Frequently Asked Questions.

100 km from national borders and 50 km from the coastline. 

It is a trust system ownership sanctioned by the Mexican government and secured by the Central Bank of Mexico.

In very simple terms, the foreign buyer is the beneficiary of that trust.

It is 50-year perpetually renewable and transferable bank trust.

The beneficiary of the trust has ALL the rights commonly enjoyed by a Mexican owner (use, sell, lease, etc) 

It means irrevocable and absolute ownership rights to the property; the bank CANNOT sell the property without written consent of the beneficiary. The Mexican Bank Trust only holds the property title for the beneficiary but doesn't have any rights over the property.

It is important to mention that a lot of Mexican nationals go for a trust based ownership as it clearly states the beneficiaries in case of death.

The Notario Publico is an experienced lawyer appointed by the government who is essentially a government official. He/she is a neutral party in the transaction.

His/her responsibilities are to ensure the title deed is clear of all liens, encumbrances and or debts of any kind and recorded at the Public Registry and ensure the legality of the title deed transfer.

First and foremost, the lawyer will represent YOUR interest.

He/she will ensure there is no human error, that your property title is registered, that taxes and bills are paid in full. In addition, he/she can provide a Title Guarantee, submit your application for the various permits, set up appointments with the bank and obtain the survey of the property if necessary. Your lawyer will be your greatest ally and will guide you professionally through the whole process.

It is a Mexican Bank authorized by the government to act as Trustee or Fiduciario.

It is a three step process which starts with the Offer to Purchase, followed by the Promissory Agreement and the Irrevocable Trust Agreement.

Offer to Purchase:

Very Similar to an Offer to Purchase in the United States and Canada. 
It is an offer to purchase a property at a given price within a certain time period and is subject to review of the full documents. At this stage, a refundable deposit is held by the seller and is fully refundable if the buyer decides not to proceed. 

Promissory agreement:

This is not the final document, but it is legally binding and it outlines the details and terms of the transactions once all the negotiations are final.

The Irrevocable Trust Agreement:

The execution of an Irrevocable Real Estate Trust Agreement is the means by which title of the property is irrevocably transferred to the trust. 

The standard is to put a reserve deposit of $5,000 USD down which holds the unit(s) for a period of between 15 and 20 days. The deposit is fully refundable if the decision not to go through with it is made prior to the expiration of the reserve period. Once this time frame is up, a minimum 30 percent down payment will be required for most developments. However, there are some that offer a limited time offer of 10 and 20 percent.

Financing for Pre-Sale

This is a very attractive option, particularly for investors as the purchase price is lower, brand new, there is room for negotiation and customization of your apartment unit(s). There are also reasonable payment options during the construction process which often falls within the range of a 6-18 month delivery.

Typical payment plans are as follows:

i.) 30% down payment 40% during construction 30% upon delivery
ii.) 50% down payment 30% during construction 20% upon delivery
iii.) 80% down payment 20% upon delivery
Starting at 50% is often when a discount is given.

Developer Financing

There are few development companies that offer their own financing in the Mayan Riviera, however, they do exist. Some project offer up to 5 years of developer financing. There are also some options offering 36 month and 48 months financing plans. In certain interest rates can be much higher than a North American line of credit, however, if you’re unable to get a loan in Canada or the U.S. this may be the best option for you.

Yes, it’s possible to tap your self-directed IRA or 401(k) retirement funds. In other words, you may have a sum of money at your disposal that you weren't even aware that you could use.

Sounds like an amazing option doesn’t it? Well, it certainly can be. Not only do you have access to more money to buy that investment property, but you can also defer paying state and federal income tax on said property.

Having said this, buying real estate with your self-directed IRA funds is not without its setbacks. You can’t, for instance, buy your new home overseas, unless you want to pay full taxes and you can solely buy an investment property.

With your standard IRA or 401(k), a fiduciary custodian is responsible for your investment options. Through the IRS, this individual ensures that you follow the rules and invest your retirement money prudently. As a result, fiduciary custodians offer you a limited choice of investment options which are usually specific mutual funds.

However, by rolling over an IRA or 401(k) into a self-directed IRA, most of the investment restrictions go away, and you take on the full responsibility for your investment choices.

To elaborate on this important topic,  we want clients to be very well aware that titles will be issued once the construction is finished and it can take a few months to obtain them. Hence, the remaining balance of the purchase price should be paid when they have full ownership and that the delays for the deeds should be clearly stated in the final contract with penalties if the seller is late on the delivery of such deeds. 

Buyer and seller pay their own legal fees but the buyer pays 100% of the closing costs which is approximately 5.5% of the purchase price.

Closing costs – Breakdown

Notary fees: ~ 1-1.5% of the purchase price 
Acquisition Tax: ~ 3% of the purchase price 
Trust: Acceptance of the Contract: ~$5000 MX Annual Fee: $ 5800 MX
Permit Ministry of Foreign Affairs: ~$16000 MX 
Registration National Department of Foreign Investment: ~$3200 MX 
Other : ~ 1% of the purchase price
(registry fees, confirmation of title, certificate of no encumbrances, certificate of no property taxes due, professional assessment of the property value) 

Stop! We know what you’re thinking!

Yes,  the closing costs are higher in Mexico but let’s put this into context...

In the Mexico, an average of $600 USD a year is paid in property taxes.
In Montreal, Average Taxes: 1.62% Average Price of a home: $335 000
Taxes Annually: $5427 or $4039 USD 
In Vancouver: Average Taxes: $2.56/$1000 Average price of a home: $1 011 200
Taxes Annually: $2588.67 or $1926.82 USD 
In Texas: Averages Taxes: 1.9% Average Price of a Home: $177100 US ($237 940 CDN)
Taxes Annually: $3364.90 USD

In the long run, the low property taxes in Mexico will outweigh the closing costs in a few years.

Yes it is!

On average, the cost of internet and cable will go for $30 a month, the condo fees average form $100$ to $250 and usually include a vast array of amenities; the electricity is minimal unless you are not conscious of usage.