Mexico is a prime destination for expats who are interested in buying a second home or vacation property overseas. They look towards urban centers like Mexico City or coastal regions, such as the Baja California Peninsula, where Los Cabos is located.
Read this essential guide to buying properties in Mexico to learn more about the process and enjoy a smooth-sailing transaction.
In the early 1900s, the Mexican government declared all land in Mexico communal rather than private properties. They call this “ejido,” This isn’t the case today, but there is still some land that is considered as such. Because of this distinction, it is highly advised to double-check if the land or property being purchased isn’t classified as communal.
In the 1970s, a law was passed that allowed foreigners to purchase property in Mexico. Land within 100 kilometers of international borders and 50 kilometers of coast such as Los Cabos real estate, however, were out of bounds. That law was changed in 1993 when an amendment was made. This allowed foreigners to purchase property in once-restricted areas through the help of a fideicomiso.
A fideicomiso is an agreement that is established with a Mexican bank, valid for 50 years and can be renewed. This trust agreement allows foreigners to buy and hold property in Mexico with all of the rights of a Mexican citizen. Through the fideicomiso, a foreigner can own several properties in perpetuity. Properties can be willed to his heirs. If the foreign owner wishes to put the property up for sale, the fideicomiso can be transferred to another foreigner.
Restricted land can also be bought through a Mexican corporation. This route, however, is best for business and investment purposes only, with more rules attached to it.
The Mexican home buying process
Other than the establishment of a fideicomiso, the process for buying property in Mexico is fairly straightforward.
- Find a property and make an offer
The first step of purchasing a property in Mexico is finding the right one. A great real estate agent, like Andrew Lemke, can help you explore houses for sale in Los Cabos’s master-planned communities.
Once you’ve decided on a property, you’ll make your offer. Verbal agreements are recognized in Mexico but putting it in writing legitimizes the intent. Prepare an “Offer to Purchase” contract, which includes all the necessary details of the offer, from the price and earnest money deposit to clauses in case the sale does not push through.
After the seller accepts your offer, you can then deposit your earnest money.
- Lock in the basic terms
After you give your earnest money, a document called a promissory agreement (contrato de promesa) is drawn up. This is a binding agreement between you and the seller, setting a timeframe to complete the transaction. Followed by the signing of the promissory agreement, a trust application will be started with your fideicomiso bank. Your lawyer will then contact the Ministry of Foreign Affairs to process a trust permit.
The property, including its legal status and title, will be reviewed by your lawyer. Necessary documentation will be collected. For foreign buyers, requirements include your passport, driver’s license, and proof of billing. You may also be asked to submit a corporation documentation.
- Start the closing process
The compraventa or purchase agreement must be executed to start the closing process. At this point of the sale, the Ministry of Foreign Affairs must have already forwarded the trust permit to your fideicomiso bank. The final documents, such as the closing deed, are reviewed by a lawyer, notary, and a bank trust officer before they are signed.
- Closing on your new property
Once all the documents are ready, you will receive notification of your closing and the total associated costs. These typically include notary fees, attorney fees, acquisition tax, the trust permit fee, public registry fees and foreign investment registration fees. The appraisal fee and certificates can be shouldered by you or the seller, depending on what was discussed.
All documents are signed by you and the seller in front of a notary. A notarized copy of the closing deed will be given to you. You will receive the final deed three months after the closing date.
- Delivery of your property
After closing, a separate date for the delivery of your property will be arranged. Before signing the delivery statement, it’s important for you to do a final walkthrough to ensure that everything is as discussed. After signing the delivery document, the property will officially be yours.
Get in touch with Andrew Lemke today for more home buying tips and information about Los Cabos Mexico real estate.