Another question that gets asked a lot by potential buyers who wanted to purchase in Mexico pertains to risk. Americans and Canadians want to know how safe it is to buy here and what to be aware of. Once again I put the question to Ivan Castillo, the Regional Manager of Stewart Title Latin America. Ivan’s expertise in closing services, title insurance and escrow services allowed him to give us the following answer:
Ivan Castillo: I consider that there are no risks when buying in Mexico. However, when you enter in to a purchase and sell agreement for a property that is in a pre-construction phase I always advise customers that any advance in payment go towards the purchase price. If there is a payment schedule that all the payments be done in accordance with an advance in construction. This way as a buyer you will be fully aware that your property or the amounts that you are paying to your developer will be destined to build the product that you are buying. For example, it’s always recommended that you have a purchase and sell agreement that will outline the payments and when those payments are due.
We always recommend to customers in a pre-construction phase that at the execution of the purchase and sell agreement you give a down payment. At the moment the foundations are completed another advance payment. When the first floor is built another one. When the keys of the property are given to you, meaning everything is fully finished, then another amount. And a smaller amount when you receive physical title.
However if the property is literally one or two months away from being completed then what I would suggest is that the funds be held in escrow and that we do not give the developer any amount of payment until the actual physical physical possession and transfer of title are formalized. Because during the physical possession you have to do an inspection and verify that everything is running- the electricity turns off, the toilets flush, there’s no cracks, the windows are OK, among others.
To answer your question it is not risky but it is very important that any purchase and sale agreement drafted be very clear regarding the terms and conditions and obligations assumed by both parties.
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