Frequently Asked Questions

Unless otherwise negotiated, the buyer is responsible for covering the closing costs, while the seller is obligated to pay the capital gains taxes and any directly incurred legal fees, such as power of attorney (POA) fees, representation fees, legal advice fees, and trust cancellation fees (only when trust cancellation is strictly necessary).

Certainly, and the process is straightforward. You can designate your beneficiaries when the fideicomiso is initially established or when the rights of an existing beneficiary are being transferred. There are no specific requirements, such as a minimum age, other than providing a copy of their passports.

The fideicomiso is prepared and executed in Spanish. If you require a translated copy, I can connect you with a translator for assistance.

Your attorney may opt to be granted the authority to sign on your behalf during the closing process. Nevertheless, many attorneys prefer to supervise the documents remotely and do not typically attend the closing in person. This decision is one you should discuss directly with your legal counsel.

An Assignment of Rights of the existing trust (Cesion de Derechos) is a method used to transfer title by transferring the rights of the Seller’s existing trust. This approach is primarily employed in private property resales held in trust. In this scenario, the Purchaser takes on the Seller’s existing trust term and the existing foreign affairs permit. This can lead to slightly reduced closing costs and, at times, an earlier closing date because the Notary does not need to obtain a new foreign affairs permit. The decision on how to transfer title, either through a new fideicomiso or using the existing Seller’s fideicomiso, if applicable, is typically determined by the Notary and depends on the remaining term of the trust.

A fideicomiso is granted in 50-year increments, with the possibility of an automatic extension for an additional 50 years upon reaching the initial term’s end. According to existing regulations, when the combined 100-year term concludes, you will be required to apply for a new foreign affairs permit in order to extend the term further.

In accordance with The Treaty to Avoid Double Taxation signed by Mexico with several countries, including the United States, Canada, and the European Union, it is possible to credit the Seller’s capital gain, which is a federal tax in Mexico, in the United States. Any other potential deductible fees or taxes should be discussed with your US financial advisors.

No, property held in trust or fideicomiso by a trustee bank is NOT considered an asset of the bank. In the unlikely event that the bank faces financial difficulties, the property is transferred to another trustee bank. These regulations are federally mandated.

The trustee bank plays a crucial role as the custodian of the property held in trust. The signature of the trustee bank officer is necessary during the closing process, legal proceedings, property sales, and more. When selecting a trustee bank, the Notary typically considers the following criteria:

1. Location of the trustee bank’s empowered officer: It’s important for the trustee officer to be located in or near Los Cabos.
2. The current trustee of the property: In cases involving the assignment of rights of an existing bank trust, the Notary will utilize the same trustee bank that currently holds the property in trust. This is particularly common in private property resales.

The Trustee Bank imposes an annual maintenance fee, which typically ranges from $450 to $900 USD, including 16% IVA (Value Added Tax). In cases where property financing is involved, these fees may be subject to an increase. These fees are billed to your home address, and you can make the payment through wire transfer.

The only annual taxes applicable in Los Cabos are property taxes, known as “Impuestos Prediales.” These municipal taxes are typically released at the beginning of January and can be settled at the local tax office, located in San Jose near the Fire Station, and in Cabo San Lucas at the municipal offices. If you make the payment by the end of January, you generally receive a 15% discount, and by the end of February, a 10% discount is usually applicable.

ISABI, which stands for Impuesto Sobre Adquisiciones de Bienes Inmuebles, is commonly referred to as the acquisition tax. It is applied to every real estate transfer in Mexico and is typically calculated at 2% of the registered appraised value of the property. This municipal tax is settled by the Notary during the closing process.

Since October 15, 1981, the United States has been a participant in the 1961 Hague Convention, which eliminates the need for the legalization of foreign public documents. This international agreement streamlines the certification process for public documents, including notarized ones, intended for use in member countries (a list of these countries can be found at http://www.state.gov/m/a/auth/c1267.htm).

