How To Successfully Buy Real Estate In Mexico

2nd
Edition
How To Successfully
Buy Real Estate
In Mexico
Even if you don't speak
Spanish
By Gabriel Gallegos
©MMXIII
2nd
Edition
How To
Successfully Buy
Real Estate In
Mexico
Even if You Donʼt
Speak Spanish
By
Gabriel Gallegos
2
HOW TO SUCCESSFULLY BUY
REAL ESTATE IN MEXICO
Even If You Donʼt Speak Spanish
Second Edition
© Copyright MMVII, MMXIII Sayulita Coastal Properties
ALL RIGHTS RESERVED.
Published and distributed by:
Sayulita Coastal Properites
AV. Revolucion #32, Local-C
Sayulita, Nay.
Mexico C.P. 63734
Toll-Free U.S. Phone (800) 743-2616
Direct: 1+ (329) 291-3759
Toll-Free U.S. FAX (800) 397-8718
Fax 1+ (329) 291-3762
www.sayulitacoastalproperties.com
No part of this book may be reproduced or transmitted in any
form or by any means, electronic or mechanical, including
photocopying, recording, or by any information storage and
retrieval system, without written permission from the publisher.
For information, address Sayulita Coastal Properties.
The information contained in this book is provided for
information only and does not constitute financial or
investment advice to readers. We recommend that each
potential buyer or seller conduct his or her own due
diligence and review, and seek professional advice before
entering into any agreement or contract. The Author and
Publisher specifically disclaim any liability, loss, or risk
which is incurred as a consequence, directly or indirectly, of
the use and application of any of the contents of this work.
Cover and inside photos by Tyania Lee Diffin
About The Author
Gabriel Gallegos
• Born and raised in Sayulita • Graduate of the University of Guadalajara • 12 years specializing in the sale of real estate in the coast of Nayarit. • Principal, Sayulita Coastal Properties founded 2004.
About Sayulita Coastal Properties
Sayulita Coastal Properties is the leading real estate ofDice in Sayulita, Mexico on the Nayarit Coast just 35 minutes north of Puerto Vallarta. Our mission is to provide the foreign investor with expert professional services to insure a safe and secure real estate transaction.
We specialize in real estate sales, Dinance, development of residential, commercial and large scale 4
land subdivisions, as well as historic residential and commercial property restoration.
We are dedicated to an educational and ethical business practice. We pride ourselves on providing the highest level of integrity and service to our clients. Our proven track record, knowledge and experience has earned us the distinction of being the most sought after real estate ofDice successfully serving the needs of the foreign investor.
We have received many favorable comments from our clients:
"Fantastic! We were able to buy our dream retirement home in
Mexico at a huge bargain value. Sayulita Coastal Properties
helped us in every step, and we couldn't have done it without
them!"
— J.C. Kline
"We love Mexico and have always wanted to own a house,
however we were anxious about buying property and even if
it was possible. The agents at Sayulita Coastal Properties
handled our fears. The transaction was much easier than
expected and we purchased our home."
— K. Langdon
"Our number one real estate office recommendation if you are
buying property in Sayulita, San Francisco or surrounding
areas." — Foreign Investor Real Estate News
5
CONTENTS
CHAPTER 1
8
The Great Mexico Land Rush... Who Else Wants A
Dream Retirement or Vacation Home?
CHAPTER 2
11
Meet “The Smiths"
CHAPTER 3
13
The 5 Biggest Lies Ever Told About Buying Real
Estate In Mexico
CHAPTER 4
20
The Basics
CHAPTER 5
24
8 Concepts That Are Key To Understanding How To
Successfully Buy Real Estate In Mexico
CHAPTER 6
30
Mexicoʼs Legal System—Some Important
Differences You Should Know
CHAPTER 7
33
What About Financing?
CHAPTER 8
35
All About Negotiation: 5 Insider Tips Successful
Buyers Use To Get The Properties They Really
Want
6
CHAPTER 9
37
Questions To Ask Before You Hire A Real Estate
Agent In Mexico
CHAPTER 10
40
How To Locate The Ideal Property
CHAPTER 11
42
The “Smiths” Buy Their First Property A Typical
Step-By-Step Example
CHAPTER 12
45
See How Easily You Can Own Your Dream
Property On The Beautiful Nayarit Coast.
Frequently Asked Questions Reference
49
Sample Closing Costs 52
Maps
53
Sayulita Map
San Francisco, Nayarit Map
(AKA San Pancho)
Real Estate Resources
55
7
CHAPTER 1
The Great Mexico Land Rush...
Who Else Wants A Dream Retirement or
Vacation Home?
It’s no secret retirees continue to Dlock to Mexico to enjoy the retirement they could only dream of affording in the States and Canada.
Many people, not just retirees have traded their stress-­‐Dilled American and Canadian lifestyle for the idyllic charm and easy living Mexico has to offer. The US 8
State Department estimates the number of Americans residing part-­‐time and full-­‐time in Mexico has increased from 200,000 just ten years ago, to as many as one million today.
