Investing, Retiring, Living, & Working in Mexico Online Workshop 2013:
- About Our Agency
- Historical Overview of Foreign Ownership in Mexico
- FAQs About Purchasing Property
- Helpful Buyer Links
If you are looking to purchase property in Puerto Morelos, you've come to the right place!! Mayan Riviera Properties is uniquely qualified to provide Buyers with the best service, knowledge, and experience -- allowing you to make informed decisions about your investment and enjoy the best representation during the purchase process.
Mayan Riviera Properties Agents Are:
Puerto Morelos Property Specialists
Federally Certified Agents --- We're the ONLY Certified Agency in Puerto Morelos!!
Members of AMPI, the Realtor's Association in Mexico
Professional, Ethical, & Helpful
Puerto Morelos Property Specialists
The Puerto Morelos Area is our specialty! We are intimately familiar with properties here and can show you a wide range of options in any budget. It also means that if you don't find what you are looking for from the available listings, we'll work our hardest to find it for you!
Attention Investors: Many properties have been bought and sold through our office that never hit the open market! We know our area and can do the research. Let us help you find your paradise!
The Puerto Morelos Area Includes: Puerto Morelos, Petempich, Playa del Secreto, Playa del Secreto, Colonia/Zona Urbana, & Central Vallarta.
FEDERALLY CERTIFIED BROKERAGE:
WE ARE THE ONLY PUERTO MORELOS REALTOR WITH CERTIFICATION! Licensing and Certification are NOT required for Real Estate Agents in Mexico. Mayan Riviera Properties Federally Certified by the Mexican Government to represent Buyers and Sellers in real estate transactions. Additionally, we are members of AMPI (Mexico's Real Estate Organization) and International Members of the National Association of Realtors.
Our office is also the only Puerto Morelos Realty with access and active listings in the MLS system for Mexico. We have the unique ability to show you ALL of the area listings.
KNOWLEDGEABLE & EXPERIENCED:
We're not newcomers...We have lived in Puerto Morelos for years, giving us intimate knowledge of the area, new development plans, and possibilities that we share our Buyers. Additionally, the previously mentioned Federal Certification process requires rigorous testing on all aspects of real estate transactions. We also attend courses and regularly seek legal counsel to keep abreast of all of the numerous changes that are happening as Mexico modernizes its way of doing business.
Enjoy the benefits of true experience! Our experience is hands-on! Our company's roots are in Puerto Morelos investment and development. We personally have bought, sold, and developed property in Mexico for 10 years. In that time, we've run into nearly everything you can imagine! We welcome using our experience to making your transaction a smart and sucessful one.
PROFESSIONAL, ETHICAL, & HELPFUL:
Our motto is "Expect Excellence" and we mean it! You will not find better Buyer Services. We go the extra mile to ensure that your buying experience is a positive, educated experience.
For starters, all of our listings are substantiated with listing contracts. While this sounds incredibly basic, it's not by any means standard practice here and many Buyers are led on a wild goose chase with commission upon commission tacked onto a property that may or may not be for sale.
All of our contracts are in English or have an English translation so that you know what you are signing at all times! Our contracts were drafted by an attorney to be correct and legally binding under Mexican law. Mexico has certain standards which contracts must meet in form and content to be legally binding. Many are composed by realty offices according to U.S. standards which may or may not meet the legal requirements in Mexico.
You'll find our agents to be incredibly helpful throughout the buying process and beyond. Not only do we take the time to educate you about ownership in Mexico during your buying process and lead you through the various steps of sale that will be unfamiliar, we also help you settle in after the sale! Things that you take for granted aren't necessarily so simple here -- whether it be due a language barrier, unfamiliarity with Cancun and locations of offices, or just the sometimes confusing processes. First, we provide you with a Puerto Morelos Homeowner's Package loaded with information our Buyers have found to be very helpful in getting them off to a good start. Additionally, we can assist you in getting your place furnished, changing utilities into your name, recommending insurance agents, even getting you hooked up with satellite television.
Many Buyers are so satisfied with our services, that we now care for and/or rent their places while they're away in our property/rental management programs.
To fully understand the process of foreign ownership in Mexico, a bit of history on the subject is certainly helpful.
Beginning when Cordoba landed on the Yucatan in the 1500s and claimed it for the Spanish flag, Mexico has been dominated by foreign ownership. Even in 1822 when Mexico declared her independence from Spain, a majority of land was still owned by foreigners, Mexico’s upper class, and the Catholic Church. Due in large part to the unequal land distribution (1% of Mexico’s population owned 97% of Mexico’s land), the Mexican Revolution erupted in 1910. The Revolution resulted in a new government, a new constitution, and tumultuous land re-distribution.
The new government and its constitution were created with an insular spirit in an effort to ensure that prior conditions would not be repeated. Fearing the persons seeking revenge for their loss of land, Mexico established a very private land ownership system, whereby the information regarding land ownership is not a matter of public record. In addition, Article 27 of the 1917 Constitution established a “restricted zone” within which foreign ownership was prohibited. This restricted zone was (and still is) defined as 100 kilometers of any international border and 50 kilometers of any costal border. The establishment of thisrestricted zone was viewed as a matter of national security, as it prevented foreigners from owning land along Mexico’s borders, through which armed forces or contraband could be smuggled into the country.
