The buying process in Mexico

The buying process is quite straightforward and we’ve set out the main steps in the process in the section below. You can also go to the Buyer’s Guide section for additional, more generalised information.

The process of buying a home in Mexico is much like the process in Europe or the US. However, the transfer of the property title and the funding may take a little longer to set up, as this is dealt with via a bank trust which is set up in your name.

Here’s a quick overview of the process.

Reserving your property

Once you’ve decided on a property, you sign the reservation agreement and pay a reservation deposit (around $5,000). This secures the property for you and fixes the price. The property is taken off the market and held for you whilst you arrange your finances

Loan application and pre-approval

Now that the property has been reserved in your name, our representative in Cancún will file your mortgage application and you’ll just need to complete the short loan application. When you have approval in principle, the bank will need additional documentation to accompany your full application (passport copy, bank statements, etc.).

Depending upon whether you want a euro or US dollar loan, your application will be sent directly to the bank’s office in Florida or Spain.

A representative from the bank will contact you to advise you as soon as your initial application has been approved.

Gather documents and open escrow.

The bank will give you a list of the additional documents needed for the full loan application. When you get back home you’ll just need to send these documents to the bank start the ball rolling and enable them to open an escrow account for you to make your payments.

Setting up the Fideicomiso (Bank Trust).

The mortgage provider will arrange the setting up of your Fideicomiso (fee-day-e-co-me-so; loosely, a Bank Trust) and will contact the notary and the bank in Mexico in order to deal with this on your behalf. Once the notary receives all the relevant documentation, they will apply to the Department of Foreign Affairs for the Bank Trust permit.

Searches

Whilst the above is happening, your lawyer will complete his searches and investigations. This includes, title search, overseeing the survey, checking that all the right licences are in place, obtaining relevant documents from the seller and ensuring the property is free of debt or encumbrances.

It’s vital that the developer has full title to the property and your lawyer will insist on seeing this as part of their conveyancing. For your peace of mind, our local due diligence team will have ensured that all our developments have the correct titles and licenses before the property is offered for sale.

Many purchasers now consider further protecting their investment by purchasing title insurance. We can help with this if you would like us to.

When the due diligence is complete and your lawyer is satisfied that everything is in order, you will sign the Private Purchase Contract and at this point you must pay the first of your stage payments (between 10% and 30% of the price).

When your lawyer has copies of the signed contracts and is satisfied that everything is in place, they will transfer the payment to the seller/promoter’s account.

The contract of sale will specify details of the property (location, description, dimensions, cost, etc.) and all the agreed terms of the sale.

Second Stage Payment

If you paid only 10% at the signing of Private Purchase Contract, you will make another stage payment of 20% within 90 - 180 days of your first payment.

Scheduling the documents for completion.

When the notary receives the permit for the Bank Trust, they will draft the deed, and prepare all the closing documents. They will also calculate the taxes due from both parties. A date will now be agreed for completion.

Completion

The sale is formally completed when the title deeds of purchase are signed in front of a notary and the final payment is made, the balance being 70% plus fees and taxes. Both the seller and the buyer must be present or they may appoint an authorised representative to sign on their behalf.

If you are funding your purchase with a mortgage, the mortgage deed is also signed in order that the bank will release the funds. Once signed, the notary will handle the formalities of registration of your title deeds at the land registry. He is also normally responsible for registering the sale for tax purposes.

The completion process generally takes from 45 to 90 days.