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Real Estate (Scroll Down to Read More)
Investing in Real Estate in Mexico by Canadians can take many shapes, being the most common Developing and Purchasing; let’s take a look at each one of them: 1. DEVELOPING REAL ESTATE. Some of the fastest growing tourist areas in the world are located in Mexico, offering big opportunities to investors and developers; The Baja, the Mayan Riviera and the Pacific Coast have some good opportunities you do not want to miss. Is the Canadian Market a target for selling your Real Estate products? Mexico has been a preferred tourist destination by Canadians and in some cases those trips result in Real Estate acquisitions; however, the number of Canadians who acquire Real Estate in Mexico is still considerably lower than the level it should be, mainly because of the lack of confidence they have about it. Surely you have a good team of lawyers, accountants and business advisors here in Canada (and you must!)…but Mexico is another country. Before going any further make sure you are covering all the business and legal aspects for your business in Mexico…the way it is done in Mexico; we can assist you in all stages of your project development in Mexico. 2. PURCHASING REAL ESTATE. Either if it is for pleasure, for investing or for both, buying of Real Estate is a major decision usually involving a considerable amount of money. Be careful in each and all steps of the process, no matter what part of the world you are purchasing in. Here are some tips to help you in buying real estate in Mexico and please feel free to contact us if we can be of any help during the process: Purchase contracts. Carefully read and review your purchase agreement focusing in the most significant matters like terms of payment, inclusions and exclusions, deadlines and cancellation penalties. Transfer of Title on Property and Due Diligence Make sure that the transfer of the property title is made by deed before a Notary Public (this is the most important stage on the purchasing process) and an extensive due diligence is performed on the property; at least, the Due Diligence must focus on verifying that: a) The identity of the seller is legitimate by verifying the existence and validity of identification documents approved by the Mexican government for each case; in case of Marriage, check the appropriate Certificate; in case of a corporation, verify that such entity is dully constituted; b) The seller has enough legal rights for selling the property, either holding valid unencumbered title to the real estate or holding a sufficient power of attorney; if the property is a joint or common tenancy, by making sure that all owners agree to the sale and sign. c) The seller has no obstacle for performing legal acts and specifically for entering into a Contract of Purchase; In case of a corporation verify that the person acting in its behalf has enough legal powers to do so; d) The previous transferring of the land title have been dully performed e) There is the existence of an original property deed; f) The property is dully registered on tax registries and there are no taxes or charges for water services pending at least for the last five years (period for which you are liable); g) There are no previous payments pending for utilities and public services (telephone, electricity, gas, phone, etc.) pending at least for the last two years (period for which you are liable); h) There are no liens attached to the property (for example an unpaid mortgage loan), by obtaining a certificate of no liens on the property (“Certificado de libertad de gravamen”). This is extremely important since under Mexican Law, liens are passed on with title of the land; Finally, make sure that the title transfer gets registered on the Land Title Registry. Bank Trust. If you are buying Real Estate on the “Restricted Zone” (50 kms from shores or 100 kms from borders) you require doing it via a Real Estate Bank Trust; in such case: a) Review the Bank Trust Agreement and make sure it has been done according to the specific information and special terms or conditions that you provided; b) Supervise that the Trust Bank in Mexico obtains the necessary permit from the Ministry of foreign affairs; c) Arrange for the settling of the Trust according to the requested terms. d) Supervise that the property is transferred to the Bank Trust, with you as the prime beneficiary e) Supervise that the bank trust gets registered on the Ministry of Economy Registry (Foreign Investment Section). Escrow Account It is desirable to pay the full price (or at least a significant balance) for the Real Estate once the Title has been transferred to the Buyer before a Notary Public in Mexico; however, the Seller may not want to transfer the Title before the whole price is paid. An alternative is to have an impartial third party holding the money in an “Escrow Account” and release it until the Seller transfers the Title; this option gives the Buyer the certainty that the Title will be transferred to him and gives the Seller the certainty that the money will be paid to him. Title Insurance Although most likely the Notary Public will perform a Due Diligence on the property you want to purchase, please be advised that it does not cover you if in the future someone claims to have previous rights on the land. You can arrange to cover yourself in such event by obtaining a Title Insurance on your Property: Generally speaking and depending on applicable terms and conditions, in case of a dispute the Insurance Company will represent you in court; if you happen to loose your property, the Insurance Company will pay you back (specific terms and conditions apply) Sincerely,
Luis Brasdefer, LLB, MBA
DISCLAIMER: The information contained in this web site is only intended as to provide some basic tips and although deemed to be reliable is not guaranteed. Mexico Consulting and Luis Brasdefer are not responsible for any decision taken based on such information. |
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contact@mexicoconsulting.ca
(604) 221 4422