How to Buy Property in Cabo San Lucas & Baja

9 Mar

Blog Note: We did not write this article. It was written by respected real estate agent Evelyn Pepper of http://www.remaxloscabos.com. Please check all sources and do your own research. However, this guide will give you a good starting point to purchasing real estate in Mexico.

As an investor in Mexico, it is good to know that procedures are constantly changing for the better. As the two countries become more similar in their real estate practices and procedures, buying real estate in Mexico will become even easier.

By Evelyn PepperImage

March 8, 2013 – Between the years 1517 and 1822 Spain held claim to the Mexican land. In 1822 Mexico declared independence from Spain but wealthy foreigners, the Church and the upper class Mexicans continued to lay claim to much of the land. Also during the 19th century, Mexico lost about 1/3 of their country to Texas in 1845, and in 1848 the territory that became California, Nevada, Utah, most of Arizona, and parts of New Mexico, Colorado, and Wyoming were purchased for $15,000,000.

In 1854, through the Gadsden Purchase, the U.S. acquired the rest of what is now Arizona and New Mexico.

With this constitution, México began the process of subdividing large property holdings (50 million acres in all) belonging to the Federal Government into smaller parcels. This provided the Mexican farmers with a beneficiary interest in the land. Entitled under the Agrarian Law, these government parcels, known as “ejidos,” are recorded in Mexico City.

The ejidatarios (farmers) can live, farm, homestead and construct dwellings on the property but they do not own it. These farmers have the use and benefit of the land, but they do not have title to it and therefore can’t sell, lease, subdivide joint venture, contribute, mortgage or encumber the property. In 1992, realizing the value of the ejido land and the development potential that would be created by allowing the owners to sell or lease the property to non-Ejido members such as foreigners, the Agrarian Law was passed. In other words, ejido owners had the right to take the land that they didn’t own, remove it from federal control, place it in the public land registry and convert it to private property thus allowing them monetary benefits.

Today, thousands of acres are being removed on a daily basis from the Ejidos and are added to the public lands and being sold or leased.

The Real Estate Buying Process

The process of buying real estate in Mexico is similar to that in the United States and Canada. A Notario is a lawyer whose position is similar to that of an American or Canadian judge, and NOT that of a notary public.

Their responsibilities include the practice of real estate law, accessing and auditing taxes. Notarios close real estate transactions similar to escrow officers’ duties in the U.S. & Canada, but with expanded powers. Due to the fact that the Notario is a neutral party, buyers are recommended to hire their own lawyers if they need representation.

As an investor in Mexico, it is good to know that procedures are constantly changing for the better. At this time, the U.S. based companies Stewart Title and Lawyers Title are offering title insurance in Mexico. This provides added security for foreigners.

‘Closing Costs’ run about 4-6% of the sales price. At the time you purchase any property in Mexico, you are required to pay a 2% Acquisition Tax, however this 2% is figured in the 4-6% closing costs fees.

Investing in Baja Real Estate

Beginning in 1993, the federal government of Mexico liberalized ownership provisions of all property within the constitutionally protected area known as the “prohibited zone.”

Prospective buyers outside of Mexico’s borders who seek to buy tourist developments such as housing, condominiums and time-share projects can now enjoy greater legal freedom and ownership rights.

The Fideicomiso or Mexican Trust

In 1972, the government of Mexico initiated a legal process of entitlement to protect foreigners known as the fideicomiso. Simply put, the Mexican government issues a permit to the federally chartered bank of your choice.

This allows the bank to hold title to the real estate as the “Trustee” for you the “Beneficiary.”

The law authorizes Mexican banking institutions as trustees to takes instructions only from the beneficiary of the trust (the foreign purchaser).

The beneficiary has the right to occupy, develop, improve, mortgage, borrow against and enjoy the property. The beneficiary may also will or sell the rights and instruct the trustee to transfer title to a qualified owner.

When first established, the term of a Bank Trust was for 30 years only. In 1989 it was made renewable for another 30, and in 1993 the term was extended to 50 years with a renewable period of 50 years. The renewal must be applied for within this 50-year term.

This renewal process can be continued indefinitely, providing for long-term control of the asset. Thousands of people from countries around the world own real estate in many parts of Mexico. It has been estimated that 300,000 to 500,000 Americans and Canadians spend over six months each year in Mexico, many of which own real estate

Peace of Mind Buying Real Estate in Mexico

The first and foremost thing a buyer must consider is whether the seller of the property has legal title to the property, and if so, whether the property can be legally transferred. An adequate title search of the property should be performed.

These title investigations should include a lien search of the property, subdivision approvals and permitted development licenses for the land, in addition to an extended search of the chain of title.