Under the Hague Convention, signatory nations have mutually agreed to recognize public documents issued by other signatory nations, provided these documents are authenticated by attaching an internationally accepted form of verification known as an “apostille.” The apostille serves as assurance that public documents issued in one signatory country are considered valid in another signatory country.

When you need to use a document in a foreign country, it is often necessary to have the notarization or certification authenticated. Many foreign jurisdictions require this authentication before they will accept and recognize the documents. Authentication involves verifying both the signature and the authority of the official responsible for executing, issuing, or certifying a copy of the document.

Only the owner’s name(s) is publicly recorded. Any personal information requested, such as date of birth, social security numbers, and address, is kept confidential by the Notary and Trustee Bank. The new privacy law safeguards all data, and every client is provided with a privacy law document to sign.

The local public registry, known as the “Registro Publico,” serves as the Registry of Public Properties. This office is tasked with keeping records of property ownership within the municipality. A contract is considered officially validated only after it has been registered with this registry. The responsibility for registering the transferred deed of title lies with the Notary.

The title to your new property is officially and irrevocably transferred on the day when all parties involved—Purchaser, Seller, Notary, and Trustee Officer—sign the title deed. However, the Notary must then proceed to register this newly transferred deed for public record, a process that typically takes around three months, sometimes a bit longer.

Once the deed is fully recorded in the local tax office and public registry, the Notary will prepare final statements and provide a copy of the fully registered deed to the title insurance company. The Buyer should collect the recorded deed from the Notary. It’s important to note that Notaries will only release these documents to individuals who hold title to the property, unless written notification or authorization is provided to do otherwise.

A portion of the itemized closing costs in a sale covers the legal fees associated with a federally appointed and licensed Corredor Publico (Federal Notary). This specialized attorney is engaged to ensure that all parties involved are fully protected under Mexican law and that the transaction is efficiently closed in compliance with both Mexican law and U.S. escrow requirements.

Although it is not required, except in some cases where financed. I strongly recommend the purchase of title insurance for every transaction. Title insurance is essentially an insurance policy for property ownership and serves as the only financial protection a buyer can secure to ensure their ownership of Mexican real estate.

The Notary, who plays a crucial role in Mexican real estate transactions, will oversee the closing process. Given that transactions in Mexico often involve more documentation compared to typical U.S. transactions, I will be assisting in guiding the sale from the agreement to purchase stage. My role includes handling the specific requirements related to closing a Mexican real estate transaction, coordinating due diligence, navigating the trust and closing procedures, explaining the contract to clients, and facilitating a successful closing.

The key parties involved in a Mexican real estate transaction are:

1. Buyer and their realtor and/or legal counsel
2. Seller and their realtor and/or legal counsel
3. The Notary and Legal Coordinator
4. Myself
5. The Trustee Bank

Property can indeed be titled in a Mexican Corporation without the need for a fideicomiso. However, it’s important to note that in such cases, the property cannot be utilized for residential purposes; instead, it must be used for income generation and investment purposes. I strongly recommend discussing this option with your legal counsel and financial advisors, both in the United States and Mexico, before making a decision.

A purchaser has the flexibility to title the property in a manner similar to how properties can be titled in the United States. This includes in their individual name(s) (either as joint tenants or tenants-in-common), within an individual or family trust, an LLC, or another U.S. corporation or partnership, among other options. The choice of how to title the property is best determined by the purchaser’s U.S. legal or accounting advisors, as the tax and legal implications in Mexico are consistent for foreigners, regardless of how the property is titled.

I generally recommend either titling the property individually or through an entity. It’s important to note that family trusts are no longer widely accepted by most trustee banks, and as such, we do not recommend them.

Unless otherwise specified in negotiations between the parties, possession of the property is typically transferred simultaneously with the transfer of title and the release of funds from to the Seller.