Why Write This Book?
For many foreigners, their vacation destination of choice has be-­‐ come their dream location for a second home, full-­‐time residency or retirement. Mexico welcomed 22.67 million visitors in 2011, according to SECTUR – Mexico’s Board of Tourism.
Foreigners who decide to purchase property in Mexico, often know very little about buying and selling real estate in Mexico. Our goal in writing this book is to better inform those who are interested in moving here – how to:
• Ensure your real estate investment is safe and secure. • Gain a deeper understanding of Mexico’s culture, business and legal system (as it relates to real estate transactions)
• Make well-­‐informed decisions by working with qualiDied experts, and by asking the right questions.
The realities of buying and selling real estate in Mexico can differ in many ways from what North Americans and many foreigners are accustomed to. Where most North Americans are used to a fast-­‐
paced way of doing business, Mexicans prefer to socialize Dirst. This can be a culture shock for some 9
North Americans who like to get to the bottom line, while their Mexican counterpart wants to take their time, perhaps get to know you and your family and introduce you to theirs. Overall, business in Mexico is generally conducted in a personal way at a very relaxed pace.
“The Smiths"
We will introduce you to the Smith family who fell in love with a sunny beach town just north of Puerto Vallarta. We will illustrate their transition from American residents to expatriates, who purchase real estate in Sayulita and are fully enjoying the good life.
10
CHAPTER 2
Meet “The Smiths"
The Smiths had vacationed in Puerto Vallarta three other times. It had become their favorite destination. The whole family could relax and enjoy all Puerto Vallarta had to offer (water sports, shopping, the night life, and the local cuisine and culture). This time, the Smiths returned as empty nesters and they no longer needed to keep their kids entertained.
As much as the Smiths loved Puerto Vallarta, they had grown weary of the city and began to crave a more authentic experience. They decided to go exploring the Riviera Nayarit Coast.
11
For the Dirst excursion, they chose to head north. The Smiths had learned from the locals that more and more visitors were opting to stay out of town; off the tourist track at some of the small resorts and hotels which dot this very picturesque coastline. They found many of these havens to be tranquil and charming while others were luxuriously exclusive. Since their “appetite” was for a more authentic Dlavor, they focused on sleepy hamlets and Dishing villages.
The Smiths were particularly delighted to discover a Dishing village known as Sayulita. The beaches were uncrowded, the hills were covered with lush jungle and everywhere they looked, they felt the essence of old Mexico. They fell in love with the charm of this small village with its open-­‐air markets and eateries, even the occasional horse and rider trotting down the cobblestone streets. Sayulita was only a 35-­‐minute trip north of Puerto Vallarta for the Smiths, but to them it seemed more like a half-­‐century away.
Upon returning to the States, the Smiths’ dream of one day buying real estate in Mexico grew into a real desire with their sights on Sayulita.
12
CHAPTER 3
The 5 Biggest Lies Ever Told About
Buying Real Estate In Mexico
1. Only Mexican Citizens Can Own Real
Estate in Mexico.
This is false. Foreigners can own and hold title in the interior parts of Mexico with what is called a fee simple title (the same type as in the United States).
All foreigners, including Americans, are eligible to own land in these areas of Mexico. However, the 13
Mexican constitution does not allow foreigners to hold title directly in what has come to be known as the “restricted zone” which includes the following areas:
• 50 km (31.05 mi) from all Mexican coastlines • 100 km. (62.1 miles) from Mexican International borders
It is helpful to remember the history behind Mexico’s decision for establishing this restricted zone: In the 1800s, the U.S. gained the territory, which was once Northern Mexico, and later became the states of Arizona, California, Colorado, Nevada, New Mexico, Texas, Utah, and Wyoming. After losing about 1/3 of their country to foreigners, it’s clearly evident why Mexico wanted to safeguard their coastlines and borders.
However, even though Mexico strictly enforces this restricted zone, they welcome foreigners to invest in their country.
In order to make it possible for Americans and other foreigners to purchase residential properties in the restricted zone, Mexico developed the bank trust called “Fedeicomiso,” (FEE-­‐DAY-­‐E-­‐CO-­‐ME-­‐SO) which permits foreigners to invest in these highly desirable areas and enjoy unrestricted use of the land, including selling the property that is held in the trust to any eligible buyer. We will discuss Bank Trusts in further detail later in this chapter.
2. The Mexican Government Can Take Away
Your Property Whenever It Wants.
14
This is false. In the restricted areas, foreigners enjoy the same rights of ownership as Mexican citizens, established by the government through the bank trust. The only difference is the actual fee simple title is held in trust for them by a bank. You can secure title insurance from one of several larger American insurance companies that will for a small fee, guarantee your ownership rights.