The lien certificate should show the owner of record, surface area and classification of property type, the legal description and whether there are any liens or encumbrances filed of record against the property.

There are several companies, U.S. and Mexican that provide title examinations or title reports. Companies such as Stewart Title Guaranty will issue Commitments for Title Insurance and subsequent Owner’s and Lender title policies after an extensive title search of the deed records has been performed and the real estate has been conveyed AND recorded in the public registry of property. Some of these companies can also provide escrow services for earnest money. Buyers should always ask the sales agent/broker if a bank trust could be obtained at the time of closing on the residential acquisition.

The Mexican real estate market is rapidly changing for the better with new projects that sell their properties with title insurance policies just as if they were being developed in the US or Canada.

Be sure to use a realtor that will only list and show properties with legal title. All documentation should be written in English and Spanish and offer and promote the option of title insurance on all the property sold.

About the Author

Evelyn Pepper has 14 years of real estate experience in Los Cabos and 28 years selling properties in Half Moon Bay, California. She is the owner/broker of Remax Los Cabos and serves the entire southern tip of Baja California Sur. Her goal is to educate buyers, as she believes that anyone considering the purchase of property in a foreign country needs to be informed. The combination of the above will enable the purchase of Mexican real estate to be a worry-free and profitable experience.

Contact:
Evelyn Pepper
http://www.remaxloscabos.com

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Top 10 Hurricane Tips – Batten down the hatches!

17 Jul

What does that mean exactly? What are the necessary steps that should be taken for hurricane preparedness?

Most things are usually on hand but should be stocked up and easily accessible. If it turns out the hurricane has changed its path, at least you will have known you were ready.

If your city or town is in imminent danger of a hurricane, most likely evacuation announcements have been made, and should be taken seriously. Here is a checklist to consider before you leave:

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1. First, get important papers and special photos in order and secured in plastic. Identification is difficult and time-consuming to replace: so be sure to include social security cards, birth certificates, high school diplomas or GED certificates, titles or deeds to property. Photos of special occasions or loved ones cannot be replaced, so including these is important as well.

2. Think ahead and take video or photos of your property before you leave. This will help later on with any Insurance checklist claims for damage that may need to be filed.

 

3. If staying with relatives is not an option, consider booking a room in a hotel or motel in another nearby town or state. Make sure to get directions and put them in the car ahead of time. It is easy to forget that piece of paper in the rush out the door. A cheaper route might be to find temporary hurricane shelters. Usually nearby towns not in the direct path of the hurricane will provide these for people in need.

4. Safety of your pets during a Hurricane. Taking your pets along is the most important thing individuals or families can do for their animals during a hurricane evacuation. Pets left behind can be injured, lost or killed during a storm, or in its aftermath. Pet owners should include their animals in their Family Hurricane Planning, before a storm threatens.

 

5. Designate a spot, in the hall closet, to keep a bag of clothes for each person in the household. Make sure to include sleeping gear if you plan on going to a temporary shelter.

 

6. Along with overnight clothes, consider stocking your Hurricane Kit with the following: extra cash, generator, batteries, flash lights, battery operated radio/television, bottled water, toilet paper, non-perishable foods such as cereal or crackers, canned goods, a can opener, a small cooler, candles, prescription medicines and any over-the-counter remedies you use regularly; and if you have small children – diapers, baby wipes, formula, baby food.

 

7. Count on the power being out for at least a day or two. Remember that ATM’s will be non-operating, so have at least some hard cash in your Hurricane Kit (see no. 6, above) to see you through the storm.

When TV and computer games no longer operate, board games or a deck of cards come in handy! Arts and crafts, crayons and downloadable coloring pages are always great distractions for the kids – so make sure you’ve stored some of these supplies in a tote bag or in the car trunk.

 

8. If you decide to tough out the storm, stay downwind in your home. This means if the wind is hitting the living room windows, go to the room opposite the living room.

 

9. Plywood is a ‘hot’ commodity for those of who decide to stay. However professionally made exterior coverings for the openings of your home is a better choice. Boarding up windows that will take the brunt of the wind and rain is a wise decision and Highly Recommended and actually required by Most Insurance carriers offering Hurricane Protection in Mexico.

 

10. Finally, STAY INSIDE. However tempting it may be to videotape or take photos of the storm, be sure to shoot from indoors – where it’s safe, and dry!

Hurricanes are serious business. Weather forecasters can only predict so much. Educate yourself and stay on top of weather updates in your area. National Hurricane Center Eastern Pacific

 

There is no harm in being overly cautious. In most cases where a hurricane is concerned, it truly is better to be safe than sorry.

 

*Be sure that your Mexican home policy Insures your home for hurricane damage and that you meet the requirements by your insurance policy.