In most cases, the answer is no. In the majority of transactions, the Notary will arrange for a straightforward bank instruction letter along with a specific power of attorney for the purchaser and seller to sign remotely. These letters will inform the Trustee bank about each party’s individual intentions regarding the property purchase and sale, instructing the trustee to act on their behalf. Instead of the parties’ signatures, this letter will be attached to the fideicomiso at closing.

It’s important to note that powers of attorney (POAs) or any documents executed outside of Mexico will require apostilles (or certification in the case of Canadian documents) and translation by a certified translator.

The trustee bank is a Mexican financial institution authorized to serve as a trustee (Fiduciario). It must be a registered Mexican bank with a dedicated trust department. It’s important to note that properties held in trust are not considered assets of the bank, and the bank’s size does not necessarily correlate with the quality of trustee services.

When selecting a trustee bank, the Notary typically looks for a Trustee with a locally based empowered trustee officer to streamline the closing process.

Currently, you have several options to choose from for your preferred trustee bank. The following Trustee Banks operate in Baja California Sur (BCS): BBVA Bancomer, Banco Interacciones, ScotiaBank Inverlat, S.A., Banco del Bajio. Additionally, services from banks without local presence can also be considered.

In the ‘restricted zone’ of Mexico, which extends 100 kilometers from the border and 50 kilometers from the coast, foreigners can acquire real estate exclusively through a FIDEICOMISO (Trust). This trust arrangement, granted for a renewable term of 50 years, involves a Trustee Bank holding the property in trust for the beneficial use of the purchaser, who is the beneficiary. While the trustee holds the title as the ‘legal owner’ of the real estate, the beneficiary retains all ownership rights and responsibilities. This includes the ability to sell, lease, improve, mortgage, and even bequeath the property to heirs. In essence, the beneficiary enjoys all the rights they would have if they held fee-simple ownership.

The authorization for the fideicomiso is obtained through a permit issued by the Mexican Ministry of Foreign Affairs (Secretaria de Relaciones Exteriores) in accordance with Article 27 of the Mexican Constitution. The trustee bank is responsible for securing this permit on behalf of the beneficiary. In certain circumstances, a beneficiary can be assigned the rights of an existing trust held by the seller, provided there is a sufficient term remaining in that trust. This is known as an Assignment of Rights (Cesion de Derechos). The decision to establish a new trust or assign the rights of the seller’s existing trust is typically made by the Notary, often based on the remaining term of the trust.

The key parties involved in the fideicomiso are: the Trustee (Fiduciario), the Purchaser (Fideicomisario), and the Seller (Fideicomiente). The Notary (Notario) also signs the trust document, formalizing the transfer.

A Notary Public (Notario Publico) in Mexico is a licensed and highly skilled attorney certified by the state government and appointed as a Notary Public to serve as an official and impartial representative of the government. The role of a Mexican Notary is significantly more extensive and vital than that of a notary in the United States or Canada.

Here are some key points highlighting the importance and responsibilities of a Mexican Notary:

1. Extensive Legal Training: Mexican Notarios undergo rigorous legal education and must pass a demanding examination before being appointed as Notarios. They possess specialized knowledge in areas like real estate and contract law.
2. Public Officials: Mexican Notarios hold a unique status as public officials designated by the government. They function in a quasi-judicial capacity and are responsible for ensuring that all legal requirements and obligations are met in real estate transactions. This includes verifying the authenticity of documents, conducting thorough due diligence, and drafting legally sound contracts.
3. Impartiality: Mexican Notarios are neutral and impartial parties in real estate transactions. They do not represent the interests of either the buyer or the seller but instead work to safeguard the rights and interests of both parties, ensuring that the transaction adheres to the law.
4. Monopoly on Certain Transactions: Notarios in Mexico have a legal monopoly on specific legal acts, particularly those related to the transfer of real estate. They possess exclusive authority to record property transactions in the Public Registry.
5. Custodians of Public Records: Mexican Notarios are entrusted with the responsibility of maintaining and preserving public records and archives. They ensure that all documents pertaining to real estate transactions are accurately recorded and safely stored.
6. Responsibility and Liability: Mexican Notarios bear a high level of responsibility and liability for their actions. They can be held financially accountable for any errors or omissions that occur during the execution of their duties.

