Frequently Asked Questions
How the buying process works and how long it takes?
The process to purchase property in Mexico is very similar to the US and Canada. Once you find the property you like, an offer to purchase is presented to the seller through your Real Estate Agent. After the offer is accepted and signed by the seller, a promissory contract to purchase is established. This contract will stipulate closing time frames, detailed costs, terms, inclusions, and exclusions for buyer and seller and may include a penalty clause if one of the parties cancels. It’s customary to provide a deposit between eight and 10% of the full price as earnest money and a percentage amount of the closing costs, which includes property city appraisal, certificates of no liens, and no tax debt issued by the Municipality where the real estate is located, along with the cost to establish the Fideicomiso or Bank trust. This process will take between 3 to 4 weeks. The closing takes place at the Notario Publico office. Unlike in other countries, Mexican Notarios are highly trained lawyers appointed by the State Governor and licensed to authenticate documents and legal transactions. At the closing in front of the Notario Publico, the rest of the closing costs are paid. These include notary fees and the registration of the real estate property with the Municipality and acquisition tax transfers derivate of the purchasing. The earnest money and balance of the purchase amount will be presented to the seller and the Notario will release the new property title (escritura) to the buyer. The Notario Publico collects the transfer and capital gains taxes and records the purchase with the Registro Publico at the Municipality where the real estate property is located.
Are the closing costs a percentage of the value of the Property?
In Mexico, the buyers pay all of the closing costs with the exception of capital gains, which are the responsibility of the seller. The taxes on a property purchase are related to the value of the property and this is a minimal percentage that goes no higher than 3% of the value of the real estate. The rest of the closing costs are the certificates and appraisals which vary according to the type and price of the property. Notary fees are discretionary and thus vary. The establishment of the Fideicomiso depends on the bank of your election and costs approximately $2000.00 USD. Of course, each situation is unique, but these are the basic facts about closing costs.