This list is courtesy of our friends at West Coast Insurance Services (http://www.westcoastri.com). Please make sure to contact them for all of your Mexico insurance needs.

AMAR “The Baby Boomers 50+ Living Show”

30 May

ImageLake Chapala, Jalisco, Mexico: Coming up June 8th & 9th is The Baby Boomers 50+ Living Show promoted by AMAR (Mexican Association of Retirement Communities). Not only will there by exhibitors and sponsors showing all products related to retiring in Mexico, but it’s free to senior citizens. The event will have have folkloric dances, music, art exhibits, great giveaways and even lodging and transportation discounts. Interested in retiring in Lake Chapala or other areas of Mexico? Here’s more information; http://www.amar.org.mx/bbliving/inicio.html

Amar Guadalajara 2011 International Congress & Expo

31 Mar

Amar is preparing to carry out the largest convention on the retirement industry in Mexico. “Amar Guadalajara International congress & expo ” in the state Jalisco “The most Popular retirement destination in Mexico,” the days May 18th-20th , reserve your spot now!

What is the AMAR Guadalajara 2011 International Congress & Expo?

Is a major event organized by our association for Industry Senior Living & Care in Mexico. As an exhibition, meeting, convention and celebration event, our members, guests and participants will have valuable experiences that will contribute to the consolidation of social and commercial links with the 50+ active adult, businesses and government.

Exposure.

Companies recognized for their achievements in technology and services will present directly their most advanced projects and products from the most important retirement industry regions in our country.

Convention.

Top experts will present issues relevant to the sector in lectures, workshops and debate forums where different topics with officials and businessmen will be discussed.

Fiesta y Cultura.

The varied program of activities which the International Convention AMAR offers its guests will provide the opportunity to get to know various tourist and retirement destinations in Mexico. Amar Guadalajara 2011International Congress & Expo has an excellent event and artistic program that make the perfect balance for an unforgettable experience.

More information at www.amar.org.mx

2nd Annual Baja California Investment Forum: Sept 29-30

13 Sep

The 2nd Annual Baja California Investment Forum will be held in Los Angeles, California on September 29th and 30th. Here’s some information according to their website:

The two-day meeting brings together corporate executives involved in many business sectors (including tourism, real estate, medical and entertainment services) with government officials from both Mexico and the United States. The Second Annual Baja California Investment Forum will provide valuable perspectives from our panel of experts while also offering a platform for its attendees to discuss the changing issues affecting the real estate, tourism and health service industries of Mexico’s north-western region.

Mexico Real Estate Forum

25 Jul

Need a place to ask questions about real estate? About certain destinations in Mexico and their vendors? Somewhere to receive answers from both these same vendors and others who have purchased real estate in Mexico? Well we are announcing the opening of the Mexico Real Estate Forum. It’s free and all you need to do is sign and start asking or answering questions.

http://mexicorealestate.freeforums.org

10 Questions – Mortgages in Mexico

28 Jun

We recently submitted a series of questions to Elaine Duke of Your Mexico Mortgage. Ms. Duke is an expert in the Mexican mortgage field especially for Canadians and Americans looking for a second home or retirement possibilities. Please feel free to contact her with any questions via her website and please tell her were sent you.

Mexico Real Estate Blog (MREB) – What is the latest on the real estate market in Mexico? Is it  recovering?

ED -The last six months indicate that a recovery is certainly  underway in Mexico! We have been busier in the last 6 months than we were all  of last year, and in speaking to clients and developers, it appears that the  general public recognizes that the negative  “Mexico news” is primarily along the border not in  the resort areas.  Those of us that live there and visit there  realise that the perceived dangers in Mexico are also reality in the USA and  Canada. It is my belief that the Americans and  Canadians are realizing the affordability, natural  beauty of Mexico, the warmth of the Mexican   people, the culture, and the lifestyle, as well as the constantly  improving health care programs  and providers make Mexico one of the best  choices globally for retirement living and secondary home investments.   

MREB – Where are the hot spots which you are securing  mortgages in 2010?
 
ED – We are finding all of Mexico to be busy, our  top spots for financing this year have definitely been in  Puerta  Vallarta, Mazatlan, Puerto Penasco, Cancun, Playa del Carmen, Cabo, and La  Paz, however, Ensenada, Mirada and Lake Chapalla also interest the foreign  purchaser.

MREB – Tell us about your company “Your Mexico  Mortgage”?

ED – Your Mexico Mortgage was founded 4 years ago as an  independent mortgage brokerage specializing in mortgages in Mexico, Canada,  and the USA. We work in conjunction with Advanced Mortgages in Mexico which is  headquartered in Dallas Texas, and all of the loan processing is done through  the USA.  We have no affiliations with specific lenders, we are able to  shop the market for the best rates and terms for the clients in all three  countries and are often able to offer financing in Canada and the USA which is  much more attractive in terms of rates and fees than a Mexican mortgage,  dependant on the individual borrower.

