An Agreement is defined by Mexican Legislation and the Mexico law as a voluntary pact to create, transfer, modify and/or extinguish rights or obligations; furthermore The Federal Mexican Civil Code and legal doctrine establishes that an agreement is binding when the following elements are met:

Existence Items.- These are the most primitive and essential elements which any legal Mexico real estate contract or agreement must be provided with: a) Consensus.- The express or tacit will of  the parties to execute an agreement; b) Object.- The agreement’s goal must be determined or determinable from a physical and legal point of view (i.e. transmission of rights and obligations, to grant, to refrain from doing, to do).

Validation Elements.- These items must be considered in order for the Agreement or Contract not to be affected by partial or total nullification: a) Capability.- Attribution that an individual or entity has, which allows him/it to be responsible from the legal acts performed (exercise capability and inherent capability). I.E. A child has inherent capability but no exercise capability, ergo, is not allowed to sign and/or execute any contract or agreement. B) Form.- The shape of the contract, it’s wording, syntaxis and semantics. c) Lack of vice.- The contract or agreement must not be subject to bad faith, violence, duress or injury. d) Legality.- The contract or agreement must be executed accordingly to the enforceable Mexico laws and will never be performed against public order or good customs.

Existence items must be present in order for the agreement to produce any legal effect whatsoever, and validation elements must be closely observed, otherwise a party could have a legal recourse to challenge the efficiency of the contract through court.

Juancarlos Pelaez has been helping non-Mexicans with their real estate contracts and activities for over 10 years in the Yucatan Peninsula region. A graduate from the prestigious Mexican University of Monterrey Technologico and a Masters Degree from Madrid Spain, JuanCarlos has ample knowledge in the regional laws and obstacles that most Americans and Canadians experience. You can contact him at (512) 879-6546 or through the company’s web site www.TOPmexicorealestate.com NETWORK

“Mexico’s Leading Network of Specialists for Finding and Purchasing Mexican Properties Safely!”

For your Mexico Real Estate purchase, the promissory contract is a legal document of very high importance.  When negotiating this contract, it is important to make sure the contract includes all the elements that make it legal, that it includes conditions in your favour, and that it does not include conditions which can cause problems for you.  The following is a “checklist” compiled from advice given by a panel of Mexico real estate agents, experts in their industries.  The following advice can be applied when purchasing Mexico Homes, Mexico land, Mexico condos and similar properties.  The following experts contributed:

Ivan Castillo – Stewart Title

Jim Scherer – Puerto Vallarta Real Estate

Linda Neil – La Paz Real Estate

Mitch Keenan – Yucatan Real Estate

Information and details to be included in the Mexico Real Estate Contract

While some of the following items might seem obvious, it is necessary to check everything carefully.  As Mitch Keenan points out, “a Mexico real estate contract, like a USA contract has several elements that are required to make it a legal document.”  If any of these basics are missing, it could cause complications in the future and may not protect your interests as it should.

To be a legal document, the promissory contract should include:

*    A written contract – a contract for real property must be written

*    Names and signatures of both Parties, buyer and seller

*    Signatures of both parties, with and date and place

*    Competence of the parties

*    Offer and acceptance

*    Agreement to bind both parties

The following information is necessary to make sure that there are no surprises.  You might be under the impression that something is included in the property, and be surprised at the delivery not to find it.  If it is not spelled out in the contract, you are not protected.

*    Detailed information of the property to be conveyed

*    Accessories that the property will contain

*    Date of delivery of physical possession of the property (if applicable)

*    The date of transfer of title

Ivan Castillo points out that the last point – date of transfer of the title – is of key importance.  In some cases, buyers have paid the FULL property amount, are in physical possession of the property, but are still not in legal possession, i.e. the title has not been transferred.  Buyers put themselves at an unnecessarily high risk by allowing such a situation.

Conditions and procedures to protect your interests

Besides this basic, but key, information, there are important procedures that should be followed and conditions that should be included in order to protect your interests as a buyer. 

Mitch Keenan lists the following procedures:

*           Your contract should be written in English and Spanish

*           You should have it reviewed by your attorney

Jim Scherrer points out the following conditions:

*           Post-dating any initial deposit check to the date of expected purchase contract signing is the ideal route to take.

*           If the purchase contract price or terms and conditions can’t be agreed upon, the deposit check can be returned or stop payment ordered.

*           The promissory contract must clearly spell out all contingencies where and how the deposit money will be 100% refunded.

Linda Neil adds:

*           Avoid costly and time consuming litigation, insist upon including a binding arbitration clause in your contracts with the seller and other parties involved.

What to avoid!

Of course, you have to know what should not be in the contract.  Connected to his earlier point of specifying the title delivery date in the contract, Ivan Castillo points out the following DON’T:

*          Don’t agree to delivery of a high percentage of the purchase price without delivery of title

Thomas Lloyd graduated from Purdue University Krannert School of Management with a degree in Management/Financial Option Investments. He has been living, investing, and working professionally in Mexico for over 15 years. In the summer of 2009, he received the first federally applied Mexico Real Estate Degree and Mexico Professional Real Estate License S.E.P. #5978657. He is the current president of TOPmexicorealestate, you can contact him at (512) 879-6546 or through the company’s web site www.TOPmexicorealestate.com NETWORK

“Mexico’s Leading Network of Specialists for Finding and Purchasing Mexican Properties Safely!”

Mexico Real Estate offers many great opportunities.  However, because of the fact that laws and processes are different here in Mexico, many non-Mexican buyers make costly errors because they don’t take the time find the information they need first.  In some cases when buying Mexico homes, the new buyers even make blunders that they would avoid back home – simply because of the uncertainty of being in a different business culture.  Based on their years of direct experience in the Mexico property market, a panel of experts from the TOPMexicoRealEstate NETWORK, “certified professionals that specialize in guiding new buyers through the Mexican purchasing process,” has identified the top 5 mistakes made by non-Mexican buyers.  The following is a compilation of their answers, giving a general overview of their answers for each of the five points, then giving their exact answers below.  Each mistake is followed by advice from the panel on how to avoid causing problems for yourself in that area.

