TRUST is everything in the real estate business. You’re making one of the biggest investments of your life, and it’s imperative that you have full and complete trust in the people guiding you on that journey.
Proud members of AMPI (our National Real Estate Association), at Pacifico Property we only work with title properties, properties guaranteed to be safe investments for our clients. We guide new and seasoned home buyers through the process of buying property in Mexico, with complete transparency and with only our client’s best interests front of mind.
We understand that everyone’s wants and desires when it comes to buying property are as unique as the individual, whether you’re a first-time home buyer relocating your family to Mexico, or you’re investing in a portfolio of properties, you’re in perfect hands.
Purchasing a property is most likely the biggest financial decision you will ever make. Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully
General Information about Home Buying
Topic description: Thinking of buying investment property in Riviera Nayarit, Mexico? If you have reservations about investing in these areas, you’ve come to the right place. We’ll break down the home buying process in Mexico and go through the pros and cons of buying real estate in Punta Mita, Sayulita, San Pancho, and other surrounding communities.
From year-round resort-style living to leisure and recreation, the benefits of owning property in these communities are undeniable. But if the prospect of transacting in a foreign country makes you skittish, we’ll offer relevant information and professional guidance to help you navigate real estate markets like Sayulita, Punta Mita, and others.
Foreign buyers are hopelessly drawn to the natural beauty of Riviera Nayarit. If you’re considering buying property in the area, here’s what you need to know about the buying process in Mexico.
Deciding to Buy
When getting ready to buy real estate in Sayulita and the surrounding areas, be clear about your reasons for buying and set your expectations. This will help inform your decisions moving forward and help you avoid frustration. Once you’re clear about your motivations and expectations for buying, you need to define your dream property. This will help narrow down the search and allow you to make efficient use of your time and resources.
Preparation for Buying
Ejidoversus Fideicomiso in Mexican real estate
The Mexican Government gave all lands within its territory ejido designation, which refers to communal land meant for farming and agricultural operations by Mexican citizens, in 1917. These days, it is estimated that 55% of Mexican land qualifies as ejido. When buying property as a foreigner, you need to verify the status of the property in question.
In 1973, the Foreign Investment Law was enacted, allowing foreigners to acquire property in Mexico, with the exception of properties in coastal areas and border lands. This encompasses real estate within 100 kilometers of Mexico’s international borders and within 50 km of the coastline.
In 1992, Mexican lawmakers enacted a Constitutional Amendment in a move to regularize (Title) agrarian lands and allow these properties to reach their full developmental potential.
Through the Office of Agrarian Reform, the government provided a process of legal entitlement giving ejidatarios the legal right to convert land to private property and benefit financially from regularization.
In 1993, real estate sales within areas formerly off-limits to foreign buyers were legalized through fideicomiso, which is a long-term irrevocable bank trust between the buyer and a recognized Mexican bank. This agreement allows foreign buyers to acquire property with the same rights and privileges of a Mexican citizen, with exclusive use to build, remodel, and rent.
It’s also possible for foreign investors to hold multiple Mexican properties with a single fideicomiso (bank trust), will those properties to their designated heirs / beneficiaries, or transfer their real estate holdings to other foreign buyers in the event of a sale.
The fideicomiso will remain in effect for over 50 years. The trust agreement can be renewed thereafter. It can be established with one or several individuals as well as a legal entity (i.e. LLC).
How to buy Mexico real estate as a foreigner
There are many steps to consider when purchasing property in Mexico. This is where an AMPI Agency like Pacifico Property will protect your best interests every step of the way. Our BUYERS GUIDE combined with our 20-Point Buyers Checklist will provide much more information. But here’s a quick snapshot:
- Find the right property
From Nuevo Vallarta, through Bucerias and La Cruz, to the unparalleled Punta Mita Resort, Litibu, Sayulita, San Pancho, and north past Guayabitos and Chacala, we have a team of dedicated experts who call this region home and will be more than capable of narrowing down your most suitable property options.