You may have seen negative stories published in US papers involving title discrepancies, lawsuits and possibly buyers losing property. These stories concerning alleged injustices to a few of the hundreds of thousands of Americans who own property in Mexico are often one sided, and usually involve either ill-­‐
informed buyers or unscrupulous developers. The following is an example of one such case.
A U.S. newspaper reported on a group of Americans in Baja California who complained of being “evicted” from their property, which they had purchased in an upscale development in 1986. As it turned out, the property was never legally owned by the seller, an unscrupulous American developer. This developer built the homes and offered them for sale to other Americans, who couldn’t believe what a “steal” these beach properties were. Even though the buyers had been forewarned that the developer’s title to the land was being disputed and litigation was pending, the buyers went ahead with their purchase without performing their own due diligence. The rightful landowners of the property petitioned to be paid or have their property returned. Many of the Americans did negotiate with the rightful owners to lease and maintain the property and they continue to enjoy it to this day. However, others did not want to negotiate or pay the rightful landowners 15
and a lawsuit continued for many years. The Mexican Supreme Court ruled in favor of the Mexican landowners, and the Americans were dispossessed. In U.S. newspapers, it was reported that “the Mexican government” had taken away their land.
In truth, the government did not conDiscate the land. It was a simple matter of the law being enforced which was unpleasant, expensive and left hard feelings on both sides – all of which could have been avoided. Lawsuits and title discrepancies exist in any country and catastrophic failure of title does not happen often. The title assurances and ownership protection that is available in Mexico today was not easily obtained 20 years ago.
Today, there are many national safeguards to protect your investment, and property laws do exist in Mexico and will protect your investment, if you follow them.
It pays to do your homework, make informed decisions, and understand the legal system relating to business and real estate in Mexico. Instead of fearing the Mexican government, U.S. and other foreign buyers would be wise to be cautious of unscrupulous developers like the one described above.
It is important to remember that with any investment, it is recommended that each potential buyer or seller conduct his or her own due diligence and seek professional advice before entering into any agreement or contract. Just as in the U.S., always seek advice about title matters on a prospective acquisition from competent sources.
16
The chain of title can be obtained from the public registry of property for any given parcel or residential unit. Lien certiDicates, land use permits and subdivision authorizations are examined in the process when a U.S. title insurance company is requested to issue a Commitment for Title Insurance on Mexican Land.
It is becoming more common for foreign investors in Mexico to insure with a title insurance policy, which is enforceable under U.S. jurisdiction to guarantee ownership rights. With this safeguard in place, you can rest assured your investment is safe.
3. Foreigners Buying Real Estate In Mexico
Can Only Do So If They Partner With A
Mexican Citizen.
This is false. In the past it was true that foreigners had to have Mexican partners who owned at least 51% interest in order to form a partnership or corporation. However this is no longer the law.
A Foreign Investment Law was enacted in 1993, which enables foreigners to own 100% of a Mexican corporation. A foreign-­‐owned corporation can buy and own any property with fee simple title. This only relates to business and commercial real estate. It is not necessary to form a partnership or corporation to purchase residential property in Mexico.
4. You Can’t “Own Property” in Mexico. You
can Only Lease It.
17
This is false. Prior to 1971, when the Fideicomiso (bank trust) was not available in the restricted zones, leasing was the only option for Americans who wished to live in these areas. After 1971, under a bank trust the buyer has all the rights of ownership including the right to buy, sell, lease, use, bequeath, improve, transfer and encumber.
5. Foreign Investment is Frowned Upon By
The Mexican Government.
This is false. Mexico welcomes foreign investors. As mentioned previously, the change in Mexico’s Foreign Investment Law providing for land ownership through a Fideicomiso (bank trust) guarantees irrevocable ownership and provides foreigners the same rights of ownership under the Mexican Constitution as a Mexican national. Such changes of the law have also helped the Mexican Government to develop the restricted zones by attracting foreign capital.
Foreign investment was further encouraged in 1997, Mexican Banks conformed to International Banking Standards. Since that time many foreign countries, including the United States, have opened or purchased banks in Mexico. Citibank Corporation bought one of Mexico’s largest banks, Banamex. Wal-­‐Mart, Home Depot, Sam’s Club, McDonalds, Costco, Burger King, and numerous high-­‐ tech companies have invested billions of dollars in Mexico.
According to the U.S. Department of Commerce, trade between the US and Mexico more than doubled during the Dirst ten years of NAFTA (North American Free Trade Agreement). Furthermore, Mexico is among the 18
world’s most open economies, however it is dependent on trade with the U.S., which bought 73.9% of its exports in 2010. The Mexican Government and many businesses support a Free Trade Area of the Americas.
19
CHAPTER 4
The Basics
First Step: DeDine what you want: Do you want to rent, lease, or purchase a single family home or condominium? Perhaps you want to purchase land and build your dream home. All of this and more is possible in Mexico.
