Perhaps you have spent years thinking about buying a condo in your retirement in a warm, sunny place or you are now working remotely and that has made the idea of owning a home abroad a potential reality.
Where is a good place for this? Mexico. Mexico is always a good idea. And Huatulco is an even better idea.
More recently being discovered as a sunny and safe destination for those seeking beachfront or ocean view properties as second homes, income-generating vacation rentals, or for a tropical retirement, the Huatulco real estate market has been undergoing some big changes, not only with the types and locations of homes, but who is buying them and where.
How to Buy a Condo in Mexico
Once you have found your perfect property, there are a few steps to follow before you become the owner. Get the information you need and work with a trusted and reputable real estate agent. Read How to Find a Oaxaca Coast Real Estate Agent for your Mexico Property Hunt. Here are the steps of buying a condo in Mexico.
Step #1 – Making a Serious Offer
The first step is to make a serious offer to the seller. You can do so by providing a promise to buy/sell. This letter of intent will define conditions of sale.
Step #2 – Signing the Promissory Purchase Agreement
The payment structure is defined in the promissory purchase sales agreement. The buyer must be clear on how they will pay. They will have funds ready and available according to the payment structure.
This agreement defines the percentage of down payment as agreed upon by both parties. Down payment percentages can vary depending on the type of sale: private home, development, predevelopment, etc. A typical down payment may be 20% but could run anywhere from 10 to 60%. If the buyer would like for the property to be taken off the market, a nonrefundable payment can be arranged.
The promissory purchase sales agreement defining payment dates and terms is signed by both parties and becomes a legally binding contract.
Step #3 – Finding a Notary
Notaries are used in Mexico for buying and selling property. Notaries have more competencies in Mexico than in Canada and the U.S. They are appointed officials and provide a skillset somewhere between a lawyer and a judge. Notaries must be involved in all real estate transactions in Mexico that are on private land. This ensures a good transaction between the buyer and the seller.
The buyer chooses the notary as they will pay the closing costs. Closing costs vary by state. In Huatulco, for example, closing costs run 5 to 8% of the purchase price.
Each party is separately introduced to the notary. The contract is then signed. When the notary starts work on the property file, they also start work on the bank trust with a foreign release purchase.
Step #4 – Bank Trust (Fideicomiso)
A bank trust (fideicomiso) is a legal instrument issued by the Mexican Government that allows non-Mexican to acquire properties in the “Restricted Zone” (the limit of 62 miles from the border and 31 miles from the coast).
This legal mechanism is established by a bank and permits foreign investors to buy and sell. It ensures their investment by granting them the same rights and obligations of a Mexican citizen. Fideicomiso beneficiaries have the right to use, lease, inherit, and sell the property to any buyer. A Fideicomiso is established for a period of 50 years, and it is renewable at any time. The implementation of the Fideicomiso is simple and should take from 60 to 90 days to set up.
Step #5 – The Closing
The buyer is ready to make the final payment because the property title is ready or the property is ready to hand over. Final payment is sent directly to the seller (a few days before as international transfers can take between 2 to 7 days depending on the intermediaries’ institutions. ) Both parties will sign in front of the notary. A Power of Attorney may be designated to sign for a party if they are absent or out of the country. The buyer is responsible for closing costs including property taxes. The seller pays capital gains.
If you have been considering real estate in Mexico and you don’t know where to start, our real estate agents can help you. If you’re curious about the difference between buying from a developer or a real estate agent, read our article here: How to Save Money: Developers Vs. Real Estate Agents in Mexico. Contact us today to find out more about the homes and condos for sale in the Oaxaca Coast area.