In contrast, notaries public in the United States and Canada typically serve as witnesses to the signing of documents, administer oaths, and verify the identities of signatories. They do not possess the same level of legal training, authority, or responsibility as Mexican Notarios.

The significant distinction lies in the pivotal role played by Mexican Notarios in verifying the legality of real estate transactions, providing an essential layer of protection and oversight throughout the process.

Initially, the closing date is the date specified in the offer to acquire or purchase agreement between the buyer and the seller. However, it’s crucial to comprehend that the final determination of the closing date rests with the Notary. Although every attempt will be made to adhere to the date agreed upon by the parties, a Mexican closing involves numerous variables and various stakeholders, including the parties, the Notary, and the trustee bank. These factors may impact the ultimate closing date.

The duration of a real estate closing in Mexico can vary based on several factors, including the complexity of the transaction, the readiness of all parties, and local customs. Typically, a straightforward real estate transaction in Mexico can take approximately 30 to 60 days from the acceptance of the offer to the closing date. However, more complex transactions or unforeseen circumstances may extend the timeline. It’s important to work closely with your real estate professionals and legal counsel in Mexico to ensure a smooth and timely closing process.

The duration of a real estate closing in Mexico can vary based on several factors, including the complexity of the transaction, the readiness of all parties, and local customs. Typically, a straightforward real estate transaction in Mexico can take approximately 30 to 60 days from the acceptance of the offer to the closing date. However, more complex transactions or unforeseen circumstances may extend the timeline. It’s important to work closely with your real estate professionals and legal counsel in Mexico to ensure a smooth and timely closing process.

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A Notario in Mexico, often referred to as a “Notario Publico,” is a highly trained and certified legal professional with specialized knowledge in real estate and contract law. They hold a unique and influential role in real estate transactions in Mexico due to their responsibilities and authority.

Here’s how a Notario impacts real estate transactions in Mexico:

1. Legal Authority: Notarios in Mexico are appointed as public officials by the government. They hold a quasi-judicial role and are authorized to perform certain legal acts, including the transfer of real estate.
2. Document Verification: Notarios are responsible for verifying the authenticity and legality of all documents related to a real estate transaction. They ensure that contracts and deeds comply with Mexican law.
3. Impartiality: Notarios are neutral parties and do not represent the interests of either the buyer or the seller. They work to protect the rights and interests of both parties and ensure that the transaction is legally sound.
4. Public Records: Notarios are custodians of public records and archives, which means they maintain and preserve documents related to real estate transactions. They record these documents in the Public Registry, making them part of the official public record.
5. Monopoly on Certain Transactions: Notarios have a legal monopoly on specific legal acts, such as the transfer of real estate. They have exclusive authority to record property transactions.
6. Responsibility and Liability: Notarios in Mexico have a high level of responsibility and liability. They can be held financially accountable for any errors or omissions in the execution of their duties.
7. Closing Process Oversight: Notarios oversee the entire closing process, coordinating various aspects such as the calculation and collection of taxes, appraisals, certificates of no liens, and more.
8. Protection of Parties: Their role is to protect the interests of both the buyer and the seller, ensuring that the transaction adheres to Mexican law and that all legal requirements are met.

