8 steps to purchasing property in mexico

by nick fong, broker of los cabos agent

How difficult is the property purchase process in Mexico?  Here are a few steps that can make the process easier.

Step 1: Make an Offer
This is usually done in the form of an “offer to purchase agreement” (oferta) or a “promissory agreement” (contrado de promesa), which your attorney or the real estate agent you’re working with draws up. Most real estate agents will have a standard form they use for this purpose. (When your offer has been accepted, you should ask your real estate agent and the notary to estimate the closing costs for you.)

Step 2: Set Aside 10% as Earnest Money in Escrow
Once your offer is accepted in writing, you’ll need to put a certain amount (usually 10%) of the purchase price aside as earnest money (depositos condicionales) in escrow with a third party. Whatever you do, don’t give this money to the seller. One typical arrangement is for the agent to hold the deposit in dollars in the United States. When the deal nears closing, the agent transfers the money to his own Mexican bank at the current rate of exchange.

Step 3: Inquire About Title Insurance
We suggest you call about title insurance for your property. Though a notary will investigate a property’s title to be sure it is free from immediate encumbrances and that the taxes are paid, that research may not extend back through the entire chain of ownership. A title insurance company, however, will dig to be sure that there are no surprises lurking. If the title is not clear, don’t buy the property.

Step 4: Wait While the Notary Investigates the Title, Gets an Appraisal, and Puts the Closing Papers in Order
You need to have a purchase sales agreement (contrado de compraventa) drawn up at this point. Normally, you’d have your attorney do this. But if you are working with a real estate agent, then his office may be able to take care of this for you. It should be in English for you and in Spanish for the Mexican authorities... he’ll get the papers in order to register your purchase with the Ministry of Foreign Affairs.

In the meantime, your title insurer and the notary will verify the property’s title. In doing so, they will request a copy of the lien certificate (certificado de libertad de gravamen) from the land registry, which will show the name of the owner of record as well as the details of the property, including the lay of the land (its size) and its status (commercial or residential, for example). They will also request from the local tax authority a non-lien certificate (certificado de no aduedo), which, if issued, will show that no taxes are due or reveal unpaid back taxes. In addition, they will make sure that no other property-related bills such as water or electricity are outstanding. And they will have the property appraised to establish its assessed value.

Other Papers You Should Have in Hand
If you are purchasing a home, make sure you have copies of the paid water, electricity, telephone, homeowner’s association, cable, and other utility bills from the seller. Unpaid bills remain attached to an address. They will be your responsibility—not that of the prior owner.

Step 5: Close on the Property
Once you have assurances from your attorney, notary, and title insurer that the property’s title is good, and the purchase of sales agreement is ready for you to sign, you’ll meet with the notary, the seller, and your attorney or broker for the closing.

Step 6: The Notario Registers Your Ownership
Though you’ll have a copy of all the paperwork associated with the property, the transaction isn’t really complete until the notary registers your deed with the land registry office...

Step 7: Have Your Attorney Draw up a Mexican Will for You
While your Mexican property can be transferred to your heirs as requested in your U.S. or Canadian will, it is by far the least desirable way to ensure they’ll get it... Have your attorney draw up a Mexican will in Spanish that disposes of your Mexican possessions and property. It will simplify matters immensely.

Step 8: Don’t Forget the Ministry of Foreign Affairs
No matter how you plan to buy property in Mexico, you’ll need to alert the Ministry of Foreign Affairs that you intend to make a purchase. As we mentioned before, it is usually your attorney or the notary who applies for the permit on your behalf before the closing.


By Nick Fong, Broker of Los Cabos Agent,
www.loscabosagent.com, 312-725-3664 (US Office)
624-157-3170 (Cabo Cell)