Advantages Of Buying Real Estate In Mexico
• Affordable housing
• Low cost of living
• Very Low Property Tax
• Ability to drive to and from U.S./Canada
20
• Beautiful climate • Rich culture
• Natural beauty, geographical diversity and exciting outdoor activities
• Modern infrastructure (yes, high-­‐speed Internet is available in Mexico and the Riviera Nayarit Coast)
• Ability to drive to and from the U.S. • Safety • Relaxed pace and overall great quality of life
So your Dirst step is to decide, what kind of property you want. Let's take a look at the types of property available.
The Two Main Types of Property Available in Mexico
It is important to gain an understanding of the two main types of property available in Mexico, which include the following:
1. Titled Property.
• Titled Property in Mexico can be bought and sold like private property anywhere. It can also be awarded by judicial decree, gifted, or inherited. The property is held with fee simple title or in a Bank Trust.
2. Ejidal Property.
21
• Ejidal properties were established as an outcome of the Mexican Constitution of 1917, and includes approximately 50% of all land in Mexico. (It is of great importance for the foreign investor to gain an understanding the Ejido System.)
Understanding the Ejido System & Regularization
As mentioned previously, it is very important for the foreign investor to understand the Ejido (pronounced ay-­‐hee-­‐doe) system. This type of property ownership is unique to Mexico, and has presented problems to foreign investors, due to their lack of understanding.
The History Of Ejidos
In Spanish colonial times, small Indian communities were located near the exits of large towns – hence the word Ejido is derived from the Latin word exitus (exit). From the period of the Revolution to the early years of the Mexican Republic, these Ejidos were essentially peasant farming villages surrounded by workable plots of farm land. In 1917, the Mexican government classiDied hundreds of millions of acres as “ejidal” land for the beneDit of its citizens. These areas, which were originally Spanish land grants, were now registered, under Agrarian Law (La Ley Agraria), with the National Agrarian Registry as farm and ranch lands and were granted to communities for these purposes.
The communities did not own the property and were only entitled to use and work the land. If they did not, title could be revoked. In addition to farming, rights of 22
usage also included the ability to homestead and construct dwellings on the property. These rights passed from father to son, but could not be rented or sold.
By 1940, over 49,000,000 acres had been converted to ejidal land and distributed to thousands of rural families. Approximately 1/3 of the population received land under this program. Many of these Eji-­‐ dos were managed and operated in a similar fashion to that of a farm cooperative. The members of the collectives, called Ejiditarios, had no absolute property rights, since the federal government retained ownership of the land. It is estimated at that time about one-­‐Difth of the arable land in Mexico belonged to Ejidos.
Regularized or Titled Property
In 1992, the Mexican government enacted a Constitutional Amendment, and a new Agrarian Law was formed. Under this new amendment, it was now possible to “regularize” agrarian lands to permit the lease or sale of an Ejido property through a process known as El Procede (the procedure) and Corett. Through this process of legal entitlement, the Ejiditarios could take the Ejido land that they didn’t own and convert it into private property -­‐ by subdividing the Ejido into parcels.
Sayulita is now about 60% regularized, and San Francisco (San Pancho) is almost entirely regularized which means it has been through the process of legally transferring from Ejido land to private property. Foreign investors are eligible to legally & safely purchase the regularized private property through a Dideicomiso (bank trust).
23
CHAPTER 5
8 Concepts That Are Key To
Understanding How To Successfully Buy
Real Estate In Mexico
1. Bank Trust
As mentioned previously, the bank trust commonly known as a Fideicomiso, enables foreigners to legally purchase real estate within the restricted zones, located 50 km (31.05 mi) from all Mexican coastlines, and 100 km (62.1 miles) from Mexico’s International borders. The Dideicomiso is commonly used for residential real 24
estate transactions, however a Mexican corporation may be formed to purchase real estate if the property will be used commercially.
When a decision is made by a foreigner to purchase the property, the bank will acquire authorization from the Ministry of Foreign Affairs. Upon approval, the bank will be instructed to hold the property as trustee. In addition to the fee to set up the trust, the bank will charge an annual fee to ensure the purchaser’s rights are protected and all terms of the trust are fulDilled under Mexican foreign investment law. The bank holds the title in trust for the foreign buyer who is the beneDiciary of the trust (alternate beneDiciaries may be appointed). As the beneDiciary, the foreign buyer enjoys full use and rights of ownership of the property in order to purchase, sell, lease, use, bequeath, improve, transfer and encumber. The term of the bank trust is 50 years and is renewable.
2. Equitable Title
Through the establishment of the bank trust, the Mexican government gives foreign investors the same rights of ownership as Mexican citizens. However, as explained above, the foreign investor never receives fee simple title within the restricted zone. Under a bank trust, the beneDiciaries (foreign investor) have “equitable title” while the trustee (bank) has legal title.
3. Fee Simple Title
Unlike the purchase of property in the restricted zone, it is possible for the foreign investor who decides to purchase property with-­‐ in the interior of Mexico, to hold direct title (fee simple title) to the property.
