The role of the notario in Mexican real estate is often not well understood by expats purchasing homes in Mexico. But these specialized attorneys are involved in every real estate transaction made in the country.
What Is a Notario?
A notario is an attorney who specializes in real property law and is specifically licensed by the state to legally transfer real estate from one party to another. The number of notario licenses is limited by the state. An attorney who wishes to become a notario must first attend classes and then pass a board examination. It is a demanding process and many do not make the cut.
Those few attorneys who do pass the test and are eligible to become a practicing notario then enter a waiting list for the next available notario license from the state. The wait is usually many years. Frequently, a law firm will employ one or two of the junior partners who have completed the notario board exam and can become the notario for the firm. A notario license is extremely valuable and dearly guarded by the firms that have them.
The notario is responsible for ensuring that a clean, merchantable title is passed from the seller to the buyer and that the property taxes, transfer fees/taxes and any capital gains taxes are paid at or prior to closing. They are also responsible for properly recording the transaction in their personal books and with the office of the Catastro (the office of property titles). Should a notario fail to discharge his/her responsibilities in an honest, fair and complete manner, he/she could lose their notario license.
Choosing a notario is usually not difficult. Your real estate agent will be able to suggest a good notario who is versed in transferring titles to foreign buyers. You may also choose to work with an attorney who is not actually a notario, but is connected to a notario. Frequently, these attorneys have passed their board to become a notario and are waiting their turn. In the meantime, they are skilled at checking titles, ordering fideicomisos and setting up corporations.
Notario fees will vary from one firm to another. Many fees are based upon the amount of the operation (appraised value of the property). Taxes and transfer fees are based upon this appraised value or the actual purchase price. Frequently, the appraised value of the property is much less than the actual purchase price.
The Notario’s Role in the Closing Process
You have found your property, negotiated and signed a contract, paid your earnest money deposit and contracted with a notario/attorney to handle your closing. You have decided to either utilize the fideicomiso, corporation or both. Your attorney/notario has copies of your passport, visa, the contract, and perhaps a POA (poder) from you to sign on your behalf.
The ball is now in your attorney’s court to prepare all the necessary documentation for closing. This documentation includes checking to see that there are no debts or liens against the property, that the taxes are paid, the meets and bounds descriptions are correct, the title is clear and in the name of the seller listed in your contract, and the permiso for your fideicomiso or creation of your Foreign Owned Mexican Corporation is completed.
Standard closing time from signing the contract to actual transfer of title is a process of 4 – 6 weeks. If there are problems with the title or meets and bounds it may take longer. Usually the “Offer to Buy” purchase contract provides for an automatic extension of 90-days to acquire proper documents if there is a problem. Should the documentation problem take longer to repair, the seller and buyer will need to sign a contract to amend the closing date.
Most foreign buyers wire the proceeds for closing to our earnest money account a few days prior to closing. If the seller wishes to be paid in pesos, we exchange the proceeds into pesos on the day before closing and order certified checks to pay the seller and the notario. We issue a final closing statement for review by the sellers, buyers, agents, attorneys and bank the day prior to closing.
There are no title closing services available, so the broker acts as a closing agent and disburses funds. If the seller wishes to receive their proceeds in a U.S. or foreign bank or other currency, we set up the bank wires and execute them upon signing.
The notario will provide the buyer with a copy of certified escrituras at closing, after all signatures are collected. Afterwards, the notario will send the new escrituras to the office of the Catastro for recording of the new owner and title. The Catastro will then send the newly recorded title either back to the notario, the seller or the seller’s agent or accountant. The Office of the Catastro is notoriously slow. It is not unusual to wait many months for the new escrituras.