As a buyer you should always hire your own attorney instead of relying on an attorney of the seller or the estate company you are dealing with (even if the agency offers you the help of an attorney ‘free of charge’). Legally licensed attorneys in Mexico should have a cédula professional, which is a registered license to practice law in Mexico. Foreign attorneys are not licensed to practice law in Mexico and should not give you advice on legal matters. There are a few foreign attorneys who are licensed to practice law in Mexico, but in most cases you will have to rely on the service of a Mexican attorney.
Your attorney will guide you through each step of the real estate transaction and should be involved in drawing up any legal documents. Good attorneys also have many contacts with banks, notaries and the Mexican government and can help you in choosing providers with competitive fees. In addition a good attorney can also consult you on tax optimisation possibilities on your property purchase and other legal issues that might evolve around the estate transaction.
Notaries in Mexico
Next to your attorney the most important person in your property purchase will be the public notary. All estate transactions in Mexico have to be certified by a licensed public notary who is appointed directly by the State Governor.
As a property buyer you have the right to choose a public notary for the estate transaction. The notary will ensure that all documents and permits are in order. He will check if the property has a ‘clean’ history, and that there are no liens on the land (like an unpaid mortgage). He should also check the building permits, tax registers, and whether all land taxes and utilities have been paid.
If a property is owned by multiple owners, (often the case with an ejido property), the notary will check whether all owners have agreed to the sale. However be aware that the notary can only check records that are publicly available, and that even a notarised estate transaction can still be challenged in court if there are any owners entitled to the land that nobody was aware of before. Nevertheless the notarisation gives you additional security, so you should notarise every document involved in your estate transaction and never rely on having had somebody tell you that the documentations are valid without additional notarisation.
The property purchase process in Mexico
Your best bet when buying property in Mexico is to hire a lawyer who will guide you through each step of the purchasing process. Though this process can vary depending on each individual case, it is likely to involve most or all of the following steps:
- Your verbal agreement on the price of a property you want to buy
- An initial written agreement to sell/buy (convenio de compra/venta). This agreement details the cost and deadlines for the purchasing process. Upon signing this agreement, an initial deposit (around 5-10%) is paid by the buyer. The agreement normally also includes a cancellation penalty (usually equal to the deposit) which has to be paid if either one of the parties decides to pull out.
- If the property is inside the ‘restricted zones’ (50km from the coast or 100km from the border), foreign buyers need to set up a trust which can hold the deeds of the property on their behalf.
- As a foreign buyer you need to seek permission from the foreign secretary’s office to buy real estate in Mexico. This formality can usually be settled within a couple of days. You will have to sign the ‘Calvo Clause’, stating that you will not seek foreign jurisdiction for anything to do with your property transaction.
- The public notary checks the seller’s land / property deeds. You should explicitly ask the notary to check that the land is not ejido land (unless you already know so).
- An official appraisal of the land (avaluo) is carried out. This can be arranged by the notary.
- Both the buyer and seller have to provide official documentation to the notary, including their ID (passport), birth certificates, marriage certificates (if applicable) and their visa (if applicable). The seller also has to supply the original property deed, recent tax receipts and proof of the payment of public utility bills.
- The seller needs to pay capital gains tax on the property purchase.
- The final payment is made when the property deed is signed over to you at the notary’s office. You can buy in cash, by cheque or other payment forms, but you need to have the funds available at the point at which the property deeds are transferred.
- At this point the notary’s fees are paid as well, as well as any taxes associated with the property purchase.