25
4. Ministry of Foreign Affairs
Mexico’s foreign investment law requires all foreigners to apply for and obtain a permit from the Ministry of Foreign Affairs prior to contracting to acquire real estate in Mexico. In the case of a bank trust (Dideicomiso), the bank, as trustee, must get a permit from the Ministry of Foreign Affairs to establish a real estate trust and acquire rights on real property located within the restricted zone. The Ministry of Foreign Affairs must grant any petition for a trust permit that complies with the stipulated requirements within 5 working days following the date of its presentation to the Ministry's central ofDice in Mexico City. It must be granted in 30 days if the application is submitted to one of the Ministry's state ofDices. The Ministry of Foreign Affairs must conDirm the registration of any property acquired by foreign-­‐owned Mexican corporations a maximum period of 15 days following the Diling of the petition.
5. Notario
In Mexico, the ofDice of a notary public (notario publico) is far different from a notary in the United States. A Mexican "notario" is an attorney who, after practicing law for at least 5 years, must pass further examinations. Only then is the notario commissioned for life by the government as a public notary. Although licensed as an attorney, the notario is not in a position to provide either of the parties with legal advice. The notario drafts documents, veriDies the facts therein, and records the documents with the Public Registry. The notario’s fee generally ranges between 1% and 2% of the value of the asset.
26
The role of the notario in real estate transactions is as follows:
• The buyer or the buyer’s attorney normally hires the notario
• The notario serves as an independent and neutral counsel to both the buyer and seller or lender
• The notario ensures their respective rights and obligations are met and takes all necessary steps to conclude a valid contract according to the mutual instructions of the parties.
In order to complete the transaction, it is necessary for the notario to obtain the following documents, which are legally required for the transfer:
1. A non-­‐lien certiDicate “CertiDicado de Libertad de Gravamen” (CertiDicate of Freedom from Liens and Encumbrances) from the Public Property Registry based on a complete title search.
2. A statement from the Treasury or Municipality regarding property assessments, water bills, and other pertinent taxes that might be due.
3. An appraisal of the property for tax purposes. The notario will also:
• Review the sales contract
• Freeze the property’s Dile at the local Public Property Registry (no documents may be 27
recorded in a property’s Dile during three consecutive thirty-­‐day periods)
• Perform the closing at the ofDice where the notario handles the transfer of the deed, tax withholding on the underlying real estate transaction, and the recording of the documents at the public registry
To ensure accuracy and because the notario represents the government, it is advisable for a foreigner purchasing real estate to hire their own real estate agent and an attorney to verify the Dindings of the notario.
6. Trustee
In Mexico, Dinancial institutions are the only entities authorized to act as trustees. Formerly, only Mexican banks could legally serve as trustees, however, insurance companies are now getting on board.
Trustees are required to provide their services on a Diduciary basis. It is important to remember, trust assets belong to the trust (not the trustee) and are maintained by the trustee for the beneDiciaries whose interest and wishes always come Dirst.
7. Bank Financing
In Mexico, the title guarantee trust is used as a vehicle to guarantee debts and has made real estate Dinancing more accessible to both Mexican and foreigners. This instrument enables Mexican and foreign lenders to take back a property in default more easily and expediently on loans to foreigners for Mexican properties.
28
The buyer and seller must designate the Mexican bank to act as trustee. If the buyers are obtaining Dinancing from outside Mexico they are required to have title insurance in order to obtain a guaranty trust.
8. Title Insurance
It is becoming more common for Americans to obtain U.S. title insurance on the purchase of Mexican real estate. Mistakes can be costly and result in signiDicant loss, and any title defect that can occur in the US can also occur in Mexico – especially to foreign buyers who are not experienced in purchasing Mexican real estate.
A title insurance policy issued on Mexican property is enforceable under U.S. jurisdiction to guarantee ownership rights. This provides comfort and security beneDit to foreign buyers and is the only safeguard against title pitfalls resulting in eventual Mexican lawsuits and monetary losses.
29
CHAPTER 6
Mexico’s Legal System—Some
Important Differences You Should Know
Mexico's legal system is based on “civil law” and was developed and evolved based on classical legal systems including Roman, Greek and French. The civil law system is based on "written law," which means the codes or statutes present the general principles governing broad areas of law. The judiciary in civil law countries such as Mexico, therefore, do not play the central role in interpreting and making the law as it does in common law jurisdictions such as in the U.S.
All laws regulating investment in Mexico are federal in nature and apply throughout the country. However, 30
the subject of ownership and real estate is a matter which corresponds to each of the 32 States and is governed under the 32 Civil Codes. The statutes or codes most relevant to foreign real estate investment in Mexico are:
• Banking Law • Foreign Investment Law • Tax Laws
Your best source of information regarding speciDic legal questions is an experienced Mexican lawyer.
