Since this is something I provide to anyone interested in getting into our market here, I figured I might as well put it into a handy reference guide. It's a complete breakdown of the average timeline and items required to purchase a property here in Riviera Maya.
Deposit & Reservation
Once you find that perfect vacation property, smart investment or family home that you just can't live without, you will need to leave a deposit to take the unit off the market. In the case of a new build or presale (so anything you are buying directly from a developer) you will reserve the unit by making a deposit. These are refundable and on average are around $5,000 USD depending on the value of the unit. In the case of purchasing from a developer they sometimes offer discounts and a variety of payment structures to choose from. There is usually a 5-10 day reservation period during which the unit will be held, giving you time to review the promissory contract and make your down payment. If you change your mind for any reason within that time frame you will get your deposit back.
In the case of resale properties, typically a 2-5% deposit is included with the offer letter and terms will vary depending on what is negotiated between the parties.
Required Documents
Once both parties are in agreement and you decide to go forward, in order to start the purchase process you will be asked to provide the following documents to your agent who will share them with the lawyer/notary:
1. Proof of any payments
2. Document you used to enter the country - usually your passport
3. Birth certificate (from both buyers in the case of couples)
4. Proof of residential address (no more than 3 months old)
5. Statement of the bank account from which you will fund your purchase (most current)
6. Marriage certificate if applicable
It’s important to have the original copies with you as the notary working on your closing will need them.
Anti-Money Laundering Laws
*Regarding payment regulations here in Mexico, we have to abide by strict anti-money laundering laws so cash payments are allowed only up to around 800k pesos and anything more must be paid by bank transfer or some traceable form of payment. This usually isn’t an issue as most people pay with a wire transfer but it’s good to note.
FInancing
In the case of financing a property, this adds a few more layers as it would anytime you are dealing with a lender. It may affect your payment schedule and the seller or developer must be willing to be flexible and work with the lender. In most cases, banks or finance companies will require appraisals, inspections, insurance etc. which are not a factor in cash purchases. The lender will also be named on the title/trust until payment is made in full. Because of these additional layers it is usually in the buyer’s best interest to work with a mortgage broker in their home country to secure a HELOC (home equity loan) as these are the simplest and most cost effective way to purchase foreign property. If that is not an option, I do work with a mortgage broker here in Mexico who can help secure loans at rates as low as 6.99% and up to 90% LTV but that is with a stellar borrower profile and don't forget there are often upfront loan setup fees etc. In most cases, rates fall somewhere between 8.99-12% and 80-85% LTV.
Transferring Title/Deed Signing and Fideicomiso
In the case of presale or new construction, it’s ideal if the developer has the title ready at the same time as the physical delivery of the unit but it doesn’t always happen that way. In some cases the buyer will take physical delivery before the title is ready to be transferred. In the case of resale it can take a few months for the notary to prepare all the documents and legal requirements to sign the deed over. This includes the fideicomiso or bank trust that you will purchase your property through if it is near a border or coastal area. These trusts offer protection and benefits to foreign buyers such as legal rights to the property, privacy, asset protection and it even acts as a will. In case anything should happen to you, your property will automatically be transferred to your named beneficiary and won’t have to go through Mexican probate. This is a huge benefit.
In the case of a new construction it will cost approx $2,500 USD to set up a new trust and in the case of a resale with an existing foreign owner it could simply be transferred and save you that setup cost. There is an annual maintenance/administrative fee for these trusts that run approx $400-500 USD/year.
Closing Costs
You can expect closing costs and notary fees to run between 6-10% depending on whether you are creating a new trust or transferring an existing one. Some of the costs are fixed and for the legal services, different notaries charge different fees. It's advisable to get quotes from a few to get a general sense of what you should be paying before you make a commitment.
Residency and a Tax ID will come in handy when you're ready to sell as there are benefits like capital gains exemptions in qualifying cases. These are not necessary at the time of purchasing.
If you would like a one on one consultation where you can ask all your questions, please reach out via the contact info below.
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