Have you Decided to Buy a Property in the Riviera Maya?
Learn about the Process you must Follow to make your Dream come True.
STEP 1 Formalize your Intention
Once decided to buy a property; You must formalize your desire to acquire the property by means of a “Proposal Letter” or “Offer Letter”. This is a document where the price and payment terms are specified.
If the seller accepts your proposal, he will give you a file with the complete documentation. Check with your lawyer that everything is in order.
STEP 2 Make a Downpayment
You must give a downpayment to guarantee your commitment. Depending on the property, they are usually requested from 5,000 USD, or 5% of the total value of the property.
STEP 3 Make a “Purchase Agreement”
They must gather the necessary documents from both parties so that the final title contract is prepared. Your real estate advisor will be present throughout the process and will help you obtain the records and all your documentation.
For foreigners, it will also be necessary to create a trust with a bank in Mexico.
STEP 4 Deed
As a buyer you can choose which notary you want to deed with. The deed of a property is carried out before a public notary, who is in charge of carrying out a good term, referring to the preparation of the property title and its registration before the public registry.
In Mexico, it is the only way in which, as a buyer, you will have the legal certainty of ownership before third parties. The average cost of a deed fluctuates between 5 to 10% of the value of the property.
Once the property title is ready for signing; It is necessary for the seller and you to be present. Are you buying a Pre Sale? In this case, the deed and final payment will be carried out until the delivery of the property.
And what if I am a Foreigner?
The documentation that a foreigner needs to buy is:
- Passport
- Proof of address from your city
- airport immigration form
- BANK TRUST
As a foreigner, the only way to register your property is through a TRUST also known as FIDEICOMISO, which is done with a bank established in Mexico. It is important to mention that it is the only legal and juridical way for the property to be in your name.
At the time the property is sold, the trust can be transferred (in the case of a foreign buyer) or simply extinguished (in the case of a national buyer). If after living in Mexico for a while you decide that you want to become a Mexican national, the trust is extinguished and a new Mexican deed is created.
>>> If you want to learn more about the Bank Trust or Fideicomiso read this guide.<<<
Other Factors to Consider
Whether you are Mexican or Foreinger, it is important that you consider the following:
The deed process takes time: The average time of the sale process can be from 20 to 40 days, from the moment all the documentation is entered; however: Quintana Roo being a state with a large number of real estate operations, waiting times are usually a little longer, or even delayed.
Form of payment: According to the Law for the Prevention and Identification of Operations with Resources of Illicit Origin (‘Anti-Money Laundering Law’) the payment of housing in cash will only be allowed if it is for 8,025 times the minimum wage of the Federal District, about 540,000 pesos .
The remaining money must be paid through some financial instrument such as check or bank transfer. “The notary is obliged to attest to the way the payment was made and will also have to keep a copy of the bank documents with which the payment was recorded.”
How to make a Deposit?
You can make a wire transfer or pay with your credit card.
Can I or should I get a Mexican ID?
If you choose to buy through a Bank trust there is no need to have a Mexican ID, ( later on you can apply to become a Mexican citizen if you want). If you are willing to create a corporation to own property you will need a Mexican TAX ID known as RFC.
Condo Insurance – How much per Month?
It is important to purchase insurance to complement the complex’s insurance policy. Before quoting a home insurance it is wise to get informed of the HOA policy, review the condo association’s commercial policy. The policy will typically cover the complex structure, common areas, and swimming pool. Read the fine print regarding what is included and what is your responsibility to cover. Do not assume you are protected by the complex´s policy. For instance, if your pipes leaks into another suite you will be responsible. Condo insurance do not cover your unit or your belongings.
Make sure you have rental insurance if your condo will be used as a rental long-term or even occasionally. Protect yourself from liability. Should a tenant be injured on your property you may be liable for their medical expenses plus lost wages. If you rely on your rental property income, you may want to include a “loss of use” risk in your policy.
When investing in property along the Caribbean or the Pacific Coast you should consider hurricane insurance, of course this will increase the cost of your insurance but your investment will be protected.
Insurance quotes may vary according to coverage but they range from $350 USD a year to $500 USD or more, once again, this will depend on coverage and the value of the property.
Condo Warranty from the builder – For how Long and How it Works?
By law in Mexico you will have one year warranty in the structure and finishings and also a one year warranty in the appliances directly with the manufacturer. All terms and conditions for your warranty will be included in your buyer’s contract.
If you are buying a resale you will not have any warranty, this property will be acquired as it is, once you have inspected and agreed to buy the property as it is. If you agreed to a remodeling with the seller, this must and will be included in the selling contract.
What is the Procedure to buy for Non Residents?
As an overview we can mention that it starts when the involved parties provide the information and documentation to the bank, along with the corresponding fees, so that it can request a permit before the SRE (Foreign Affairs Secretary). Once that the permit is granted, the bank sends it to a public notary to prepare the deed to form the bank trust. After the text of the deed is approved, an appointment to sign it is set amongst the parties.
There’s no maximum number of beneficiaries. The number and the names of the beneficiaries are decided by the purchaser of the real estate, and any person or legal entity can be designated as beneficiary. Also, as beneficiary you can designate the number of substitute beneficiaries.
>>> If you want to learn more about the Bank Trust or Fideicomiso read this guide.<<<
If you still have doubts, at 5th Ave Realty Group we will accompany you at every step so that your acquisition is safe and stress-free.