The real estate experts who contributed to this article are:

Jim Scherrer – Puerto Vallarta Real Estate

Linda Neil – La Paz Real Estate

Mitch Keenan – Yucatan Real Estate

Thomas Lloyd – Playa del Carmen Real Estate

The top 5 errors non-Mexican buyers make are:

#1 Not surrounding yourself with reliable, experienced professionals

The panel’s answers point to this as the number one error that non-Mexican buyers make when buying Mexico Real Estate.  The key behind this is to find an experienced, reliable broker or agent.  After this, it is also necessary to find a notary public – again with knowledge and experience to do things right – and a Mexico title insurance company, among others. A reliable agent is central, as they can also help point you to other trustworthy professionals.

The panel’s answers are:

“Not using a reputable Agent/Broker, not using a reputable notary public, and using a Title Company.” – Mitch Keenan – Yucatan Real Estate

How can you avoid this error?

“Check with the USA Consul in Mexico. They have a list of recommended Notary Publics and Agents.” – Mitch Keenan – Yucatan Real Estate

“When you select an agent, make sure that the agent is member of AMPI, The Mexican Association of Real Estate Professionals.  Also, check references.  This agent is representing your purchase in a country where you are not familiar with the laws; you need to be confident that that person is.” -  Linda Neil – La Paz Real Estate

“These top 5 errors are only a few examples of the items and risks that a non-Mexican buyer must administer. There are hundreds of other topics that a buyer must address and decide upon; only through EXPERIENCE can teach us to look for these issues. The best way to avoid all of these mistakes and other errors in the purchasing process is to surround yourself with experienced players. It costs the same commission rate to hire an agent with 15 years experience vs. an agent with only 2 months experience.  If you are making a $200,000 dollar investment wouldn’t it make sense to hire someone with credentials and years of experience to represent you.” – Thomas Lloyd – Playa del Carmen Real Estate

#2 Buying from the listing agent and not finding an exclusive buyer’s agent

Even if an agent seems honest, reliable or experienced, no agent who is representing the seller can also represent they buyer fairly, since each one needs an agent protecting only their interest.

The panel’s answers are:

“The most common mistake I have seen are for new buyers to retain the services of a real estate representative just because he was advertising a property on the internet and had his email and phone number on a yard sign next to a property. I am surprised as how some non-Mexican buyers who are very diligent in their money investment decisions while in their home countries come to Mexico and will choose to retain the services of a real estate agent based on the fact that the agent is able to speak English.” – Thomas Lloyd – Playa del Carmen Real Estate

“Buying anything from a listing agent or the sales agent representing the developer; their loyalty is to the seller and they have a fiduciary duty to that seller. No matter how honest, nice, and sweet that agent may seem, it would be a conflict of interest for him to discuss any negatives about the property or to truly help the buyer in getting the best price and contract protection.” – Jim Scherrer – Puerto Vallarta Real Estate

How can you avoid this error?

“Use a professional buyer’s agent exclusively representing buyers and having no listings.” – Jim Scherrer – Puerto Vallarta Real Estate

“The agent who represents you as a buyer cannot represent the seller as well.  Agreeing to and signing an agency disclosure agreement can serve as further protection.” – Linda Neil – La Paz Real Estate

#3 Not carefully considering the implications of different property types, locations, etc.

Different property types have different have various considerations to be made.  Especially the area of pre-construction purchase of Mexico Condos needs special attention; preconstruction offers excellent opportunities, but for the buyer’s protection, the right steps need to be followed.

The panels answers are:

“Buying a pre-construction Mexico Condo with a payment schedule based on the calendar.” – Jim Scherrer – Puerto Vallarta Real Estate

“Buying in a remote (and supposedly growing) area in order to save money. As everyone knows, the three main rules to buying real estate anywhere are location, location, and location. During periods of recession and/or slow growth, these remote areas are the first to drop in value and the last to recover. With current economic conditions the way they are, it may be many years before the remote areas see any appreciation in value.” – Jim Scherrer – Puerto Vallarta Real Estate

“You should not attempt to buy Ejidal property. Ejidal property offers considerably lower prices, but it must be converted to private property before it can be sold.” – Linda Neil – La Paz Real Estate

“When purchasing in preconstruction, to allow for some money to be held back until the legal possession has been delivered. Many times the buyer will have paid out the entire value of the property, have received the physical possession, yet remain waiting for the developer to deliver the legal possession.” – Thomas Lloyd – Playa del Carmen Real Estate

How can you avoid these errors?

“The buyer needs an agent that knows how to write purchase contracts that protect the buyer’s initial deposit and progress payments. They should be prepared with payment schedules based on construction milestones, delivery dates, closing date, etc. as opposed to calendar dates. They should also have construction delay penalty charges, contingencies for 100% refunding upon failure to perform, and escrow protection.” – Jim Scherrer – Puerto Vallarta Real Estate

“Include only private property in your property search.” – Linda Neil – La Paz Real Estate

#4 Not reviewing contracts and documentation or following processes properly

Reviewing all documentation and following processes properly is necessary in any real estate purchase.  However, this is especially true when buying Mexico Real Estate, where regulations are not as well defined to protect the buyer, and taxation and other processes follow different rules than what buyers are used to in their home country.

The panel’s answers are:

“Many first time buyers do not understand the implications of the Capital Gains Tax issues. They believe that capturing a low acquisition cost on a property will decrease their closing costs expenses but forget to understand the more expensive capital gains tax levied against profits on the sale of the property.” – Thomas Lloyd – Playa del Carmen Real Estate

“A potential risk is not to check if you are dealing with the legal owner of the property.” – Linda Neil – La Paz Real Estate

“Assuming everyone they deal with has the same business ethics as they are accustomed to in the US or Canada, thereby not paying extremely close attention to ALL documentation they are signing.” – Jim Scherrer – Puerto Vallarta Real Estate

“Not including a clause in their purchase sales agreement to allow for the first beneficiary (the buyer) to have the voting rights transferred from the fiduciary for condo association meetings.” – Thomas Lloyd – Playa del Carmen Real Estate

“Some non-Mexicans believe they can hold property with a private contract and avoid paying closing costs and taxes. They are placing much of their hard earned money at risk by not receiving a title duly subscribed with a notary public and filed in the public registry.” – Thomas Lloyd – Playa del Carmen Real Estate

“Depositing money in an agent’s or seller’s personal account.” – Mitch Keenan – Yucatan Real Estate

How can you avoid these errors?

