Prior to any transfer of real property by individuals or companies, Mexican or foreign, you should verify that there are no liens or encumbrances registered against the property.
If the property is encumbered, the lien will follow the property. The title cannot be transferred until the lien has been paid. This is especially important if you are purchasing property through a promise to trust – private contract. If taking possession through a promise to trust – private contract, have a lien search performed before providing any payment to the seller.
A title search is the best form of title verification available.
A Mexican real estate transfer is concluded or consummated at the time the Escritura Publica, the public deed, is signed and witnessed before a Mexican Notary Public. The Escritura Publica, or public deed must then be registered in the property tax department and in the Public Registry of Property and Commerce in the jurisdiction where the property is located, in order to protect the interests of the Buyer and to provide notification to third parties.
BUYERS
These are the steps which generally need to be followed after your offer has been accepted and all conditions to the purchase have been satisfied
Step 1
Buyer and seller submit personal information and information about the property to be transferred.
Review and approve the Estimate of Costs for the transfer. Wire transfer the funds required for the initial part of the closing process.
Step 2
Choose your Transaction:
- Bank Trust (Fideicomiso)
Pronounced “fee-day-e-co-miso”, this is the trust document that is required for non-Mexicans who purchase property in the “restricted” zone; along the coasts and borders of Mexico - Assignment of Rights
When the property being purchased is already in a trust the Seller of the rights in the trust may simply transfer his/her rights in the property. Trust remains with the same bank and expiration date for the term of the trust does not change. - Purchase in Fee Simple
Property may be acquired by a foreigner in the interior of Mexico in a direct deed without the need for a bank trust (fideicomiso). Non-residential property in the coastal and border areas may also be acquired by a Mexican corporation with 100% foreign capital in a fee simple deed, without the need for a bank trust. - Mortgage
This transaction may take place if you obtained a loan on a Mexican property from a Mexican or foreign individual or corporation. - Extinguish Current Trust and Create a New One
In the event you do not wish to acquire the rights in an existing trust (through an Assignment of Rights), a request of cancellation of the existing permit and obtain a new one with a term of fifty years. - Trust with Pledge Guarantee
This takes place when the seller or an independent lender makes a loan secured by the property. Buyer receives title and possession, subject to payment of the remaining balance to the seller or the lender. - Change Trustee Bank
Among other rights you have under a Mexican Bank Trust (Fideicomiso), is the right to change the trustee (the banking institution) in the event you decide to do so.
Step 3
Sign registration and consent forms
Sign Closing company Instructions.
Request a title investigation.
Step 4
Certificates and permits are ordered.
Step 5
Appraisal is ordered.
Step 6
All documents, including bank instructions to the Notary Public are reviewed for accuracy.
Step 7
Verify Seller’s Capital Gains Tax. Inform Seller and Buyer of the amount to be set aside for this purpose.
Step 8
Review the draft of the deed. Coordinate the signing of the deed by the Seller and the bank. Order title insurance. File preventative notice with the Public Registry office.
Step 9
Deed is registered in the property tax and public registry offices. Final accounting of all funds is prepared. This is sent to the Buyer, together with the deed, and translation of the pertinent parts of the deed. NOTE: The registration process can take approximately 60 to 90 days to complete before you receive your originals.
SELLERS
Now that you are selling, it makes sense to have your title files reviewed in order to avoid unpleasant surprises.
Don’t wait until a prospective Buyer makes an offer. If there are issues to be addressed with your title file, deal with them ahead of time. Otherwise, you’ll lose time, effort and possibly even the sale over delays.
Step 1
Verify that you have the following documents:
Fideicomiso or Escritura all pages. Especially the title page of the deed with the Property Tax Department and Public Registry Office stamps. All pages are required. There may be loose pages after the final stamped registry page these are the exhibits of payment of the acquisition tax, property manifestation, ISABI etc.. All of these are needed to transfer the title to the property. If you do not have your complete deed or can’t find it, you can hire a 3rd party to obtain it from the property tax office including it’s exhibits.
You will also need:
Receipts of payment for Bank Trustee fees.
Receipts of payment for Property Taxes.
Receipts of payment for Homeowners Association’s fees.
Receipts of payment for Utilities.
What about outstanding utility bills?
Seller is responsible for paying for utilities to the date Buyer receives possession unless otherwise agreed. Unpaid utility bills may become a lien on the property.
Step 2
Estimate your Capital Gains Tax. A copy of the deed with the stamps of the property tax department and the public registry office is required to make a more accurate estimate.
Please remember: Capital Gains Tax in Mexico is paid as follows:
25% of the amount of the transaction (no deductibles apply) or 35% of the difference between acquisition value and sales price, less allowable deductions.
Step 3
Instruct the Trustee Bank through a letter of instructions to transfer title to the Buyer or to the person(s) indicated by him/her.