The Importance of Legal Contracts In Mexico
In a formalized legal system such as Mexico’s, legal contracts are of great importance. Whereas in the U.S., fax, photocopied and even digital signatures are commonplace and widely accepted, that is not always the case in Mexico. Mexico puts great emphasis on original documents, and signing before a Notario is what guarantees the authenticity of the signatures.
It is important to note that an english translation of a Mexican legal document, however of7icial it may appear to be, is not accept-­‐ able in a Mexican court of law. As always, it is a good idea to read all contracts carefully, and have them reviewed by both a reputable real estate agent and a Mexican attorney.
Taxes
During the transfer of real estate, the notario is responsible for calculating, withholding and paying the 31
applicable taxes, which are established under local and federal laws. These taxes include:
• Property Acquisition Tax – this is a local tax (State or Municipal) and can range from 2 to 4% of the value of the property. The property acquisition tax is 2% in the state of Nayarit.
• IVA -­‐ Mexico has a value-­‐added tax of 16% (Impuesto de Valor Agregado, or IVA; pronounced "ee-­‐vah") on most everything. No IVA tax is due on the sale of land used for any purpose and structures used for residential purposes. If only part of the construction is used for this purpose, IVA tax will not be required to be paid on such part.
• Property Taxes – In Mexico, it is typically a requirement that all property taxes are brought current prior to the closing of the property.
32
CHAPTER 7
What About Financing?
While Seller Dinancing is still a common form of home Dinancing, the introduction of the Title Guaranty Trust is rapidly changing the face of real estate Dinancing in Mexico.
Historically, the main problem for buyers and sellers was the unavailability of credit. However, the credit situation has improved dramatically. Mexican banks are being purchased by foreign banks. Citigroup now owns Mexico’s largest bank — Banamex and this is the Dirst time in Mexico’s history that US Dinancial institutions are entering the Mexican mortgage marketplace. 33
Canada’s Scotian Bank now has over 350 Branches in Mexico.
Real estate has never been more accessible to both Mexican and foreign buyers. However, current Interest rates (at the time of this writing) are higher than in the U.S.
It is usually easier, faster, and less expensive to get Dinancing in the U.S. and Canada for your property purchase in Mexico, than using banks located in Mexico — even if there is a branch in Mexico.
34
CHAPTER 8
All About Negotiation: 5 Insider Tips
Successful Buyers Use To Get The
Properties They Really Want
Negotiating is a way of life in Mexico. Mexicans are good at it, they expect it and they enjoy the process. Successful foreign investors should understand this and realize the importance of respecting and participating in the negotiation process. Here are some insights to keep in mind during negotiations with your Mexican counterpart:
35
1. Communication: If you don’t speak or read Spanish Dluently, it is advisable to have a translator with you who is also well-­‐versed in Mexican real estate and social customs.
2. Slow Down: Most Mexicans expect relaxed socialization before getting to negotiations. Don’t rush. Take this time to develop the relationship, which helps to build trust and credibility. If you rush the process, you may lose negotiating power.
3. Expect tough negotiations: the Mexican negotiator typically likes to question everything and may put a great deal of time and importance on getting you to understand their viewpoint and conditions.
4. Focus on Win-­‐Win: Always factor in a margin of leeway so you can give a little. But again, don’t rush it and don’t put all your cards on the table too quickly. It will be to your advantage to let the negotiator claim a little victory in the end.
5. Remember: Put it in writing – the Dinal result of your negotiations should be recorded in writing and both parties should sign and retain a copy.
36
CHAPTER 9
Questions To Ask Before You Hire A
Real Estate Agent In Mexico
The reasons for hiring a good real estate agent with a proven track record of success are numerous and especially important when making real estate investments in Mexico. A good real estate agent provides the following:
• Real estate education, experience and integrity. • Knowledge of the features and beneDits of the area. • Understanding of market conditions and pricing guidance.
37
• ConDidentiality.
• Handling of volumes of paperwork. • Relationships with a network of other professionals. • Negotiation skills.
Here are some important questions to ask when selecting an reputable agent:
1. What is your Real Estate Experience?
2. Do you have references and may I call them?
3. What strategy do you use for someone with my needs?
4. Do you have email and a toll-­‐free phone and fax number?
5. Do you have a website and do you post listings there?
6. What sets you apart from your competition?
7. Will you provide me with a list of reputable referrals (attorney, appraisers, title insurance, Notario, etc.)?
8. How much of your experience is in this geographic area?
9. How much of your experience is with the type of transaction I am considering?
10. What are your fees? 38
11. Are you in this area full-­‐time, all year -­‐ or just seasonally?
WARNING!
Don't use a real estate agent
who doesn't live in Mexico
full time!
39
CHAPTER 10
How To Locate The Ideal Property
Your real estate agent is your best friend and guide when seeking good properties. Your agent will be able to show you the homes that are currently advertised for sale, however, some of the homes that are for sale may not be advertised anywhere and won’t even have a listing sign on the property. You could drive right by your dream home or parcel of land and not even know it is available for purchase.
