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Real Estate Closings in Mexico

A real estate closing coordinator organizes all aspects of the final stages of a real estate transaction. Often, they are an attorney, and their purpose is to prepare closing documents to facilitate a smooth transaction between buyer and seller. In the Bay, the coordinator obtains the no-lien certificate, tax appraisal, transfer tax, trust if the buyer is a foreigner, and any other requirements needed. For example, the property may have a federal zone concession, and it is important to verify it is current.

The coordinator represents the notary who is paying her to prepare the closing. The closing coordinator should not take that role and the role of representing the buyer during due diligence, or the seller, as this is a conflict of interest.

The closing coordinator is also to work on the ISR or capital gains of the seller. If a seller has an attorney, she usually wants to have this person negotiate the capital gains with the notary to be sure she pays the tax but does not overpay.

Closing costs in Mexico for buyers with a trust or fideicomiso range on average from 3-6% of the purchase price. If a buyer is obtaining a mortgage, the costs will be higher for items such as a market appraisal, points or commissions paid to the mortgage brokers, and other expenses. Get a complete list of expenses when you are considering a mortgage.

Mexican buyers will have many of the same closing costs, except for the trust and foreign buyer registration. Their escritura (deed) does not contain a trust. Both a trust deed and a simple deed are registered in the public registry.

Upon a later sale, the escritura is transferable and does not have to be recreated when the property is sold. The document gets bigger with each purchase or change and is a recorded history of the specific property.

Buyers can take physical possession of the property after the closing. This time frame is usually 30 to 90 days after the original purchase agreement in a resale. In other cases, arrangements are made for occupancy- Typically, pre-construction projects allow occupancy if the regime and deeds are not ready.

The buyers usually must pay all or 90% of the purchase price, before receiving occupancy, and they start paying HOA fees.

Closing occurs when the property has issued tax numbers for each unit, the condo regime in the case of condos is recorded, each property has a property ID number, and the buyer has paid the agreed upon amount of money to the seller. Notary closing costs for buyers are paid after occupancy and before receiving the escritura. Funds are wired, and no cash or checks are used.

Meeting all legal requirements can take a few months or longer. With pre-construction, discussing the time frame with the developer through your attorney and agent is wise as part of the purchase agreement details.

A good agent and attorney have the responsibility to help you understand the closing and guide you in how to transfer utilities and register with the administrator of the building, so there is a file showing you are the owner.

You must understand how to hire a maid or have other services for your new purchase. You may want a manager to pay your bills and oversee the property to be safe and in good condition.

Your property manager can be different from the administrator of the building. There is a conflict of interest if you are using the administrator for your personal expenses. Some buildings do a better job than others, so this is something you need to check out carefully.

One absolute is not to give your money to another person to put into their personal bank account. This triggers much interest in anti-money laundering laws and the risk of losing your money.

Every month, you need a reconciliation of your funds and expenses and not just a running balance of income and expenses. You need to know each month what you have spent money on and your balance, as well as have year-to-date accounting of your funds.

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 of Mexican real estate conduct his own due diligence and review.

Author

  • Harriet Cochran Murray

    Harriet was born and raised in Louisiana. She has a BA in Art Education and has lived in Vallarta since 1996, founding Cochran Real Estate a year later. She is also a Certified International Property Specialist and a long-time Realtor who travels the world to attend courses and give presentations.

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