Invest in Mexican Real Estate and Buy a Vacation Home in Beautiful Puerto Vallarta

This is designed to be an informative summary and not formal legal counsel. Before you take any steps toward buying a home in Mexico, you should meet with a qualified Realtor® or lawyer.

It’s a common misperception that citizens of the United States or Canada can’t legally purchase property in Mexico. You can OWN it rather than merely lease, rent, timeshare, or borrow it. Keep reading…

A successful real estate investment requires following standard practices and procedures, regardless of whether you’re buying or selling in the United States, Canada, or anywhere else. Without authoring a whole book on the subject, I’ll do my best to explain how things work and offer suggestions for safeguarding your money and your interests. In my opinion, getting help from an expert is essential. It won’t cost you a dime, but it could save you a lot of trouble, cash, or your entire investment. Puerto Vallarta, Jalisco, Mexico, is one of the world’s most beautiful cities. Puerto Vallarta, Mexico, is very similar to Hawaii in climate, beauty, and friendliness, yet, it is much closer to home (for most people) and much more affordable. It’s easy to see why Puerto Vallarta quickly becomes a favorite among first-time vacationers. Indeed, we did. It is no surprise that so many people who fall in love with Mexico decide to uproot their families and relocate there. However, when they decide to make a real estate investment and then choose to work with the first person they meet who claims to sell real estate, we start to scratch our heads.

In Puerto Vallarta, Mexico, hundreds of people advertise themselves as real estate agents. Only a tiny fraction of them do this professionally, and even fewer have the most fundamental skillset. To begin, remember that selling real estate or acting as an agent in Mexico does not necessitate a license. Those of us who are not native English speakers know what this means! Is it possible that you would let a waitress operate on your heart? Why not have your gardener handle your income tax returns? Ridiculous, right? However, there is reason for optimism: the Mexican government and school system have recently begun acknowledging Real Estate as a Profession. Therefore, I expect to see the first legal requirements for Realtors in Mexico implemented within five to ten years. Verify the credentials of your Realtor or Real Estate Specialist with the National Association of Realtors (NAR) and the Asociación Mexicana De Profesionales Inmobiliarios (AMPI) before you purchase or sell property in Mexico.

A Primero Básico de Propiedad in México

The constitution of Mexico explicitly forbids foreigners from owning land in the restricted zone. Despite the foreboding moniker, the restricted zone consists of the entire Baja Peninsula and the area up to 100 kilometers (about 60 miles) from the borders and the land up to 50 kilometers (about 30 miles) from the Mexican coastline. Foreigners are permitted fee simple ownership of all other lands in Mexico. The Mexican government established a land trust structure called a fideicomiso (fee-day-ee-co-me-so) to avoid the trouble of amending the constitution (a poor proposal for any politician) while allowing safe foreign investment. A fideicomiso is established through a Mexican bank, which then acts as the trustee in possession of the property’s deed. The trust (and its assets) are held exclusively for the benefit of you and the people you name in the faith. By applicable legislation, you can build on, rent, lease, sell, or donate your land as you see fit. So, in all but name, you own the property in fee simple. The property is not a bank asset, which is excellent news. The trust assets are moved to a new bank if the original fails.

General Description of Steps

Brokers – Make sure your real estate agent or broker has at least the following credentials: experience selling real estate in Puerto Vallarta or Mexico for at least one to two years; a track record of at least ten closed transactions; membership in the Mexican real estate association A.M.P.I.; certification from the National Association of Realtors® (NAR); and, if possible, CONOCER certification (a standards-based competency certification given by the Mexican government). It would be best to double-check this with the relevant agencies or organizations or request certified copies from your Agent.

While many foreign buyers in Mexico pay in full with cash, an increasing proportion are instead financing their purchases with help from mortgage lenders back home. Mortgage firms and banks in the US and Canada may not all be willing to finance property purchases in Mexico, so it pays to shop around. Most sellers in Mexico would not accept a “subject to financing” in the agreement, therefore it is crucial to have your financing in place before making an offer. Your broker should be able to put you in touch with local financial institutions.

Finding the Home of Your Dreams Unless you have lived in a particular region of Mexico for an extended period, are fluent in Spanish, and are familiar with the local Real Estate rules and terminology, it will be pretty tricky for you to find the home of your dreams on your own. You’re probably browsing the local Multiple Listing Service (MLS) in a popular tourist destination like Puerto Vallarta to find your ideal house. You can start your search from the convenience of your home, but don’t forget to contact a Realtor when you’re ready to make a purchase!