Mexicans use family and personal networks for doing business. So be sure your real estate agent is respected and very well connected in the community. If so, he or 40
she will have access to the right people to discover possible hidden opportunities.
Typical ways to Dind listed properties include:
•
Internet Listings (www.sayulitacoastalproperties.com)
• Listing signs on the property • Listings posted at real estate ofDices
41
CHAPTER 11
The “Smiths” Buy Their First Property A
Typical Step-By-Step Example
When we left off with the Smith’s in Chapter 1, they were ready to purchase their Dirst property in Mexico. They knew purchasing real estate in Mexico was well-­‐
charted territory for the foreign buyer, but they weren’t sure where to begin.
In the following example, we will guide you step-­‐by-­‐
step through the Smith’s Dirst real estate purchase right here in Sayulita.
42
Step One - Decide what you want
The Smith’s fell in love with Sayulita and knew this was the perfect area for them. After considering their options: the purchase of land to build a new home, or the purchase of a condominium or a single family home, they decided on Dinding a single family home nestled in the hills so they could enjoy both the lush foliage and the magniDicent view of the PaciDic Ocean.
Step Two – Find a reputable real estate agent
Even though there are many real estate ofDices in Sayulita, the Smith’s wanted to Dind the right Dit for them. Their prior experience stateside had taught them that the largest real estate ofDice wasn’t necessarily the best. They were looking for a friendly full-­‐time agent who was experienced with an understanding of the area and the culture. They also wanted an agent who was trustworthy and had excellent negotiation skills. They settled on Sayulita Coastal Properties.
Step Three – Get financing in order
The Smith’s wanted to pay cash for their property in Sayulita. However, many people choose to take advantage of the ability to Dinance their property under a Title Guaranty Trust (as discussed earlier). If so, begin shopping for rates and terms and prequalify. Seller Dinancing is possibly available.
Step Four – Visit Properties
After spending months looking at listings online, the Smith’s Dlew down to see listed properties with their real estate agent. It is important to see the properties in 43
person, if possible, instead of purchasing the property site-­‐unseen. The Smith’s kept track of each property they viewed and before long they found their dream home. With the help of Sayulita Coastal Properties, their transaction was completed.
Step Five – Enjoy your new home!
Because they bought an older home that needed some work, the Smith’s decided to do some renovations before they moved in. Their real estate agent, helped them Dind reputable local craftsmen to work on their property. The journey from tourists to expatriates was now complete and the Smith’s made a lot of new friends along the way. They learned that buying real estate in Mexico can be safe, secure and is fairly simple with the right professionals to guide them through the process.
44
CHAPTER 12
See How Easily You Can Own
Your Dream Property On The
Beautiful Nayarit Coast.
We hope you have enjoyed this book and found the information useful. As the leading real estate ofDice serving the entire Riviera Nayarit Coast, Sayulita Coastal Properties can help you locate and purchase the perfect property.
Sayulita Coastal Properties Specialize in real estate sales, Dinance, and development of residential, commercial and large scale land subdivisions—as well 45
as historic residential and commercial property restoration.
Our proven track record, knowledge and experience in serving the needs of the foreign real estate buyer, combined with our intimate knowledge of the Nayarit Coast, has earned us the distinction of being the most sought after real estate ofDice in the area.
Whether you are looking for a single-­‐family residence for yourself, or want to develop commercial property on a large scale, or just buy undeveloped land
—we can help you.
Our network of professionals and preferred local vendor contacts will save you time, money, and frustration. Plus, we have native English speaking and Spanish speaking agents on staff.
Unlike many real estate ofDices, we won't abandon you after the purchase. We go out of our way to make sure you know exactly what to expect before, during and after your purchase—and then we take care of the details and 'hold your hand' every step of the way.
Why do we do this? The answer is simple: we want to treat you like you expect to be treated. Buying real estate in Mexico doesn't have to be difDicult or stressful
—in fact, it can actually be exciting and fun — if you work with the right professionals from the start.
How To Reach Us
Our beautiful air conditioned ofDice is located in the heart of downtown Sayulita. If you are visiting nearby 46
Puerto Vallarta, we are just a short 35 minutes away. Our address is:
Sayulita Coastal Properties AV. Revolucion #32 Local-­‐C Sayulita, Nay. Mexico C.P. 63734
You can also call us toll-­‐free from within the U.S. (800) 743-­‐ 2616. Outside of the U.S. our direct phone number is Direct: 1+ (329) 291-­‐3759
You can also get more information and view property listings on our web site at: www.sayulitacoastalproperties.com
We received the following letter (see next page) from Gilles Ste Croix, of Canada. Mr. Ste Croix is with the famous Cirque Du Soleil, his story however, is not uncommon when it comes to buying real estate in Mexico.
