Purchasing in Baja
How to Purchase in Baja
Brief overview of the process of Real Estate Ownership in Mexico
1917 The Constitution of 1917 proclaimed that all land in
1973 A constitutional amendment known as the Foreign Investment Law allowed foreigners to purchase real estate anywhere in Mexico, except the restricted zone. The restricted zone consists of areas within 100 km (64 miles) of international borders or within 50 km (32 miles) from the coastline (at high tide).
1993
1994 The NAFTA trade agreement between the
The Fideicomiso
The fideicomiso is a bank trust wherein the bank (trustee) holds the trust deed for the purchaser (beneficiary). While the trustee is the legal owner of the real estate, the beneficiary retains all ownership rights and responsibilities and may sell, lease, mortgage, and pass the property on to heirs. The fideicomiso is authorized by the Mexican Government under the Ministry of Foreign Affairs.
The bank is required to check ownership and insurance, and to verify that the property is free of liens. A trust is granted for a 50-year period. The trust is renewable at any time (for another 50-year period) by submitting an application to the bank. If the 50-year period expires without renewal, the owner has another 10 years in which he may submit an application to renew the trust. If property is purchased that already has a fideicomiso, the existing trust may be transferred to the new owner and will be good for the remainder of its 50-year period, or the trust may be renewed. If property is already in a fideicomiso, probate and transfer tax are avoided when the property is transferred.
Corporativo Cristo & Associates all included fees to get a trust (Fideicomiso) are $4,900.00 us dollars including the first year annual fee as well. To obtain the fideicomiso, you will need your accepted offer to purchase, Passport, ID and 20% of the purchase price into our Escrow account.
Taxes
The predial (property tax) is 0.1% of the assessed value, paid annually. The value of the real estate is determined at the time of sale. There is a 2% sales purchase tax to be paid by the Buyer at closing.
Closing Process
The closing process takes between 50 to 75 days. The buyer pays closing costs, which are usually about 9% of the purchase price. 2% is for sales tax and about 7% is for other fees such as title search, attorney’s fees, Notario and filing of legal documents.
The Notario Publico
The closing of a real estate transaction requires the services of a Notario Publico (Notary). The Mexican Notario Publico is an official who possesses greater rank and responsibility than the Notary Public in the
The Notario Publico charges a fee for his services and the bank charges a fee as well. These fees should be competitive and are based partly on the value of the property.
The Lawyer
Technically, it is not necessary to have the services of a lawyer in addition to the Notario Publico. However, for additional assurance that your interests are being protected, it may be advisable to hire your own Mexican lawyer. Contact us for additional information at alfredo@mwt.net .
Documents and Information
The buyer will need to provide his address and telephone number in the country of origin, occupation, marital status, and nationality. If married, the same information is required of the spouse. The buyer's passport and tourist visa are required as well as the name, nationality, address and telephone number of any secondary beneficiary to the trust.
Property Ownership through a Corporation
A Mexican corporation may be 100% foreign-owned and may purchase property in a restricted zone (beaches, Borders, etc.) without a fideicomiso. Property owned by a corporation is commercial property and some times might have much higher water, electric, telephone, and tax rates. A Mexican corporation may own a single-family residence following specific written rules on the “Mexican Law for Foreign Investments, determined by the Mexican Minister of Commerce & Economic Development & Foreign Affairs. Contact us for additional information at alfredo@mwt.net .
In a corporate transaction there is usually a preliminary sales agreement or an "agreement to agree". The preliminary sales agreement includes the price, terms, closing date, and some other considerations or even contingencies.
A formal sales agreement is executed at the time of closing. Escrow, the process of having a third party hold the deed in trust during the transaction, is not used in
Property Management
Condo-owners usually pay a monthly fee for maintenance of the property. For the owners of other property who may be absent for extended periods, property management agents are available to handle upkeep and bill-paying while the owner is away.
Insurance
American title insurance is available for Mexican real estate, but is not commonly used. The cost of title insurance depends on whether the property is covered by a "master title commitment".
Property insurance is available in
Financing
In the past, real estate transactions in
A Few More Thoughts
Business deals are processed slowly in
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The information on these pages is provided to inform the reader with an overview of the process of foreigners buying property in |
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