Making an Offer – A competent real estate agent will draft a sales agreement and have it reviewed by a lawyer before submitting it. Whether or not your agent understands this depends on how thoroughly you examined him or her. Your agent’s fiduciary duty is, first and foremost, to defend you and your rights. Ensure the real estate agent you’re working with knows the property’s fair market worth and is skilled at negotiations. A thing’s perceived value is not necessarily the same as its actual value. After all, it is your money and not just any old money. Once the Sales Agreement is approved, your agent will provide a closing cost estimate based on the agreed-upon purchase price. In general, closing costs are between 4 and 10 percent of the purchase price (or even more if financing is required). Both fixed expenses and fees are expressed as a percentage of the total. The difference in price between the two properties may be due to factors other than the property itself,

such as the fixed costs, which may be the same for both. The higher the property price, the smaller the closing costs as a proportion of the sale price will be. All of the licenses, the property acquisition tax, legal fees, and other costs associated with establishing the trust will be covered by these funds. Neither the buyer nor the seller receives any of this money; it goes to the government and the Notario’s office (more on the Notario in a minute). Quick aside: you should refuse if the seller or agent requests you to report paying less than the agreed-upon price for the property.

Your real estate agent should always advise that you use an escrow service when making a significant transaction. The cost is approximately $550-$650 US, but this is the most secure purchase method and could be your best investment. The representative will assist you in creating this account. Escrow is standard in the United States but is foreign, primarily to Canadians. In short, an escrow account in the United States holds the down payment and any additional funds needed to complete the acquisition. All parties (buyer, seller, and Notario) must agree that the closing is a legal sale before any funds are released. Do NOT give the seller or agent any portion of the purchase price to hold in trust in their “trust account” before the close, regardless of how earnest they may seem.

Title Insurance – This may or may not be a wise idea, depending on the specifics of the sale or property. The average cost of title insurance is between $5 and USD 6 per $1,000 of the property’s worth, with an additional $900 needed to cover attorney fees. Learn more about title insurance’s benefits by consulting with your agent. No real progress can be made until after the close. The Notario or attorney will need several documents and identification from you, including a beneficiary statement (a fantastic idea because it prevents estate taxes and probate if you should sadly pass away). A power of attorney may be required if you are not physically present in Puerto Vallarta (or wherever the Notario is located) to sign the closing documents. Closings can take 30 to 60 days for a cash sale and 60 to 90 days for financing.

All parties have sent representatives to the closing. Both the Buyer and Seller have signed where required and confirmed the accuracy of the information provided. Once the Notario has confirmed that the monies have been wired to the Seller, he or she will sign off and transfer ownership of the property to the buyer. Transferring property ownership from one person to another requires the services of a Notario.

Annual bank trust fees might cost anything from $600 to $800 US. The only real distinction between financial institutions is in terms of cost. The initial annual payment is included in the closing costs.

Taxes on Real Estate are roughly $50 per $100,000 of market value at present.

Insurance for Your Home – Most Mexicans don’t bother with property insurance (concrete doesn’t burn readily), but you may want to look into it nonetheless.

Who or what is a Notario? In Mexico, only a Notario can legally transfer property. The Public Notario is different from its North American and European counterparts. One needs a degree in Mexican law, to be at least 35 years old, to have worked for at least three years in a public notary office, to have passed a rigorous exam, and to be appointed, for life, by the Governor of the relevant state to become a certified Notario. Do not think that the Notario is working for you in the same way that an Attorney in the United States or Canada would. The Notario’s fiduciary (first) responsibility is to the federal government. To be certified as a Real Estate Agent (“qualified” as defined above), an individual must always agree to put the interests of their customers first.

Contact [email protected] for a free and reliable property assessment in Mexico or any other questions about buying or selling a home in Mexico.


Rose Chavez works as a freelance writer and assistant to real estate agents in Mexico. Misael (Misa) Chavez, her husband of 16 years, is the love of her life. Since December 2007, they and their four girls have called Puerto Vallarta, Jalisco, Mexico, home. They spent 14 years in the construction and real estate industries in their “home town” of Vancouver, Washington.

Rose S. Chavez, 2008-2009 – All rights reserved. [] This Is Private Property; No Publicity Is Allowed.

CIPS, NAR, and AMPI REALTOR® Certifications for Misa Chavez

Groupe Eléments Immobilier

Embajada en Puerto Vallarta

322-168-7224 Mexicali cel.

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