Mr. Ste Croix found us after his search for a home on the Nayarit Coast with other real estate ofDices was unsuccessful.
47
48
Frequently Asked Questions
Reference
1. Can only Mexican citizens own real estate in Mexico? (see page 13)
2. Can the Mexican Government take away property whenever it wants? (see page 14)
3. Can foreigners buy real estate in Mexico only if they partner with a Mexican Citizen? (see page 17)
49
4. You can’t own property in Mexico. You can only lease it? (see page 18)
5. Is foreign investment frowned upon by the Mexican Government (see page 18)
6. Can Property in Mexico be bought and sold like private property anywhere? (see page 21)
7. What is Ejido Property? (see page 21) 8. Can Ejido property be converted into private property? (see page, 23)
9. What is Regularized or Title property? (see page 23)
10. What is a Bank Trust? (see page 24)
11. What is "Equitable Title"? ( see page 25)
12. Are there any situations where foreigners can hold direct title in Mexico? (see page 25)
50
13. Are there any permits required to buy property in Mexico? (see page 25)
13. What is a Notario? (see page 26) 14. What role does the Notario play during a real estate transaction? (see page 27)
15. Who acts as the trustee? (see page 28)
16. What is a Title Guarantee Trust? (see page 29)
17. Is title insurance available in Mexico? (see page 29)
18. Is a contract in english acceptable in a Mexican court of law? (see page 30)
19. Does the buyer pay any taxes? (see page 31)
20. Is real estate Dinancing available in Mexico? (see page 33)
21. What are the things that Americans should know about when negotiating for real estate in mexico? (see page 35)
51
Sample Closing Costs
52
Maps
Sayulita Map
For a larger, detailed version visit
www.sayulitacoastalproperties.com
53
San Francisco, Nayarit Map
(AKA San Pancho)
For a larger, detailed version visit
www.sayulitacoastalproperties.com
54
Real Estate Resources
Sayulita Coastal Properties
AV. Revolucion #32 Local-C
Sayulita, Nay. Mexico C.P. 63734
Toll-Free U.S. Phone (800) 743-2616
Direct: 1+ (329) 291-3759
Toll-Free U.S. FAX (800) 397-8718
Fax 1+ (329) 291-3762
55
56
"...GABRIEL GALLEGOS, is a native of this town, who is a
professional with vast experience and understanding of real
estate in Sayulita. Mr. Gallegos’ integrity coupled with his
intimate knowledge of how Mexican real estate transactions
are successfully conducted, help ensure buyers and sellers
avoid the costly mistakes that foreign, or part time agents do
not understand."
— Lic Hector Manuel Piña Ortega Mayor of Sayulita
Sayulita Coastal Properties is the leading real estate office on
the Nayarit Coast offering complete real estate services for our
buyers and sellers including:
•
Residential, Commercial, and Development
•
Access to long-standing network of professional contacts
including Title Companies, Attorneys, Mortgage Lenders,
and Notarios.
•
English and Spanish speaking agents on staff!
Sayulita’s First
Official Real Estate Listing Service
For The Following Areas:
Sayulita • Chacala • Higuera Blanca • La Penita • Las Lomas • Litibu Lo
De Marcos • Los Ayala • Patzcuaro Patzcurito • Punta De Mita Rincon
De Guayabitos • San Francisco (AKA San Pancho)
Let Us Help You Find The Perfect Property!
Our beautiful air conditioned office is located in the heart of
downtown Sayulita. If you are visiting nearby Puerto Vallarta, we
are just a 35-minute drive away. Our Address is:
Sayulita Coastal Properties
AV. Revolucion #32. Local-C
Sayulita, Nay. Mexico C.P. 63734
In Mexico: (329) 291-3759
Toll-Free Within The U.S. (800) 743-2616
www.sayulitacoastalproperties.com
57
First American Title Approved and Registered Attorney
Need A Real Estate Attorney
In Mexico?
Are you looking to buy or sell real estate in Mexico? If so, then you should contact Lic. Jessica Riedesser, at Riedesser y Asociados, S.C. They specialize in real estate law and provide honest and efDicient services for every kind of real estate transaction.
Whether you are a foreign investor looking to develop commercial real estate, or a private buyer looking for a second or retirement home, Riedesser y Asociados, S.C. can assist you every step of the way.
Specialties Include:
• Real Estate Law • Bank Trusts
• All Types of Contracts
• Immigration Services: Tourist to FM3 status non-­‐
working or working, FM3 to FM2 status non-­‐
working or working, Renewals FM3 and FM2 status, FM2 to Inmigrado (permanent residence).
Free Quotes For Clients Of
Sayulita Coastal Properties!
Call now for your free no obligation quote on all fees associated
with Bank Trusts, and all associated legal costs with closing and
escrow. Know before you buy! Call Now.
In Mexico: (322) 221-0724
Plaza Marina, Local B-8
Marina Vallarta, Mexico
58