As Thomas Lloyd points out above, “these top 5 errors are only a handful of examples of items and risks that a non-Mexican buyer must administer.”  It is almost impossible for an new buyer to manage, and often even be aware of, all of these considerations.  Therefore, it is of key importance to have a reliable agent whose experience gives them the necessary knowledge of the various contracts, processes and documents involved.  Additionally, the panel points out the following:

“Never deposit money or give money to an agent or a seller without verifying that the agent has a verified earnest money account or escrow account.  It is always a good idea to spend the extra $500 bucks to set up an escrow account with a title company to hold the deposit.”  – Mitch Keenan – Yucatan Real Estate

“Deal only with the legal owner of the property or a legal power of attorney.  It is necessary to request, receive and review a copy of the title.  For cases such as this, your agent will have to know Spanish, or you will need to get a certified translation.  You should also have a title investigation, and buy title insurance.  Even if the prices are high, it is worth avoiding risks involving the title.”  – Linda Neil – La Paz Real Estate

#5 Rushing a Decision

Your Mexico real estate purchase is one of the most important decisions you will make, whether it is property for your home, or for an investment.  Rushing into a decision can have undesired, long term consequences.

The panel’s answers are:

“Being pressured into a hurry up decision.” – Mitch Keenan – Yucatan Real Estate

“Spontaneously buying on the beach, having no idea of the many magnificent properties available with better views, neighbors, lifestyle, etc.  than can be found on the beach.” – Jim Scherrer – Puerto Vallarta Real Estate

How can you avoid this error?

“Never be pressured into a deal. Take your time do your due diligence.” Mitch Keenan – Yucatan Real Estate

If you feel you are being pressured, or not being presented with all the best options, also see the advice for error #1 “Not surrounding yourself with reliable, experienced professionals,” and error #2 “Buying from the listing agent, not finding an exclusive buyer’s agent.”

For further information about buying Mexico Real Estate and avoiding costly errors, contact a Mexico Agent in the TOPMexicoRealEstate NETWORK; OUR EXPERIENCE; thousands of Property transactions & years of assignments in Mexico AT WORK,  PROTECTING YOUR INTERESTS.

Buying Mexico Real Estate can be an exciting experience, and one of the most important decisions you will make.  For this reason it is very important to know the ins and outs of buying real estate in Mexico, being familiar with the laws and the processes.  A key factor to consider is that in Mexico, the law does not offer the same regulations to protect buyers as in other countries. This having been said, buying Mexico Real Estate can be done safely, if the right steps are followed.

“Buying property in ANY country can be stressful,” observes Linda Neil, real estate expert from La Paz, Baja California, “A property investment in Mexico can be just as safe and secure as in the U.S. or Canada, if it is done correctly!”

A panel of experts from the TOPMexicoRealEstate NETWORK, “Your Expert    Property-Finders,” agrees that the most important step in avoiding the risks is selecting the right agent – an agent with experience and knowledge.

“The most important key player is an agent or broker with many years of experience,” says Thomas Lloyd, founder and president of TOPMexicoRealEstate.  “You are not looking for someone who knows where the best restaurants or bars are located, you want someone who has been on the ropes, someone who has witnessed problems or obstacles in previous transactions so he knows what to look out for.”

In the following interview, some members of TOPMexicoRealEstate’s panel of experts discuss the main risks involved, which they have seen during years of experience, and give advice on how to select an agent who can help you avoid these risks.

What kind of risks can buying real estate in Mexico involve? 

Here the brokers highlight several points in the purchasing process which buyers should watch, including property types which can pose higher risks if proper research is not done.  These risks are tied to, and made more significant, by the fact that regulations in the Mexico Real Estate industry are not as well defined as in other countries.

Mitch Keenan – Merida Real Estate

The largest risk is to NOT use reputable professionals. Interview several real estate agents and notary publics. Ask for references and check them. Raw land or raw beach is a more risky purchase than a home that has other homes on all sides of it. To mitigate that risk, use a title company. Additionally, when a fideicomiso is  issued by the bank to hold title, it does provide another layer of protection to the Buyer.

Jim Scherrer – Puerto Vallarta Real Estate

The risks are minimal when the economy is booming. During those times, the main risk is just paying too much. However, during periods of recession the risks are numerous. The greatest risk would probably be in buying pre-construction developments with no assurance of completion.

Linda Neil – La Paz Real Estate

Mexico Real Estate agents are not obligated by the same regulations in Mexico.  They do not have the responsibility to disclose all problems or defects to buyers or sellers.  The fact that the government does not regulate real estate to the same extent as in other countries poses higher risk to buyers.

Thomas Lloyd – Playa del Carmen Real Estate

The regulations in Mexico are not as sophisticated in protecting the real estate buyer as compared to our home countries.  For example, there are no disclosure laws regulating what information needs to be revealed to a buyer of real estate.

What does a buyer need in terms of information in order to avoid/reduce these risks?

Each of the brokers mention some specific steps to be taken to avoid specific risks.  However, as Lloyd mentions, “There are so many areas and risks that need managing it would be impossible for a new buyer to understand or remember to address each of these items.”  The key factor here is finding an experienced, knowledgeable professional who is very familiar with the details of these issues, and can guide the buyer through the process.

Jim Scherrer – Puerto Vallarta Real Estate

The buyer needs an agent that knows how to write purchase contracts that protect the buyer’s initial deposit and progress payments. They should be prepared with payment schedules based on construction milestones, delivery dates, closing date with “escritura”, etc. as opposed to calender dates. They should also have construction delay penalty charges, contingencies for 100% refunding upon failure to perform, and escrow protection.

Linda Neil – La Paz Real Estate

To avoid the risks involved in the lack of regulations is finding a buyer’s agent who adheres to principals and ethics.  One way to do this is to work with a agent who is a member of AMPI, the Mexican Real Estate Association; AMPI is connected with NAR (USA) and CREA (Canada), and its members follow a Code of Ethics.

Thomas Lloyd – Playa del Carmen Real Estate

Basically, I believe that it is very important that the buyer retains the services of an experienced broker. There are so many areas and risks that need managing it would be impossible for a new buyer to understand or remember to address each of these items. But, if you associate yourself with a person who is dedicated to such activities, a person who has years of experience and has witnessed and participated in hundreds of Mexico real estate transactions, such a person is an invaluable person to have on your team, taking care of your interests and monies.

What should the buyer look for in terms of an agent?