It wasn’t until much later in Mexican history that Mexico saw the positive potential in foreign investment and began to shift its policies and open the door to foreign investment. This policy shift began in the 1970’s and continues to evolve. Most important to date, has been the Foreign Investment Act of 1993. This Act is the federal statute currently governing foreign investment. Its 39 articles modernize and promote foreign investment, regulate real estate acquisitions and the fideicomiso process, and expand several other areas of commercial foreign investment.
HOW DO FOREIGNERS OWN PROPERTY IN MEXICO?
Foreigners are permitted to own land outside of the restricted zone with a fee simple deed. Residential Land within the restricted zone, must be purchased through a real estate trust (“fideicomiso”). This trust functions very similarly to real estate trusts in the USA. With the approval of the Ministry of Foreign Affairs, a federally approved Mexican bank serves as the trustee on behalf of a legal beneficiary (the foreign investor). The trustee (bank) will act on behalf of the beneficiary in all transactions involving the property held in the trust. The beneficiary (foreign investor) controls all decisions regarding the property including its use, enjoyment, leasing, improving, selling, inheriting, willing – in the same manner as a fee simple deed. This trust has a term of fifty years and is guaranteed renewable for perpetuity.
Commerical properties may be purchased through a fideicomiso as well as via a Mexican Corporation. If you are interested in purchasing a commercial property, please contact us for further information.
There is much confusion among foreigners about owning property in Mexico, but:
Foreigners do NOT lease property.
Property is NOT owned by the bank or the government
Property is NOT purchased through a Mexican Corporation (unless it is for commercial purposes).
WHAT DOCUMENTS ARE REQUIRED FOR FOREIGNERS TO PURCHASE PROPERTY IN MEXICO?
For most purchases, you will need to present your Passport and Tourist Visa, which is issued to you upon arrival. (If you already have your FM3 or FM2 Visa, you would present this in lieu of the Tourist Visa.) If you are married, divorced, widowed, you may also need to present the documentation to demonstrate your civil status.
IS OWNERSHIP IN MEXICO A LEGITIMATE, SECURE INVESTMENT?
YES! Property ownership through a real estate trust is a very legitimate and secure investment:
Real estate trusts have been established by the Mexican government specifically for the purpose of foreigners’ ownership in the restricted zone. There are numerous federal statutes and a constitutional amendment which designate this process as the method of ownership and guarantee a foreign investor’s ability to do so.
Trustees (banks) are federally approved to hold real estate trusts. These trusts are NOT considered assets of the bank. Should a bank should close, merge, etc., the trust must be transferred to another approved bank. (Coincidentally, most Mexican banks are owned completely or in majority by stable foreign banks.)
Property owned in a trust is eligible for Title Insurance from several title companies, including Stewart Title and First American Title Company. While Mayan Riviera Properties recommends the purchase of title insurance for your investment (see below), the very fact that these major companies are willing to insure properties held in trusts speaks to their legitimacy and security.
WHAT ARE MY FINANCING OPTIONS?
In general, properties that are purchased in Mexico are purchased in cash, with the financing having been arranged in the buyer's home country. It is important to note that we are not aware of any foreign financial institutions that will allow you to use the Mexican property as collateral for the loan. You will have to leverage other domestic assests to do so.
There are several options that may be available, depending on your financial portfolio and the property you are interested in purchasing.
- Developer or Owner Financing: Oftentimes, developers of new construction offer payment plans for the purchase of their properties. Likewise, some owners are open to paying for their property in the form of payments. Typically, this type of financing is shorter in term than a tradtional mortgage and can typically vary from 1-5 year terms.
Traditional Mortgage: Traditional mortgages in Mexico are a new product to the market. Since the industry is new, it is still going through its growing pains and is ever-changing. At this point in time, there are some financing options available if those buyers who have a majority of the funds to purchase and are looking for a smaller loan to make the final portion of the purchase feasible. (Please see the "Helpful Buyer Links" section toward the bottom of this page for mortgage lenders.)
Private Loan or Equity Loan: Currently, U.S. and Canadian banks will not allow purchasers to use their foreign property as collateral for a loan. However, some buyers have leveraged other assets owned nationally or used home equity to acquire credit from their local, national lenders.
U.S. Citizens: Self-Directed IRA funds can be used to purchase foreign real estate.
Co-Ownership: Mexico allows multiple parties to be legal property owners. So, how about going in on a vacation property with family or friends?
WHAT IS THE EXPECTED SALE PROCESS?
While each property and negotiation process will result in different terms and specifics, most transactions follow general pattern. Once you have decided on a property to purchase, the negotiation process begins:
Through an “Offer to Purchase” document, buyer and seller can negotiate price and terms of sale.
Once the price and basic terms have been agreed upon via the “Offer to Purchase”, then a good faith deposit is given to the seller by the buyer. This is a small amount that indicates the sincerity of the buyer and in exchange, the seller removes the property from the market for a short period of time. During this time, the buyer’s notary or attorney can review the documents related to the sale in a process called “due diligence”.
