Couple of buying questions

M

Miakko

Guest
Do you need a FM2 to purchase property in RP?

Has anyone heard of this type of language in a purchase agreement: Occupancy / possession shall be delivered to Buyer on pre-close date.

What type of timeframe is average from time of purchase agreement acceptance to closing (property currently does not have a trust setup)?

Any thoughts on whether it's worthwhile to purchase title insurance?

Thanks
 
Roberto

Roberto

Guest
Miakko said:
Do you need a FM2 to purchase property in RP?

Has anyone heard of this type of language in a purchase agreement: Occupancy / possession shall be delivered to Buyer on pre-close date.

What type of timeframe is average from time of purchase agreement acceptance to closing (property currently does not have a trust setup)?

Any thoughts on whether it's worthwhile to purchase title insurance?

Thanks
Click to expand...
Part of the issue of understanding the transfer process here in Mexico is that there is no formal closing event as in the US. Here is a typical process in a nutshell or I should say a taco shell !
1. Buyer and seller agree on a sales price. Could be through a realtor or not. Best to have it in writing to avoid misunderstandings but not required by any law. You are not required to use a realtor nor are you required to use an AMPI approved form for any purpose. At this point it is a private agreement between two parties, the buyer and the seller. Typically the earnest money is held by the realtor but there is no formal escrow account involved as in the US. 2. Buyer and seller and realtor if any meet with a Notario who requests and collects the information to establish that the property can be exchanged between the two parties. When satisfied the Notario writes a letter of instruction to the bank that will issue the trust. Typically the money changes hands at this juncture but the Noratio does not collect or pass the money. Br and sellr If both parties agree to the Notario that is all it takes. If a realtor is involved they will collect the money, take their commission, and pass the balance to the seller. At this point most say the property ownership has changed hands and the buyer takes possession. At this juncture there is not a completed bank trust in the name of the buyer, but the Notario will draw up the bank trust and submit it to the bank for their final approval. This final process can take many months in the mean time the buyer is in the house and is de facto owner and the seller has been paid in full. Be prepared to provide the same documents several times, like current utility bills and valid FMT. Title insurance here is different from in the US, most do not bother with it. If a Notario certifies the sale and transfer it is generally accepted that there are absoulutely no title issues that a policy might protect agains.
 
M

mis2810

Guest
Thanks Roberto That answer helped me a lot. what about when there is no trust needed and the seller is carrying financing How does that change the process?
 
Roberto

Roberto

Guest
As I understand it, all still needs to be processed by a Notario, except that formal processing will take place after the selling/ financing agreement is satisfied. If the property is held in a Mexican Title you first need to be sure that it can be legally sold. If title was granted to a family by the government there can be restrictions. Also you need to be sure the person selling it is one and the same as the person named on the title. Get a financing agreement signed and agreed to by both parties. You could have a Notario draw it up or use one of the standard forms found on the net. I am pretty sure it can be recorded at the City but many avoid this as it causes some issues, expenses and delays at the time of transfer. If it is held in trust by the seller at the time of sale, the trust will remain in place until the note is paid, the bank will not even be aware of the sale. The annual trust fee needs to be paid and the utilities ( and liability to pay) will remain in the name of the trust holder. When the note is paid off there will be a charge by the bank to cancel the trust. Who pays that should be specified in the financing agreement. When the note is satisfied the Notorio takes over the process as similar above, except he processes to a Mexican title not a bank trust and it should be less money in closing fees. Be aware that there apparently have been some changes made to real estate transactions and the responsibilities of the Notario in this process. Talk has been that the money will have to pass through a Mexican bank and not directly from buyer to seller as it has been. This is designed to interfere with money laundering. How that might effect a future 'slosing' is indeterminate until this process is described.


I am neither abogado or a licensed realtor. The above description is based on 7 years or so of observing a variety of real estate transactions and may not be completely accurate but should indicate the issues that need inquiry and attention. You have to go with the Notario, no one else can make a transfer. Know also that AMPI has nothing whatsoever to do with the legalities of real estate transactions in Mexico and membershiop does not guarantee anything. I will share some stories but only privately with you buying !!
 
C

Colombianbob1

Guest
Just a few things to add to this thread.

1. The transaction you are describing on buying property is VERY common in this market and very risky.

2. Bank Trust = Title or Deed - In the transaction described above the buyer doesn't have anyway to defend their property rights against 3rd parties until the title or deed is registered in the "Registro". (Recording Office).

While the buy sell agreement may be "legal" and the Buyer has possession, without the ownership being recorded, the Buyer would have a difficult time defending their rights against 3rd parties. Worst case is the seller sells to another buyer at a different notario and this deed gets recorded first. The 1st buyer would have a civil claim against the seller in a mexican court but no rights to the property. Not the best position to be in.

3. The seller has responsibility to pay any capital gains taxes on the difference of initial purchase price recorded on the last transfer of title plus some factor of inflation and the acquisition cost of the property.

There have been many a purchases in this market where a property was purchased over time, the money was paid to the seller in full, and when the buyer showed up to the Notario to transfer the property with a Limited Power of Attorney for the transaction from the Seller, the notario askes for the Capital Gains taxes and the seller is long gone and the buyer is forced to pay the Tax.

The best and safest way to buy purchase property over time in mexico in the restricted zone is with a warranty trust. The buyer and seller are both on the title and it is recorded in the Registro Office.

This isn't very popular because it "takes too long" and has a few extra cost because there will be 2 transactions on the property. One to initially record the deed and one more recording to remove the seller from the deed once the contract has been fulfilled.

Anyone who is smart enough to inquire about title insurance to protect their investment in Mexico, should investigate a warranty trust when buying mexican property in installments.

I don't practice real estate in Mexico anymore, but was on of the first licensed realtors in Sonora and graduated in the first diplomado class in Puerto Penasco.
 
Roberto

Roberto

Guest
The buyer should be responsible for any appreciation in the value of the property and increase in capital gains during the term of the note. As long as both buyer and seller agree and are aware of the eventualities it should be OK. IT is true also that lots could change in the legal transfer process during the term of a note.

Yes the Warrantee Trust is the best alternative but at this juncture I believe that no bank is offering a Warrantee Trust. An active member of this forum has sold with one and I know of one being processed but believe the bank has said no more will be processed. Bummer

Banking here is, well it's, ahhhh, ummmm, awful and completely counterproductive to growth.

I am not a realtor, never have been one and everything I post here is based on some 5 years of first hand personal experience observing transactions or on the other hand I could be just making stuff up !!
 
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