Having established that a good agent is the best way to avoid the risks involved in buying Mexico Real Estate, the brokers point out some elements to look for.  Some of the common points are experience, honesty, loyalty, thorough knowledge of the market, knowledge of Spanish, and experience in Mexico.  Most of these factors may not be measurable in a concrete way.  Keenan, Scherrer, Lloyd and Neil point to some indicators of these traits, which include certifications, licenses, degrees – Mexico now offers a real estate degree with a professional identification number, and, of course, references and testimonials (for these to be used well, there should be several, and they should actually be checked!) .

Mitch Keenan – Merida Real Estate

References. Lots of them. Check them.  Also years in the business. Reputation in the community. A license or career in real estate in the USA, Canada, Mexico or Europe. Choose an agent who has made a career out of marketing real estate. An agent who has taken the classes, received the certifications and has worked to stay on top of their field. Choose an agent that has lots of return clients. Find someone that you feel comfortable with on a gut level. If your gut is saying, “careful something stinks here!” Listen to your gut! Do your due diligence. Check references.

Jim Scherrer – Puerto Vallarta Real Estate

 A buyer’s agent exclusively representing buyers has “no axe to grind.” A true buyer’s agent has no listings and no biases toward one development over another, i.e., no fiduciary duty to any seller or developer. The buyer’s agent must be honest, loyal, fully knowledgeable of the market, familiar with all the key players in any real estate transaction, and an experienced business professional.

Linda Neil – La Paz Real Estate

A key step in avoiding various risks is finding a buyer’s agent, who represents only your interests.  An agent who attempts to represent both the buyer and the seller (called “dual agency”) will have conflict of interest; while the buyer is looking for the lowest reasonable price and all the benefits possible in his interest, the seller is looking for the highest reasonable price, and as many benefits as possible in his interest.  It’s not possible for one agent to represent both of these interests.  Besides reducing risks of not being informed of potential problems, hiring an exclusive buyer’s agent will ensure that the agent will search the entire market available, not just properties they are listing.

Some characteristics you should look for in your agent are: professionalism, knowledge and experience – education can be one indication of this, punctuality, which is sign of commitment, someone who listens to your concerns and needs, someone who looks ahead and predicts complications, honesty and cooperation.

Thomas Lloyd – Playa del Carmen Real Estate

There are several items a new buyer should insist from an agent or broker who he hires to represent him. Remember, you want someone who is going to protect you and your interests.

How many years has he lived in Mexico? Does he speak Spanish? How many years has he been working in the Mexico real estate industry? How many real estate transactions has he administered or participated? What credentials does he have? Is he certified? Licensed? Or does he have a Mexico real estate degree? The more years and experience a person has been living and working in Mexico is the strongest asset you can find in your representative. Don’t forget to ask for testimonials, (the more the better).

Who are the key players that will help you reduce your risk when buying in Mexico?

The brokers name certain professionals needed to make the process go smoothly, including a title company, a mortgage company advisor, a notary public, and a Mexican attorney.  Of course, just having these people around will not help.  They must experienced, knowledgeable and reliable.  As the panel points out, this points back to the choice of agent, who is THE key player; the right agent will also be able to help point you to other reliable professionals.

Mitch Keenan – Merida Real Estate

Notary Public. Title Company. Bank, for the fideicomiso. Broker or agent.

Jim Scherrer – Puerto Vallarta Real Estate

Of course, the main key player is the buyer’s agent. After the agent, a mortgage company adviser can be very important; after all, if the mortgage company won’t approve a loan, the purchase is probably too risky! Notary Publics will assure the paperwork and closing details are accurate, however they have no input into contract negotiations. Of course, the agent must be at least somewhat familiar with Spanish and should work closely with an experienced Mexican attorney since all contracts are written in Spanish

Thomas Lloyd – Playa del Carmen Real Estate

The most important key player is an agent or broker with many years of experience. You are not looking for someone who knows where the best restaurants or bars are located, you want someone who has been on the ropes, someone who has witnessed problems or obstacles in previous transactions so he knows what to look out for. A sharp lawyer is your second best ally. Again the more years of experience in real estate law the better.

TOPMexicoRealEstate NETWORK; Mexico’s Leading Network of Specialists for Finding and Purchasing Mexican Properties Safely

Mexico Condominium Regime; Investigate the Status

A word of caution for those who are considering the purchase of a Mexico condominium or a lot in a subdivision Just as in other countries, the unit, or lot must be legally described and an individual property tax number issued This individual property must be registered in both the Property Tax Office and in the Mexico Public Registry of Property

Often, a developer will spend time and energy on promoting the sales of Mexico real estate properties prior to completing the establishment of the Condominium Regime Until this is completed, legal title to an individual unit or lot cannot be granted since there is nothing to describe! Whether in the La Paz Real Estate market or any other region of Mexico, be sure to investigate the status of the condominium regime prior to completing the offer to purchase!

Mexico Registered Title; Insist Upon Its' Reception

The purchase / sale document signed by buyer and seller is generally legally valid between the parties to the transaction It most likely contains the description of the Mexico property, the price to be paid to the seller, and any other special terms and conditions It may be drawn up by the parties, their agent(s), or by a third party It should be considered as an interim contract, however Until the final deed is drafted by, and signed before a Mexican Notary Public and duly registered, the transfer WILL NOT provide valid notice to third parties This final deed must be recorded in the Mexico Public Registry Office of the municipality in which the property is located Mexico's land registry system functions in much the same manner as those in the United States or Canada Unless the deed for the rights of the beneficiary has been recorded, there may not be a remedy for the purchaser who neglected to obtain a registered deed…his interest, his investment, may be lost

When a foreigner is acquiring residential property for which a Mexico bank trust is required, the purchaser should receive a deed which has been signed by the bank trustee before a Mexican Notary Public This will name the beneficiaries and the substitute beneficiaries of the trust in accordance with the purchaser's instructions A full description of the property must be included, seller's capital gains taxes paid and buyer's acquisition tax paid These receipts should be included in the deed document which may consist of eight or ten pages, or more The final page of the document should bear the stamp of the Public Registry, together with Book and Page numbers and the date on which it was recorded If this stamp is not on the document, the transaction has not been completed, the buyer is not fully protected

Author Linda Neil has over 35 years of hands on experience in all aspects of Mexican real estate. She holds membership in AMPI, NAR, and FIABCI and PROFECO Certificate 00063/96. Current member of the national advisory board of AMPI she is the owner broker of LINDA NEIL PROPERTIES for more information (512)-879-6546 www.TOPmexicorealestate.com

“Where 11 TOP real estate experts from ALL regions of Mexico come together to share their Tips & Knowledge to help you buy safely !”

