Legal Steps to Buy Property at Lake Chapala, Mexico

November 20, 2010

The Legal Steps to Buy Property at Lake Chapala, Mexico:
 
Legal Status in Mexico needed to buy property.
As long as you are legally in Mexico you can buy property here as a foreigner. I’ve sold homes to people here on a tourist visa they got on the airplane flying down.
Choice of Title:
You can own the property through a Mexican bank trust or in your own name. A bank trust (fideicomiso) is where a Mexican Bank holds he “legal title” and the buyer is the beneficiary of the bank trust.
Your interests in the trust are transferable. There are some advantages in crtain circumstances, but most people want to own property in our area by direct deed in their name.
Should you decide to own property in you own name, a deed called an escritura, must be prepared by a Mexican notary public. In the Mexican state of Jalisco where we are located it’s possible to name beneficiaries in the deed as long as they are your spouse, your parents or your natural children.
If you want your property to pass to others you should then have a Mexican will prepared to save on probate and other fees at the time of death.  A US will will work, but much better to have a Mexican ill done, if only to cover the property you own here in Mexico.

The Notario Publico:

There are great differences between the United States Notary Public and the ‘Notario Publico in Mexico. Yes, the name sound similar, but the jobs and authority are vastly different .
In the United States the notary public may be the local butcher, the new accounts clerk at the bank, the secretary at the office, or practice any other occupation and still hold a Notary Public Certification.

In Mexico, the (notario público) is a public official appointed by the State Governor. He has the capacity to attest and certify documents ( similar Notario Publico is the only official who can transfer land legally at the state level.

Some of the requirements for becoming a Mexican notary public are as follows:
1.    must be a Mexican citizen;
2.    must by thirty-five years of age;
3.    must have a law degree;
4.    must serve an apprenticeship under a practicing Notario.
5.    must take and pass an examination and then must wait to be appointed by the State governor.
There is supposed to be one notario for each 30,000 people.

Legal Documents involving land transfers

 
In Mexico, every legal document, such as deeds, wills, powers of attorney, constitution of corporations, establishment of trusts and other legal transactions must be made before a Notario in order to be valid. If the document is not notarized by a Mexican Notario Publico it’s not legally completed.
 
The Buyer’s Realtor will help you to find a Notario Publico as the buyer chooses the Notario Publico. For real estate transactions you do not need to hire an attorney as the Notario Publico (a form of an advanced attorney) is completely capable and legally authorized to carry out real estate transactions. A regular lawyer can’t transfer title.

If buying property from a developer, be sure that the Notario Publico checks to see that the developer has his permits for the development and for construction.

Have the Notario determine that the land is not ejido land (communal agricultural land). The right to use this type of land can be purchased, but is full of legal technicalities and I would not advise buying this type of land.

Insist on making all real estate transfer agreements before a Notario Publico.

 
The standard initial payment (Earnest or good faith money) in our area is 10% of the offered amount which is held not by the Notario but by the real estate broker working for the buyer in the broker’s escrow account (usually in a USA bank).

The Notario Publico will need full information from both buyers and sellers to the transaction: proof of full names, marriage certificates, proof of dates and place of birth, official identification with a photograph, (passport ), and your visa to prove that you are in Mexico legally.  Note: It’s possible to buy property here even on a tourist visa.

The Notario Publico needs from the seller: 1. his deed; 2. Up-to-date tax receipts, water bills, subdivision (fraccionamiento) fees, and any other public utilities bill, paid up to the date of sale.

 
The Notario Publico will determine capital gains taxes through an official appraisal (Avaluo) which the seller is responsible to pay unless he complies with the requirements of an exemption.

Closing the Deal

 
Cash or money changes hands the minute the seller signs over the deed, usually in the notary public's office. The buyer pays the Notario’s fees and other related closing expenses when the title is signed over.

The process is not over yet — the Notario Publico must register the escritura in the Registro Público d  la Propiedad (Public Registry of Properties). This normally takes a couple of months in our area.

 
The buyer receives a copy of the deed at closing and the official deed after it’s registered.
 
Of course as your Exclusive Buyers Only Realtor we will be handling most if not all of the leg work involved in all of this. This article is just so you know the steps involved.
 
We also help with changing the name on utilities and a number of other details like changing locks etc.
 
You will also receive a complete closing statement in English prepared by the your Exclusive Buyers Only Realtor’s selling Broker’s office accounting for every dime of your expenses.

Most real estate transactions in Mexico are not fraudulent. The fraudulent deals are rare and certainly not the norm (Extremely rare in the Lake Chapala – Ajijic area).

 
Any transaction done with a notary public should not have any problems, as he or she is legally responsible that everything is in order.
 
That being said you should of course be careful, ask questions and deal with reputable Notarios. Again, this is where your Exclusive Buyers Only Realtor can be a big  help to you as he/she is looking after your interests.
 
It’s his/her job to be sure you don’t get so overpowered by the natural beauty and climate of Mexico that you "throw caution to the wind" or "leave your brains at the border."
Title Insurance
 
Title Insurance is available, but most closings do not involve title insurance as it does add significantly to the cost of closing.
 
The title search made by the Notario Publico should disclose any potential problem. The  Notario Publico will not foul his good name by completing a transaction that he/she has any idea could be a problem and  will let the parties know immediately of any potential problems BEFORE it’s too late.
 
 Experienced professionals like your Exclusive Buyers Only Realtors at ChapalaClub.com  and his/her broker are there to be sure that all goes well.
 
Conclusion:
Just be diligent in doing your "homework" which includes checking the credentials of those who you choose to do business with and then asking questions about anything you don’t understand.
 
This is the best way to insure that you will have a successful transaction.
 
Have Questions, E Mail me at Sid@ChapalaClub.com.
 
Just put the word "QUESTION"  as the subject and this will help me find it easily and I'll respond right away.
 
Siempre tu amigo,
 
 Sid Grosvenor
  • Ruth

    Great information Sid. If one does not have cash to buy a home I understand it is still possible to buy a house like in the states with a down payment and monthly payments. What is the rule of thumb on that kind of transaction and what kind of interest rates are we looking at?

    Ruth

  • http://www.chapalaclub.com Sid Grosvenor

    Hi Ruth,

    The last information I had on mortgages in our area is that the interest rates are around 8.5% to 9 %,
    Down payments 25 to 30 %. Also need a high FICA score.

    Contact Spenser at the beow address for the latest information. He’s a friend.

    Intercasa Financial
    Mortgage loans for all
    Hidalgo #230
    Chapala, Jalisco
    US 805-689-9733

    Hope this helps. Sid

Email for more information:
Sid@ChapalaClub.com

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