Mexico's close proximity to the U.S., lower cost of living, great weather and laid back life style make it an attractive option for a vacation property or retirement home. As a foreign owner, there are some differences in how real estate transactions are conducted and closed.

Most real estate transactions in Mexico are purchased on a cash basis. With the passing of NAFTA in 1993, some financing is starting to become available from U.S. mortgage companies. Typically, it consists of a home equity loan on a U.S. buyer's primary residence. Developers will sometimes provide financing on their properties. On occasion, sellers may offer limited short-term financing, typically for a 2-3 year term.

First, when considering a purchase, an adequate title search of any property should be performed. This should include a lien search of the property, subdivision approvals and permitted development licenses. The lien certificate should show the owner of record, legal description and classification of property.

Even though the title searches may be in order, we highly recommend title insurance for all properties. In the U.S., as well as in Mexico, things may go wrong with title. Rather then going through the Mexican Courts, the issue of title can be resolved through the title company. The title company can also provide third-party escrow services for earnest money. The title company we utilize is Fidelity National Title out of New York.

In Mexico, a foreigner can purchase property fee simple (direct deed), except when the property is in the "restricted zone". The "restricted zone" consists of any property within 50 kilometers (31 miles) from the shoreline or 100 kilometers (62 miles) from the borders. This restriction includes all the property in Baja California Sur. Properties in the restricted zone may only be acquired through a Mexican Bank Trust called a Fideicomiso. The bank serves as a trustee, which holds the legal title to the property for up to 50 years. The trust is renewable indefinitely and as the beneficiary, you have full rights of direct ownership. This includes the right to use, improve, lease, mortgage or sell the property as well as transferring the property to heirs. The trustee is responsible to the buyer beneficiary to ensure the technical, legal and administrative supervision of the trust is upheld according to Mexican Law. In the event the bank went into bankruptcy, the Mexican government grants all the assets of the investors.

Closing Costs average 4 to 6% of the sales price. At the time you purchase property in Mexico you are required to pay a 2% Acquisition Tax, however this 2% is figured into the 4 to 6% closing cost fees.

For the security of all our clients we only work with a third party for all Escrow Services. At the present time the cost for Fidelity National Title or Stewart Title Escrow is $500.00 US and that cost is generally paid by the buyer or in some cases it's a shared expense between the buyer and seller.

For any additional questions not answered here, please do not hesitate to contact us.