Yucat n has been the attention of many international real estate investor in recent years With the many Haciendas, the old colonial architecture, and the increasing amounts of non-Mexican buyers, where can people begin their process into buying property here in paradise We asked Mitch Keenan, a Yucatan Real Estate broker, very well known throughout the entire Yucatan Peninsula, and with many years of on hand experience in Mexico Real Estate to help us out with this post and blog.

This post is about real estate in the states of Yucat n and Quintana Roo The author, Mitchell Jay Keenan,CRS is the general director and the operating broker for Mexico International Real Estate.

Keenan has been living and selling real estate in Yucat n for over 10 years. He has been a licensed broker in the USA since the 1980's. He holds a GRI (Graduate Realtor Institute) and a CRS (Certified Residential Specialist) certifications from The National Association of Realtors (NAR). He currently lives on his Quinta between M rida and Progreso with his partner and their four companions; Wazer, Lover, Lucky and Miri.

Yucatan Real Estate Brief History

Understanding the dynamics of the real estate market in Mexico requires a reflection on the socio-economic conditions that have developed in Mexico over the last several decades. The large middle class that has emerged in the last 30 years has provided for a more robust market. Additionally, with the growing foreign interest in living and investing in Mexico, the market is becoming more dynamic and secure for investment and ownership.

Historically, Mexico was a country of basically two large economic groups; the rich and the poor. The poor rarely owned real estate and the rich tended to subdivide what real estate they had and pass it on to their heirs.

The current real estate market (where two previously unknown parties come together to buy/sell real estate) is still a relatively new business in many regions of Mexico. This is the reason why, in most of Mexico, there is no MLS, no real estate licensing requirements for agents, no governmental oversight, limited institutional financing, and few large, organized real estate companies or real estate professional organizations.

The exceptions to this current scenario are Mexico City, Monterrey, Guadalajara, and many of the coastal resort areas, where there are limited MLS's, large brokerage firms, and functional professional organizations like AMPI.

It is important to remember that Yucat n has been like an “anonymous region” separated from Mexico for decades. Yucatecos tend to think of themselves as Yucatecans first and Mexicans second. Rules, regulations and new businesses practices have tended to evolve here more slowly than in other regions of Mexico.

Mexico Real Estate Purchasing Process

Historically, in Yucat n, when two individuals come together in an agreement to buy/sell real estate, the parties have utilized a “promise to buy/sell” real estate agreement. The agreement is typically drawn up by the Buyer's notario.

Note: the buyer is responsible for paying the notario and closing costs. The seller is responsible for paying their capital gains taxes.

Upon signing, the buyer gives the seller a deposit to hold as earnest money to seal the deal. In return, the seller provides the notario with current and notarized escrituras (title documents), cedulas (tax statements), planos (lot plan), personal data, and corresponding information.

This “promesa de compra/venta” is a vehicle still popularly used in Yucat n, and it is not unusual for a seller that is not represented by a real estate agent to require this contract with the understanding that the seller will hold the earnest money deposit.

Should the buyer fail to buy, at no fault of the seller, the buyer will forfeit the deposit. Should the seller for no fault of the buyer, refuse to sell, there is a penalty clause in the contract penalizing the seller to return the amount of the original deposit and pay a penalty equal to the amount of the deposit. If the seller does not return the deposit and pay the penalty, the buyer will have a very strong case for filing a lien against the property and pursuing legal action against the seller.

Mitch Keenanhas been a Licensed Broker in the United States since the 1980s He holds a GRI and a CRS from NAR (National Association of Realtors) With over ten years of living and working in the Yucatan real estate industry, Mitch brings American business ethics and Mexico business experience together to give buyers unparalleled service www.TOPmexicorealestate.com 512-879-6546

All too often citizens of the United States, Canada and other countries ASSUME that property purchases are carried out automatically in Mexico in a manner similar to that of their native countries The first law of property purchase in Mexico is DON`T ASSUME anything! Purchasing property is NOT the same as in other parts of the world

Would You Purchase a Property in Your Hometown Which Is Not Registered in the Local Public Registry or Land Titles Office

Would you hand a complete stranger, without an office or an established business entity, a check for perhaps hundreds of thousands of dollars to pay for a property Why do so many foreigners do this when they purchase in Mexico Many do not realize that Mexico has a complex and complete legal system and a court system that is as well organized as any that exists in the United States, Canada or Europe It is essential that you have an idea of how the system works and what to expect when considering a purchase of property in Mexico

Don't Leave Your Brain at the Border!

Article 27 of the Mexican Constitution prohibits ownership by a foreign individual or business entity of real property (real estate) within the “restricted” zone which is an strip of approximately 30 miles from any coastline and 60 miles from any border Recognizing the demand by foreigners for ownership of property and recognizing the importance of making desirable properties available to foreigners for potential positive impact on the economy, the Mexican government implemented a series of Foreign Investment Laws beginning in 1973 The law was modified in 1989 and again in December 1993, to incorporate the provisions of the NAFTA treaty passed in late 1993

For those who are acquiring property for residential usage, the law requires that title to the property in the restricted zone be transferred to a Mexican bank, as trustee, in the establishment of a trust (fideicomiso) in which the foreigner is the beneficiary The bank is the titleholder of the real property and the foreigner is the owner of the rights of usage of the property The bank owns the real property rights and the beneficiary owns the personal rights of usage Ownership of these personal rights is evidenced through a deed prepared by a Mexican Notary Public and signed by a representative of the trustee bank

Currently the term for a trust is fifty years The Foreign Investment Law of 1989 provides for renewal by filing an application Multiple renewals are permitted under the law By requesting extensions every fifty years, a property may be controlled by a family or business entity for generations For those foreign individuals or companies buying property in the interior of the country, not in the restricted zone, no bank trust is required but authorization from the Secretary of Foreign Relations must be obtained and ownership must be registered in the National Foreign Investment Registry located in Mexico City, as well as in the municipality where the property is located

Avoid Mexico Taxes and Extra Costs. Leave the Mexico Deed in the Seller's Name: This is Wrong!

Until the buyer is formally named as the owner in fee simple or in the bank trust in a public document before a Mexican Notary Public, title to the rights in the property remain with the persons named in the previous property deed Their signatures are required to transfer title If the buyer fails to obtain his or her own deed he/she will be required to obtain the titleholder's signature before a sale and transfer to another buyer This can be costly, frustrating, dangerous and time consuming

The Importance of Mexico Registration of the Deed for Beneficial Rights.

