During the closing of the real estate transaction you as a buyer have the obligation of paying closing costs. The closing costs are divided in multiple parts. I spoke to Ivan Castillo at Stewart Title Latin America´s Playa del Carmen office so he could explain them in detail.
Notary Public
Ivan Castillo: We need to involve certain service providers such as a notary public. The Mexican notary public has a completely different role from the one in the United States. In the U.S. or in Canada their only obligation is to witness the execution of a document. Here a notary public is an appointed official of the government. They are obligated to calculate, retain and pay taxes on behalf of buyer and seller, and they would be formalizing the legal act through a deed that will contain thr transfer of title through a purchase agreement or with a foreigner a trust.
Regarding closing costs we have to involve the notary public which has a schedule of fees that is authorized by the government.
Transfer of Property Tax
Ivan Castillo: Every buyer has the obligation of paying taxes and a certain amount of duties. When the transfer of title occurs on the date of closing the buyer has the obligation to pay transfer of property tax, which is 2% of the purchase price if you´re closing in the Playa del Carmen region. And I say this because the transfer of property tax in the area of Cancun increases to 2.2% instead of 2% here in Playa del Carmen. In addition, the closing costs will include certain amount of certifications that are required by the government to record the deed. Such certifications include some that describe or indicate what is the current status of the company regarding payment of taxes, water and sewage, if the property is beachfront, and that the property is current with the taxes regarding federal maritime zone, among others. The buyer needs to pay a commercial appraisal because the Mexican government likes to cross-reference information. Because the payment of taxes are calculated based on the highest of 3 factors- the purchase price, the commercial appraisal and the assessed value, the value that is appointed by the government. So based on those 3 factors the government will calculate all those taxes that the buyer needs to pay.
Trustee Bank
Ivan Castillo: In addition, foreigners- in view that they cannot acquire land directly- Â need to engage a trustee bank. And that trustee bank will require a certain amount of fees.
#1: for the obtainment of a permit that is issued by the Ministry of Foreign affairs. The trustee bank will include their annual fees and another fee which they call an acceptance fee, through the bank will accept to be your trustee bank.
#2: And finally you´re looking at paying your escrow and legal fees. You would be paying the escrow and the closing legal support so that we can guide the customer from beginning to end until the transaction closes.
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