First find a good agent!
Find an agent who has been recommended or who can put you in touch with people who have bought property with him or her. Diamante Realtors has been in La Paz for the last 15 years and is well versed in all aspects of buying property in the Baja.
Your agent should be registered with AMPI, the Mexican Association for Professional Realtors. Belonging to AMPI provides a guarantee of continuous training, oversight and upgrading of skills.
Figure out what you need and what budget you are comfortable with.
Be as realistic as possible with your budget and with your plans for the property. Are you going to use it 3 or 4 times a year? Or will you live here full time? Are you comfortable maintaining a large property? While many of us dream of a large home on the beach, a practical ´lock it up and go away´ condo might be your best bet.
Similarly, identify your neighborhoods in the same way. Do you like to walk everywhere? Or are you happier in big, wide, open spaces? Does the charm of a Mexican neighborhood appeal to you or do you prefer the manicured look of a luxury resort? Will you be working? Do you yearn to see the fish being brought in to shore, or are you happiest where there is a Walmart close by? Where is the nearest medical facility? How about driving? Or do you prefer to get around on foot? If you don´t know the neighborhoods, go out and drive around. Each neighborhood is different. Some are beach communities, others are posh and upscale, some are more family oriented etc. Again doing your homework helps your realtor find you the right house in Paradise.
Join a real estate tour!! Diamante Realtors offers free Real Estate tours in La Paz during high season. Call us for a tour 612 122 8363. These are low pressure, educational types of tours. We take people around to different neighborhoods and show them what’s available. We also explain the buying process, the bank trust, and answer questions from the group. It is a great way to learn a lot in a single morning!
Your agent will help you make an Offer to Purchase. This is usually done in the form of an “Offer to Purchase Agreement” (Oferta) or a Sales Contract (Contrato de Compra/Venta), which your realtor draws up.
All terms and conditions such as a house inspection, financing if needed, special requests, furniture etc. are included in the Offer or Sales Contract. Your agent, who represents YOU will present the Offer to the agent representing the Sellers. The Offer may be accepted right away, or it may go back and forth as a Counter Offer until a mutually agreed price is reached. Your agent should have told you at this point what your closing costs will be. Estimate 4 to 5% of the value of the property you are purchasing. The cost of the bank trust is in addition.
Set aside 10% as earnest money in “escrow”.
Once your offer is accepted in writing, you’ll need to send or wire a certain amount (usually 10%) of the purchase price as earnest money. You will normally be asked to send it to an Escrow account where it will be kept for you “in trust” until closing.
What is the lawyer doing all this time?
While you are sending the earnest money, your lawyer is working on the title search, the land transfer tax, and with the notary to prepare the Fideicomiso (if you are a foreign buyer). The Fideicomiso is your bank trust document which is in essence, your Deed or Title. It is a very important document and several copies should be made and filed with your lawyer, in your house, and perhaps in your home country.
Is title insurance important?
If you have a good lawyer, we don’t feel you need title insurance as it is a duplication of your lawyer’s work. The notary will investigate a property’s title to be sure it is free from encumbrances and that the taxes are paid. Before closing can take place, the Municipal Office issues a Certificate of No Gravamen (Certificate of no liens or encumbrances). This is a very important step. Without it, the title is not clear. Your Offer or Sales Contract should include a clause that will cancel the sale and refund your deposit, if clear title can’t be obtained.
Closing on the property.
Once you have assurances from your attorney and notary that the property’s title is good, you will be asked to wire the balance of the funds. Upon notification that the funds are in the escrow account, you will meet with the notary, the seller and your attorney for the closing. Your realtor should accompany you. You will sign the contractual documents and receive a copy of your Deed (Fideicomiso if a bank trust was used).
The Bank Trust.
Every non-Mexican purchasing property within 50 kilometers of the coastline must use a Fideicomiso to hold property. This is a 50 year bank trust, which provides all ownership benefits, but holds the property in a bank trust. These trusts have a validity of 50 years and are renewable. The cost for a bank trust is approximately 2,500 USD one time, and an annual maintenance fee of approximately 400 USD a year.
The Notary registers your ownership.
The transaction isn’t really complete until the Notary registers your deed with the land registry office. Be sure to follow up with the Notary that this step has been done. Note that because we are in Mexico, your property will be registered in Mexican pesos at the rate of exchange on the day of closing. Any gain or loss on that property, at the time of selling it down the road, will be calculated in pesos. After all, we are in Mexico and the peso is the legal currency.
When you have your Deed or Fideicomiso in hand, look for a seal and for a certificate of registration, which should be included with the documents.
With these papers in hand, you can go to the land-registry office where they will look at the registration number on the certificate and show you how the transaction has been listed in their books.
Written by: Heather Bórquez.