The Mexico purchase/sale document signed by buyer and seller is generally legally valid between the parties to a transaction It most likely contains the description of the property, the price to be paid to the seller, and any other special terms and conditions It WILL NOT, however, provide valid notice to third parties unless it is recorded in the Public Registry Office of the municipality in which the property is located Mexico's land registry system functions in much the same manner as the Public Registry offices in Podunk, North Dakota, Los Angeles, California, Ottawa, Canada or places in between

many foreigners purchasing property in Mexico do not understand the importance of registration of their interest in property They believe that it should be left in the name of the property developer, in the Master Trust, or in the name of the previous holder of title What if the developer goes bankrupt What if the corporation and its principals, disappear Who can sign as the representative of the property Who then owns the property What happens if an unscrupulous seller sells the property to someone else While title is in the name of the seller, it is HIS/HER asset; she may mortgage it, he may sell it again, it may be attached in satisfaction of a judgment, she may die without a will

Unless the Deed for the rights of the Beneficiary has been Recorded, there may not be a remedy for the purchaser who neglected to obtain a registered deed…his or her interest and investment, may be lost

To obtain the deed an appraisal, a property tax certificate, and a no-liens certificate must be obtained Notarized bank instructions must also be obtained if property is in the “restricted” zone Seller's capital gains tax and Buyer's acquisition tax must be paid The deed transferring rights to the buyer must be registered and stamped by both the tax office and the public registry If this process is not complete, the buyer is not fully protected The buyer's ultimate protection is registration in the Public Registry office record, NOT the Notary Public or the trustee bank!

Financed Properties in Mexico

When property is sold with a down payment and the balance to be paid over a term of years, many sellers prefer to hold title to the rights in their name and transfer title to their rights only upon receipt of payment in full Meanwhile, however, the seller may die, may disappear, may bo bankrupt…again risky situations for the buyer the prudent buyer will insist upon a transfer of title and registration of a mortgage or pledge in which he gives his rights in the property as security for payment of the remaining purchase price

In the event of default by the buyer, the seller must conduct a proceeding similar to a judicial foreclosure in the United States and Canada It is as troublesome as a foreclosure in any country in the world but notably more problematical The registered title and recorded pledge or mortgage provides the buyer a greater comfort level in his investment The lender also enjoys protection in having his loan recorded and will have an established legal proceeding to follow in the event of default by the buyer

Author Linda Neil has over 35 years of hands on experience in all aspects of Mexican real estate. She holds membership in AMPI, NAR, and FIABCI and PROFECO Certificate 00063/96. Current member of the national advisory board of AMPI she is the owner broker of LINDA NEIL PROPERTIES for more information (512)-879-6546 www.TOPmexicorealestate.com

“Where TOP real estate experts from ALL regions of Mexico come together to share their Tips & Knowledge to help you buy safely !”

There are several articles about the Mexico Bank Trust “Fideicomiso” and how Mexican foreigners can acquire Mexican oceanfront real estateMy post below is an attempt to explain some of these TIPS ON ITEMS TO REVIEW IN YOUR MEXICO BANK TRUST.

MEXICO REAL ESTATE BANK TRUST

MEXICO REAL ESTATE TIPS

1) Study, review, and learn a little more of the bank you choose as the holder of the Bank Trust What is the name of the bank and is it in the “Asociacion de Bancos de Mexico” Do they have offices or a branch in the Mexican town where you plan to purchase your property For various reasons you will need to be in contact with your bank for payment of annual fees, for questions or interviews, notifications and having the bank in the same city is quite convenient for any of these unplanned visits.

4) Finally, don t forget to review and compare set up fees and annual service fees that the bank will charge for holding your trust. If you don t need a full package, then ask your lawyer if he can get a better rate with a particular bank; sometimes for the volume of clients the lawyer sends to the bank he can obtain special discounts that you as an individual would not qualify. These small discounts add up.

There are many details surrounding the theme of Bank Trusts and their contracts, so please feel free to contact me if you have any further questions.

Thomas Lloyd graduated from Purdue University Krannert School of Management with a degree in Management/Financial Option Investments. He has been living, investing, and working professionally in Mexico for over 15 years. A Mexican Certified Realtor he is the current president of TOPmexicorealestate, you can contact him at (512) 879-6546 or through the company`s web site www.TOPmexicorealestate.com

If you are selling your Property here in Mexico, the Mexican notary public will require several documents to be present for the closing process If you want a refresh on what all is involved during the Mexico Real Estate closing process click here to see a previous post that I wrote outlining these steps

If you are a buyer and new to the operations of purchasing property here in Mexico, it is also good to know and understand what documents are involved during the ownership transfer process There are many different properties that can be purchased here in this country, condos, single family homes, fractionals, oceanfront lots (If you want more information on properties in a particular city of Mexico, call up an expert or visit this web site to see some excellent options www.TOPmexicorealestate.com), all of these properties use the same basic documentation.

SELLING MEXICO REAL ESTATE AND THE DOCUMENTATION REQUIRED

The notary public has several key functions in the process of transferring the legal ownership from the selling party to the buying party Collecting taxes, witnessing the signatures are a few of these functions but today we will be talking about the documentation that is required to be delivered to the notary from the selling party of the property.

Identificacion Oficial – Official Identification

This would include for Mexicans IFE or passport For foreigners it basically includes only the passport.

Cedula Catastral – Cadastral Certificate

This document basically lists out the quantity of meters of the property, the government assesed value of the land and building for the basis of the anual property tax, and other information regarding the property.

Ultimo Pago Predial – Last Property Tax Receipt

Property taxes are paid on an annual basis These are due by April of each year. Most states in Mexico give incentives for early payments with discounts such as 25% if paid in December, 15% if paid in January, 10% if paid in February for example The Mexican notary public will require the copy of the last property tax receipt which should correspond to the present year of the sale of the property.