- Make an offer to purchase
Although verbal agreements were recognized under Mexican law, it’s still advisable to make a written offer (i.e. an Offer to Purchase contract including clear terms, price, etc.) and to ask for a written acceptance letter. This can help prevent any confusion on the terms and conditions of the sale. The offer should also indicate the deadline for the seller to accept the offer. LOI’s, while not uncommon, can help expedite mutually acceptable terms, but aren’t legally binding.
- Draw up the contrato de promesa (promissory agreement)
This agreement details the legal property description, legal, rightful owners as outlined in the escritura (title), terms and timeframe for completing the transaction. Under Mexican law, the promissory agreement is binding for both parties. If the terms of the agreement are sufficiently met, walking away from the sale can have legal consequences. The Offer to Purhcase and Contrato de Promesa can blend to happen at the same time and this saves time and gets the property under contract sooner.
- Make the earnest money deposit in Escrow
Traditionally, your agent or attorney can hold your earnest money, but typically this will be held in an escrow account established by, and at the cost of, the buyer. Your purchase offer should include a clause that guarantees the return of the deposit amount in the event the promissory Seller doesn’t fulfill within a specified timeframe.
- Bank Trust (fideicomiso)
As a foreign buyer in the restricted zone, you’ll want to focus on titled properties either ready for trust, or already in trust. Bank Trusts are valid for 50 years and renewable thereafter. A buyer can assume an existing bank trust or commence with their own new trust. The benefit of assuming an existing trust, is that it can speed up the closing process and save a bit of money in the process. The benefit of starting a new trust is you start with a fresh 50-year term. Pros and Cons exist for each and are often dependent on the property. This is where your Pacifico Property AMPI Agent can advise further.
- Closing your real estate transaction
Closing can often occur in 60 days. Sometimes sooner, and sometimes later depending on the complexities of the transaction, and there terms previously agreed to between Buyer and Seller. We operated with the most competent and trusted Attorneys and Notarios in order to provide the utmost piece of mind. Inquire about personalized CLOSING COSTS consultation for a detailed summary of buyer closing costs.
Finding a Buyer’s Agent
Working with the right Real Estate Agent is essential to protecting your interests as a foreign buyer. Similar to NAR and CREA, there is a Mexican real estate accreditation body for licensure for agents in Mexico – Asociación Mexicana de Profesionales Inmobiliarios (AMPI). This organization is the country’s National Real Estate Professionals Association, which was founded in 1956 and holds its members accountable to its statutes and ethics codes. However, it currently isn’t a national mandate that Realtors be accredited. So be careful who you work with. Demand and AMPI-accredited Agency and Real Estate Agent.
Looking for Homes Fit For Your Lifestyle
There’s no shortage of stunning properties in Mexico. Whether you’re looking for a vacation home, to rent out in your absence, or a permanent residence, you can enjoy resort-style living in Punta Mita or eclectic, holistic, community living in Sayulita, San Pancho, and the surrounding communities. From luxury properties to beachfront homes, to remote jungle haciendas on a sprawling acreage, the market has plenty to offer foreign buyers.
Escrow and Appraisals
During escrow, the buyer will release a certain amount of money to finance the escrow account to demonstrate serious intent to purchase the property. Normally 10% of the purchase price. The seller in turn will commit the property to the escrow account. A third party escrow agency like STLA (Secure Title Latin America), or Armour Secure, will hold the funds for distribution after the terms of the Sales Contract have been fulfilled.
Closing the Deal
If you’re satisfied with negotiations, paperwork, and the terms set forth in the contract, you can close the deal. Your agent will help you avoid delays in the transaction by working with the most reputable and trusted Attorney’s and Notarios. Closing the deal puts you one step closer to securing your dream home in Mexico. Buyers need to budget roughly 5% of the purchase price in closing costs.
Once the sale has been finalized, all that’s left to do is move into your new home. Most homes are secondary investment residences and, as such, are sold fully furnished. If not, Pacifico Property works with some of the most recognized and sought after Interior Designers in the region.
Work with an accredited Realtor today
For much more information, download Pacifico Property’s BUYERS GUIDE and schedule an appointment to review our much more comprehensive, 20-Point Buyers Checklist. As one of our Buyers you can rest assured every last detail will be attended to, and in Mexico, there are many.