After the due diligence process has proven the property suitable for sale, the buyer and seller enter into a formal Buy/Sell contract. This contract will include all of the terms and conditions of the sale, as well as any additional deposit that will be given to seller prior to closing. (Often times, if buyer requires an extended period of time to close, seller will request a down payment.)
Once buyer and seller have entered the Buy/Sell contract, the buyer’s side can then apply for title insurance and contract with a bank to open a real estate trust. The bank will apply for a federal permit to open a trust on the buyer's behalf. The seller’s side will gather all necessary closing documents that had not been gathered during the “due diligence” process.
Once both sides are ready, parties close before a notary and the real estate trust is formalized.
This process generally takes 60-90 days, providing that seller’s paperwork is in order, the buyers have cash ready for closing, and that government offices are operating under normal hours (government offices essentially close from mid-December through mid-January).
WHAT IS A NOTARY?
A notary is a neutral, government appointed representative that oversees and approves all real estate contracts and transactions (among other legal processes). Their oversight and seal of approval is required for the title to be transferred and registered. They are responsible for the accuracy of the transaction and collecting the proper amount of fees due the state and federal governments.
SHOULD I USE AN ATTORNEY FOR CLOSING?
Unless you are going to be purchasing title insurance, an attorney is optional for buyers during the closing process. However, a good attorney can really be an asset during the buying process. All legal documents that you will be signing and issued are in Spanish. Additionally, there are not standardized contracts in Mexico, so good review of documents is important. Your attorney serves as your advocate during the transaction and looks after your interest. They are a great asset when making a foreign investment, of considerable value, in a foreign language. We have worked with a variety of reliable professionals and are happy to give you a referral.
SHOULD I PURCHASE TITLE INSURANCE?
The purchase of title insurance is optional and is a one-time purchase that is very reasonable in price. Mayan Riviera Properties recommends the purchase of title insurance, as it has several advantages:
A More Complete Title Search Required: The title research that is required to obtain title insurance is much more in-depth than what is performed in an ordinary closing with a notary.
An Authorized Attorney is Required to Perform Title Search: If you were on the fence about using a notary or hiring an outside attorney for closing, your decision has been made for you. The title research must be performed by an attorney that is approved by the title insurance company, as this attorney will be writing the legal opinion for your policy. These attorneys’ competence and past performance have earned the confidence of the insurance companies and serve as a good referral in your selection of an attorney.
Peace of Mind: There is no statue of limitations regarding real estate issues in Mexico. Therefore, any associated party can claim issue with a prior transaction on the property and take this issue before the courts as a challenge to the property’s ownership. While this scenario is extremely rare – it is within the realm of possibility. Title Insurance will protect your investment and pay any legal costs associated with defending the authenticity of your title.
WHAT ARE THE COSTS INVOLVED WITH PURCHASING PROPERTY?
A good estimate for closing costs is 6-7% for properties under $400,000.00 USD. There are a variety of bank fees and notary fees, which can vary depending on the particulars of each sale. Here is an overview: http://www.puertomorelosblog.com/2010/04/what-are-closing-costs-for-purchasing.html
WILL I NEED TO BE PRESENT AT CLOSING?
All buyers who are listed on the deed will need to be physically present at the time of closing. If one or more are unable to attend closing, a representative with a Power of Attorney for each absentee buyer must be present for closing.
HOW LONG DOES IT TAKE TO CLOSE A PURCHASE?
The time required to purchase a property can vary. A good rule of thumb is 60-90 days after the Offer to Purchase has been signed.
There is some due diligence that is performed by the notary prior to closing. However, the portion that takes the longest and ultimately dictates the length of time until closing is the arrival of the trust permit to the buyers' bank. This permit is issued by the Mexican Foreign Ministry, and there is no set timeline for its release. So, the bank is not able to predict the date of its arrival until the document is received. This can happen as quickly as 1 week or take as long as 45 days. Due to the unpredictability of the permit's arrival, it is not possible for parties to make arrangements for closing until the bank has actually received the permit.
After the bank has received the permit, both buyers and sellers are advised of the ability to close. Then, both parties can make travel arrangements or have their representatives available on an agreed closing date. Generally, there is a clause in the previousely-signed Offer to Purchase which stipulates the amount of time parties have after the Notice of Closing is issued to be present for closing procedures.
WHAT ARE THE COSTS INVOLVED WITH OWNING PROPERTY?
Annual Property Tax (“Predial”) – most residential properties pay less than $500 USD
Annual Real Estate Trust Fee - paid to Trustee Bank (Approx. $550 USD)
Annual Federal Beach Tax – only assessed to beachfront properties and based on meters of beach frontage.
Utilities (Gas, Water, Electricity, Phone, etc.)
Condominium or Homeowner’s Association Fees, if applicable.
WHERE CAN I FIND CURRENT INFORMATION ABOUT BUYING?
We publish lots of articles on our blog, PuertoMorelosBlog.com, about buying real estate in Mexico, investing in Puerto Morelos, and living in the area. Check out our the "Buyer Info" tab of our blog for lots of great articles, current info, and trends.
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