Certificado Libertad de Gravamen – Certificate Free From Liens and Encumbrances

TIME: approximately 3 days

COST: $169 pesos

REQUIRED DOCS: last property taxes paid and current, official id of land owner, copy of the cadastral certificate

Cerficiado de No Deudo Predial – Certificate of No Liability Property Taxes

TIME: approximately 7 days

COST: $285 pesos

REQUIRED DOCS:folio number of the property

Certificado de No Deudo Agua – Certificate of No Liability Water Services

TIME: approximately 3 days

COST: $72 pesos

REQUIRED DOCS: copy of your last water bill paid and current

Certificado de No Deudo Obra Estatal – Certificate of No Liability State Works

TIME: approximately 2 days

COST: $201 pesos

REQUIRED DOCS:last property taxes paid and current

Certificado de No Deudo Obra Municipal – Certificate of No Liability City Works

TIME: approximately 3 days

COST:sum of your last property tax paid plus $380 pesos

REQUIRED DOCS:copy of the cadastral certificate, copy of your last property tax paid and current

These are the main documents which the notary public will request in order to execute the legal transfer of the property from a seller to the acquiring buyer If you need help in realizing any of these procedures or have any questions regarding these themes, feel free to contact me or my offices

Thomas Lloyd

www.TOPmexicorealestate.com

(512)879-6546

I have been involved in hundreds of Mexico Real Estate transactions Hardly any of the Mexico Real Estate Purchases have had the same procedures, or the same situations to occur As in any real estate transfer, there are many factors and parties involved, and when dealing in Mexico, with Mexican foreign buyers or sellers, the variables only increase

Thus, there is a high probablity that when you go to buy Mexico Real Estate transaction, it will be unique in itself, have its unique obstacles but following a common and legally protected Mexico Real Estate processI have written an introductory guide from my many years of Mexico business experience outlining the steps involved in How to Buy Real Estate in Mexico which I have shared with many first time Mexico buyers and sellers.

MEXICO REAL ESTATE DEFINITION

Lets start with the definition of Mexico Real Estate Click here to see a generalDESCRIPTION OF MEXICO REAL ESTATE As outlined in this web page definition, Mexico's Purchasing Process has several EXTRA steps if the buyer or seller is a Mexican Foreigner There exists a Mexico Restricted Zone where the buyer will need to establish a bank trust Or, if you purchase outside of the restricted zone you can hold the property out right but just need to receive a simple permit from the Mexico Foreign Affairs department

MEXICO REAL ESTATE PURCHASING PROCESS

a) MEXICO REAL ESTATE AGENT

First tip,surrond yourself with a very well qualified Mexico Real Estate agent and broker When you are hundreds of miles away back in your home country, simple obstacles can easily become headaches if you have not taken the first intelligent step of surronding yourself with professional agents Ask for certificates, diplomas and credentials Are they members of any associations, if Mexican foreigners how long have they lived in Mexico and working in the real estate industry Do they speak spanish AMPI link

b) MEXICO REAL ESTATE FINANCING

Second, define the amount of money you plan to invest in your Mexico property investment If you plan to Mexico financing the purchase, begin to study and see if you qualify for such resources Do you plan to finance using the Mexican property or raise money from your home country Define these issues before investing time and money on your Mexico property search.

c) DEFINE THE MEXICO REAL ESTATE CLOSING COSTS

Third, understand all the costs that will be involved in the real estate acquisition Mexico closing costs include several extra items that most people are not accustomed or aware Although the entry costs may be a little higher, the carrying costs (property taxes, maintenance fees etc) are on average much less here in Mexico than in other parts of the world

With the above three items defined and understood, put your agent to work on collecting qualified properties that match your criteria search Review the options, have your agent prepare visits to the properties, do your comparison evaluations and ….have fun

There are various more steps involving preparing the offer to purchase, the contracts, notary publics and other issues for the Mexico property purchasing process which are outlined in several of my articles To see these articles and to learn more, please click here Mexico Real Estate Purchasing Process

Thomas Lloyd www.TOPmexicorealestate.com

Many people are unaware that Non-Mexicans can OWN property in MexicoFor many, it is a surprise that Mexican foreigners can actually own property that is right on the beach, or that such an option is available to own Mexico Ocean front real estate.

Yes, Mexican foreigners can own a beachfront home and live full time very comfortably in Mexico! This question and a few other Frequently Asked Quesitons are covered in my previously prepared articlesYou may want to review some of the anwers to these common questions on How to Buy Real Estate in Mexico at this site. Mexico Real EstateFAQ

As to a Mexico Bank Trust, also known as a Mexico Real Estate Trust, and in spanish known as the FIDEICOMISO:

MEXICO RESTRICTED ZONE

the Mexico 1917 Constitution outlines clearly that no Non-Mexican Citizen is allowed to own Mexico Real Estate within 50 Kilometers from any Mexico Coastline The restriction also included any areas wihtin 100 Kilometers from any Mexico Border with neighboring countries (this would describe the US/Mexican border and the Belize/Mexican border and the Guatemala/Mexican border) see Mexico Map BUT………

DEFINITION OF A MEXICO BANK TRUST, THE FIDEICOMISO

Many things have changed since the 1920`s, 30`s and so onThe world has been opening up their markets in nearly 80% of all countries Including MexicoAs Mexico inteligently realized over the past several decades, foreign investors with their foreign investments were and are very attracted to the beautiful natural coastlines of the Mexican Pacific, the Sea of Cortes, the Mexican Caribbean, Gulf of Mexico There were even many Americans who preferred to live in the less expensive Mexico neighborhoods, but within driving distance of their jobs on the American side It was too complicated to change the Constitution….so amendments were established.

The Mexico Foreign Investment Law mandates the process for owning property in this restricted zone This was first introduced in 1971, adjusted in 1993, and once again updated in 1998 The main theme of these regulations:

1) Non-Mexicans CAN OWN property within the Restricted zone if for residential purposes using a Mexico Bank Real Estate Trust

2) Non-Mexicans CAN OWN property within the Restriced zone if for non-residential purposes using a Mexican Corporation

*Please note, non-Mexicans can invest and own 100% of a Mexican Corporation The Mexican Corporation requires a minimum of 2 shareholders (both can be foreign), only a few minute industries do not allow 100% foreign ownership such as the oil industry and communication.

