appointed for life, is empowered to transfer real estate. Using a notary for closing is different from both U.S. and Canadian transactions.

The notary in most of the world is the highly trained and paid professional we use in Mexico. A notary public, in our experience, is not by any means the same profession, even though the names are the same.

The notary is required to adequately identify the sellers and to be sure that the property taxes, bank trust and condominium fees (if applicable) are paid and up-to-date. Water is owned by the nation, and not individually. Notaries can require proof of water payment if they believe non-payment affects the sovereignty of the nation.

The notary is not required to be sure the electric or other utilities (except water) are paid. These other utilities will not be handled properly at closing if you don’t have the right representation. Chances are you will assume this will be no problem and can easily be handled later. To think this is to be very wrong. Your agent or attorney needs to be sure the utilities are paid, and prorations are done for all expenses, such as property taxes, and utilities.

Your real estate agent or attorney should explain to you the utility transfer procedure. No new buyer wants to pay or find the former seller in order to pay a large electric or phone bill before he/she can have the service put into his/her name. But this can happen, and it does.

Two things I think are not talked about enough when closing real estate transactions in Mexico:

1. The utility bills should be paid through the day of closing by the seller. He/she should furnish you with a bill and receipt of payment for the electric and telephone.  In some cases, the notary will keep original bills of the seller, so you may have to accept a copy of the last paid bill.

2. It is far better to transfer the utility accounts (especially CFE electric and telephone), rather than open new ones.  To transfer, you will need the proof of the account as well as a letter signed by seller with his/her ID, requesting the utility company to transfer the account into your name. The best and sometimes only time to get this letter signed and the ID is at the closing table.

After closing, when the bill comes due, you will pay it and begin the transfer.  You can be comfortable that that you have a receipt for the last payment made by the seller, and you will not need to make up unpaid back payments.

This handling of utilities may seem like an obvious and easy task as part of closing, but most of the procedure will be unfamiliar to you. Lack of attention to paying and setting up transfer of the utilities can be a problem later and leave a bad taste in your mouth.

Make sure these two steps are handled at closing and you will be very glad afterwards. Many sellers and buyers are not going to be in Mexico when the utilities need to be transferred and whomever will be doing this for you cannot easily get the paid receipts, account numbers, or ID’s of the seller to take care of the transfer for you.

A note: CFE (the electric state-mandate monopoly) may require a copy of the registered transaction from the public registry. The recorded escritura (deed) may not be back from the public registry for 6 months or longer. You need to pick it up in person or sign an original letter authorizing someone else to get it.

This article is based upon legal opinions, current practices and my personal experiences.  I recommend that each potential buyer or seller of real estate conduct his/her own due diligence and review.