Use an attorney. Not all agents are educated or experienced enough to take the place of an attorney for you. I recommend one who is bilingual and bi-cultural. A client needs to be told what is happening here and how it is different from what he is expecting. Many transactions have closed because a good attorney solved the legal problems of the sale. A good attorney charges a fair fee for his/her expertise and skill.
Understand the scope of the Notary. The concept of the “Notario Publico” needs to be explained to the foreign buyer or seller. The Mexican Notario is an experienced, specialized attorney who decides if the seller has the authority and ability to transfer his property. The Notary is required to file the fideicomiso or deed with the public registry, and he is a neutral party to the transaction. He should, however, inform a buyer or seller if there are material issues that may cause harm to one of them. Note: The Notario is not responsible for holding or disbursing purchase funds.
A notary coordinator is a good thing. An outside professional, authorized and paid by the Notary, can coordinate the closing. The actual closing will be with one specific Notary for a specific buyer and seller. In my experience, there is a conflict of interest if the buyer’s or seller’s attorney acts as the transaction coordinator. I have found one of the two principal parties can be put at a disadvantage.
Understand the use of escrow for purchase funds. Funds can be held in an approved Mexican bank. In addition, title companies with offices in Mexico or the United States can be authorized to hold purchase escrow funds. Escrow is the safest way to keep the purchase funds protected until they are transferred to the appropriate parties upon signing the deed.
Know how expenses and funds are handled at closing. Buyers assume that all prorations of utilities and costs of the property will be paid at closing. This may not be the case. The escrow company only holds the purchase funds, so they are not in the possession of either the seller or buyer. The Notary is not required to make sure any bills are paid except property tax, water, trust and condo fees. The bank trustee will not approve the transfer of the property until the bank trust fees are current.
The real estate agents need to ensure the utility bills and services are paid. They (or the client’s attorney) write the escrow instructions to wire funds to the different parties receiving payments. Net proceeds go to the seller.
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 own due diligence and review.