The fideicomiso is an agreement set up between the Mexican foreign buyer and a Mexican bank The bank acts on behalf of the buyer The bank will have title, but has a fiduciary obligation to follow the directions and wishes of the foreign buyer The non-Mexican buyer can enjoy, use, rent out, improve upon the property, expand, build and sell the Mexico Real Estate and reap 100% of the profits

other facts:

fideicomitente = seller of the property

fiduciary = the bank acting as the trustee and holder of the title

fideicomisario = beneficiary of the property

Term of 50 years, and it is renewable for another 50 year term

second beneficiaries can be established within the trust to establish automatic inheritance of the property in case of deaths of the first beneficiaries

The buyer, can choose which banks he wishes to establish his Bank Trust There are various multi-national banks in Mexico including Citibank, Scotiabank, HSBC, Bancomer, as well as several Mexico national banks which include Banorte

One last note which will be covered in further depth at a later post, in regards to Non-Mexicans buying property outside of the Restricted Zone Mexico Real Estate Bank Trusts are not needed in these regions and property can be held simple and straight title.

To see the total article and to learn more on Mexico Bank Trust and Mexico Fideicomiso click here: Articles on Mexico Real Estate

A NEW POST EXPANDING ON THIS THEME HAS BEEN POSTED FOR YOUR FURTHER READING AND EDUCATION AS ALWAYS, WE ARE EXCITED TO RECEIVE YOUR CALLS AND HELP ANSWER ANY SPECIFIC QUESTIONS YOU MAY HAVE REGARDING THIS THEME AND RELATING SUBJECTS OF HOW TO BUY REAL ESTATE IN MEXICO CLICK HERE FOR THE NEW POST More information on Mexico Bank Trusts

Thomas Lloyd www.TOPmexicorealestate.com

Resort real estate and oceanfront real estate have always had a strong track record for appreciation Mexico is no exception to this rule, and with its close proximity to the US and Canadian markets, the demand has been increasing quite noticeably over the past couple of years for these waterfront properties

If you add to this picture the potential of appreciation from buying during the Mexico preconstruction condo phases, the roi can be quite handsome and may repeat some of the spectacular returns that the Florida and Las Vegas markets experienced over 10 and 15 years ago Reserving and purchasing at the initial stages allows for discounted prices, and, allows the investor an easier exit channel The exit consists of having to sell a brand new Mexican Condo to the market in order to collect his revenue and profits Below find a short list of benefits from buying Mexico Preconstruction Condos:

1. 1) MARKET APPRECIATION prices are lower at the initial stages of a construction A chunk of land is worth the going market value As the ground breaks, Mexico real estate values increase Investors can ride the market appreciation as the construction proceeds converting from a hole in the ground to a finished, complete condo
2. 2) DEVELOPER CONTROLLED APPRECIATION Mexico Developers usually plan several scheduled price increases during the construction and selling progress This strategy is to encourage investors to invest earlier because the prices will increase if they wait till later Such strategies adds to your ROI
3. 3) CUSTOM AND DESIGN CHANGES TO YOUR RESIDENCEWhen reserving at the initial stages, you have the opportunity to customize your new home Choose different flooring, window accessories, and other design elements.
4. 4) BEST CHOICE OF UNIT Reserving in early, allows the investor to choose from the best Mexico Preconstruction condo Best floor plan, best view, best location within the community.

5) INTERNAL FINANCING When buying into Mexico preconstruction, the investor does not need to come up with the entire 100% of the value of the real estate Many condo units take from 12 months up to 24 months for completion of the unit Payments can be made over this time period and not all up front

While working here in the Playa del Carmen real estate industry, we come across frequently asked questions by many of our buyers.

I thought a good subject to touch upon this week would be to hit on some of these subjects. Also, this past week, the Riviera Maya real estate organization of AMPI, which I am a member, held a short session to discuss the theme on Condominium Regimens here in Mexico.

In layman's terms, a Condominium Regime is basically dividing one main title of a building and land, into smaller, individual titles. Physically, the Playa del Carmen condos would all be individually measured, have their own individual independence (individual contracts) in regards to their electric, water, and basically all utility needs. A condo regimen will not only specify the private areas of the individual condos, but will also specify what areas and buildings are to be considered in the common areas. By laws are also part of this package which include the rules by which the condo owners must follow while living or enjoying the areas within the complex. The Mexico Real estate Federal law outlines the basic rules that must be included in these by laws, but the sky is the limit in regards to additional rules that the condo owners wish to include in such document.

The regimen of Condominium document is an important certificate that the investors in Playa del Carmen real estate and Mexico Real estate focus upon when purchasing a Mexico pre-construction condo because titles cannot be issued until such document is obtained by the developer.

How long does it take for a Mexico developer to obtain the Regimen of Condominium

It varies upon the state, but approximately 3 6 months.

Now, Playa del Carmen luxury condo developers, need to invest time and money into obtaining the Regimen. But, the requisites are quite logical, and the majority of the work deals with engineering and architectural data. The notary public and documentation paperwork also require additional time. The information and documents that are required to obtain the Regime consists of the following but not excluding additional requirements not mentioned below.

Original application requesting the Mexico Condominium Regime

Property title

Property Tax Registry

Last property tax payments

Zoning permits

Certificate of compliance with city and state regulations

Construction permits

List of building materials being utilized in the building

Performance Bond

Delivery Bond

Condominium By Laws

The application is delivered on the city offices as well to the state. At the state level, the government offices known as the SEDUMA will be the authorizing government body. Once the authorization has been granted both by the city and state, the documentation can then proceed to the notary public.

Once arriving to the Notary Public the lead time may vary from 7 to 14 days. Once notarized, the documents will then need to be notarized. Here, the Mexico public registry will assign individual folio numbers to each of the Mexico condominium units. Finally, the cedula catastral, or the individual property tax registries are assigned. This would be the final step to obtain individual title to Mexico preconstruction condominiums.

A common question that many of my investors forward to me, is

Why do the developers wait so long to begin application for the Condominium Regime when they are aware of a 6 month period

The main reason of withholding this process, is due to the flexibility to construct according to the buyers requirements. One of the values that many buyers exercise when purchasing into pre construction, is the option of being able to custom design the layout of the interior of the unit. The buyers want the flexibility to decide if they want 3 bedrooms, or 2 Bedrooms with an extra large master bedroom for example. If the Condominium of Regime has already been applied and granted, the construction cannot be allowed to modify unless an entirely new Condominium Regime is realized. Thus, developers will withhold until either 90% of the condos have been sold, or until 90% of the construction has been realized thus definition of the final product has been ensured.

If you want to study more questions and answers to FAQ regarding this subject or other similar subject,I welcome you to click below where you can read on much more details on Mexico Real estate.

http://www.topmexicorealestate.com/faq.php

Thanks

Thomas Lloyd