In summary, Notarios play a central and critical role in Mexican real estate transactions. Their involvement provides an additional layer of protection and oversight, contributing to the legality and transparency of the process. Buyers and sellers should rely on the expertise and authority of a Notario when conducting real estate transactions in Mexico

Closing costs when buying new property in Mexico can vary based on several factors, including the location of the property, the purchase price, and specific transaction details. While the exact costs may differ, here are some common expenses associated with closing a real estate deal in Mexico:

1. Notary Fees: The Notary Public (Notario) plays a crucial role in real estate transactions in Mexico. They charge a fee based on the value of the property. This fee can be substantial.
2. Transfer Tax (ISABI): The Impuesto Sobre Adquisiciones de Bienes Inmuebles (ISABI) is a tax imposed on the transfer of real estate in Mexico. It is generally calculated at 2% of the property’s registered value.
3. Title Insurance: Many buyers opt for title insurance to protect their investment. The cost of title insurance can vary depending on the property value and the insurance provider.
4. Trust Fees: If the property is held in a bank trust (fideicomiso), there may be annual trust fees, and these might need to be paid upfront at closing.
5. Appraisal: An appraisal may be required, especially if the property is being financed. The cost of the appraisal can vary.
6. Legal Fees: Legal counsel may be involved in reviewing contracts and ensuring the legality of the transaction. Legal fees can vary based on the complexity of the deal.
7. Government Fees: There may be various government fees and permits required depending on the location and type of property.
8. Escrow Fees: If an escrow service is used, there may be fees associated with it.
9. Certificate of No Liens and Debt: These certificates, which confirm that the property is free of liens and debt, may need to be obtained at the buyer’s expense.
10. Recording Fees: The cost of recording the transaction in the Public Registry can vary.
11. Miscellaneous Expenses: There may be other miscellaneous expenses, such as translation fees, bank charges, and administrative fees.

It’s important to work closely with your real estate agent, legal counsel, and Notary to understand and estimate the closing costs specific to your transaction. These costs can add a significant amount to the overall purchase price, so budgeting for them is essential when buying property in Mexico.

In the context of real estate transactions in Mexico, a Notario (Notary Public or Notario Público) plays a pivotal and multifaceted role. Their responsibilities are extensive and critical to the legal and financial integrity of the transaction. Here’s a detailed overview of what a Notario does:

1. Document Verification: A Notario is responsible for thoroughly reviewing and verifying all documents related to the real estate transaction. This includes contracts, deeds, titles, permits, and any other relevant paperwork. They ensure that all documents comply with Mexican law.
2. Impartiality: Notarios are neutral and impartial parties. They do not represent the interests of either the buyer or the seller. Instead, they act as independent and unbiased officials who protect the rights and interests of both parties.
3. Public Official: Notarios are appointed as public officials by the government. They have a quasi-judicial role and are authorized to perform specific legal acts, especially those related to real estate, such as the transfer of property.
4. Monopoly on Certain Transactions: Notarios have a legal monopoly on specific legal acts, including real estate transactions. They possess exclusive authority to record property transactions in the Public Registry.
5. Verification of Legal Requirements: Notarios ensure that all legal requirements for the transaction are met. This includes confirming the legitimacy of the seller’s ownership, verifying the property’s status, and checking for any liens or encumbrances.
6. Calculation and Collection of Taxes: Notarios calculate and collect the necessary taxes associated with the transaction, such as the transfer tax (ISABI) and capital gains tax. They are responsible for remitting these taxes to the appropriate authorities.
7. Recording the Transaction: One of the primary functions of a Notario is to record the transaction in the Public Registry. This official recording establishes the legal ownership of the property and ensures its transparency.
8. Protection of Parties: Notarios work to safeguard the interests of both the buyer and the seller. They ensure that the transaction adheres to Mexican law and that all parties’ rights are respected.
9. Custodian of Public Records: Notarios are entrusted with the responsibility of maintaining and preserving public records and archives related to real estate transactions. They keep a secure record of all relevant documents.
10. Responsibility and Liability: Notarios in Mexico bear a high level of responsibility and liability for their actions. They can be held financially accountable for any errors or omissions in the execution of their duties.

In summary, a Notario in Mexico is a legal professional with specialized knowledge in real estate and contract law. Their role is pivotal in verifying the legality of real estate transactions, providing an essential layer of protection, and ensuring that the transaction adheres to Mexican law. Buyers and sellers should rely on the expertise and authority of a Notario when conducting real estate transactions in Mexico.