Legal Q & A with Angel: Buying a Home in Mexico

Sherri and Neil from New York state write:

Dear Angel, we have been looking to buy a home in Mexico and have been looking at the Puerto Vallarta area and Los Cabos. As we are “big” on due diligence, we have found so many varying factors in purchasing here in Mexico, from the notary process (very different than at home), to bank trusts, and even just the ability to see a clean title.

Our main question here is, how do we best navigate these very confusing waters, what is the difference between a notary in Mexico and the USA, and, lastly, how can we help ourselves gain a level of confidence to move forward on a purchase? Gracias!

Angel responds:

Hello Sherri and Neil. First, congratulations on wanting to be an educated buyer! Often, I see members of the guest community who have “fallen in love” with a property and a lifestyle—and apparently left their common sense at the border. In my opinion, the largest obstacle to buying in Mexico is getting over the hump of not knowing what you don’t know. As your question is extremely pertinent and is actually three questions in one, let me break the answers down for you.

First, you are looking to buy in a beach area as “foreigners” (I like to use the term guests), and beach areas are in Mexico’s “restricted zone,” i.e., a zone within 100 km of the international border and 50 km of the seacoast. When buying a home in the interior of Mexico that is not in the country’s restricted zone, you can take the title (escritura) in your name, but with a beach property, you will need to hold ownership through a bank trust known in Spanish as a fidecomiso.

Ownership through trust is like owning property through an LLC. Imagine that you own a company, and the company owns a vehicle or property. You are technically the owner of the vehicle or property through the ownership of the underlying corporation. The trust gives you all the rights of ownership such as the right to sell, rent, donate, or bequeath.

Second, you ask about the difference between an American notary and a Mexican notario. Mexico is a civil law jurisdiction based on Roman civil law, under which a notario plays a much larger role than a notary in the U.S. and with greater responsibility.

For example:

Requirement to practice. A Mexican notario must hold a law degree with a specialty in notarial law, have at least three years of experience at a notario office, and pass a stringent final exam. Those who qualify and pass typically are appointed as a notario by the office of the state governor. In the United States, on the other hand, a notary does not need a law degree, and becoming a notary is a much simpler process involving filing the necessary documents, paying the applicable fees, and not having a criminal record. Liability. As explained above, in the United States it is not mandatory to be a lawyer to be a notary. A U.S. notary is therefore forbidden from providing any type of legal advice or drafting legal documents. In Mexico, on the other hand, a notario can provide legal advice, issue judicial opinions, oversee the drafting of legal documents and certify their legal validity, intervene in judicial proceedings, act as an arbitrator or mediator, etc. In Mexico, a notario can be held liable in both civil and criminal matters. As you can see there are great and numerous differences between the roles and the scope of legal powers of Mexican notarios and U.S. notaries.

As to your third question about gaining the competency you are looking for, there are three essential tools to use with all purchases in Mexico, the first being a title company with experience in buying and selling to “guests” of Mexico and who have experience in both the beach areas (restricted zones) as well as the interior. A title company usually charges a small fee to provide all the due diligence for you, i.e., items like certificates of “no-lien,” verification of title, back taxes, past-due HOA fees, probate, etc.

Second, a good, full-service title company will also have access to a legal staff to help you navigate your “buy/sell” agreements, deposits, penalty clauses, timeframes, establishing the escrow contract, etc. Other services might include acting as your power of attorney (facilitated through a notario) and processing your Secretary of Exterior Relations permits. A very good title service will also help you to plan and reduce future capital gains taxes and provide the immigration services needed to achieve residency in Mexico.

Lastly, it should be said that under Article 28 of federal law, buyers have the exclusive right to choose their legal representation, their “closing team,” and the notario who will give ensure the deed title is clear and recorded at the Public Registry. Don’t let yourself be bullied into using the seller’s “team.” Having your own legal representation is a key piece of ensuring a “proper sale” occurs.

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