MREB – What type of mortgages are  offered for properties in Mexico?

ED – We offer residential mortgages for  existing homes and condos, building lots, construction mortgages, and also  have access to commercial loans. Bank statement loans are also available for  those self employed individuals whose tax  returns may not show sufficient  income for a traditional mortgage.

MREB – What percentage of cash should  be expected to be paid for a property as compared to a loan?

ED – Currently, the  banks in Mexico lend up to 75% of purchase price or appraised value, however  we are able in some cases to add closing costs of 6% to the mortgage which  decreases the amount of required down payment. You can expect a downpayment in  the 25% range. In Canada, we are able to provide up to 90% of the value   of a clients existing home in Canada, in order to free up cash for the  Mexican purchase and similar guidelines are also available in the  USA.

MREB – How are the interest rates comparing to rates in the  U.S./Canada and also to the last couple years. Are they locked in?

ED – Everyone  wants to be Canadian right now!!!! Our rates here in Canada start at 1.80% for  a floating rate variable (floats with the canadian prime rate, currently  2.50%), and cap in the 4.39% range for a five year mortgage.( as of June 9, 2010, subject to change at any time).

In the  USA you can expect rates in the 5% range, and in Mexico the range is much  different the client’s credit score combined with  the down payment affects the interest rate they are granted by the  bank. We are seeing rates in the range of 6.50% up to 8.5% depending on the  term and credit score. The 8.5% range is a locked in mortgage for 30 years,  with the lower interest rates being floating rates. Mexico is a little  different as on the floating rates you are guaranteed this rate for the term (  3 or 5 years) and after that period your rate is reset for the remaining loan  period.  In Mexico the LIBOR (London Index) is used for loan pricing, 

MREB – What additional costs can you expect such as points and  origination fees?

ED – Depending on the lender, they may or may not charge a 1%  origination fee, when we shop and compare lenders this is taken into account  versus the different interest rates offered. You can expect origination fees  to be in the 3% range.  (Do you think you should  mention the additional Mexican fees that range 5-6%?)

MREB – What  does the buyer need to take care of in Mexico concerning their  mortgage?

ED – The most important factor here is to find a reputable company  with a good track record in Mexico. Check testimonials and ensure the company  knows their business in Mexico as it is a very different process than north of  the border. Never pay brokerage fees up front, we get paid when the mortgage  is advanced, other than a nominal fee for credit work, you should not be  required to pay any funds to the mortgage brokerage company until the mortgage  is processed.

Find out if the brokerage company will be with you through  the entire process, we take our clients through the entire process, including  appraisals, permits, notario process, bank trust, and all of the other  processes in Mexico at no additional cost.

Ask for an estimate of costs, we  have seen instances where a mortgage brokerage company will quote you a low  fee, however there may be hidden additional costs such as underwriting fees,  loan processing fees, and numerous other fees that do not form part of the  “low fee” offered up front. Any reputable brokerage company will be able to  present you with a closing cost estimate which will have all of the fees  disclosed on the estimate.
Find out how much you are required to pay to  start the process, and also how fees are disbursed for costs such as  appraisal, notario fees…etc. We use an escrow account which acts as an  independent third party, protecting your funds through disbursements.

MREB  – Is title insurance still readily available?

ED – Yes, title insurance is still  available in Mexico, and dependant on the property you are purchasing, may or  may not be an additional cost that you need to incur. We can help you with any  questions you have regarding title insurance and obtain this coverage if  required.

MREB – Tell us a little about yourself concerning  Mexico?

ED – After travelling to many of the hot spots of the world, I visited  Mexico five years ago for a vacation. Of course I immediately feel in love  with the country, the people, the culture, and all that Mexico has to offer. I  purchased a home in Mazatlan and realized that the process is very different  and foreign compared to what were are used to up north and can be a difficult  process.  I had been a bank manager in Canada for numerous years and  decided at that point that there was a need in Mexico for someone with my  qualifications to assist others through the purchase and mortgaging process. I  continue to travel to Mexico and work out of both Mexico and Vancouver Island.

2010 Mexico Resort Development Conference

18 Jun

The 5th Annual Mexico Development Conference will be held September 12-14, 2010 at the Hard Rock Hotel in downtown San Diego. This conference discusses the resort development market and future in Mexico including development and investment strategies in today’s market.

This 3-day event features presentations on everything from financing to project planning to investment opportunities plus networking sessions. For more information, go to http://www.mexicoresortdevelopment.com

Mexico Real Estate Directory

4 Jun

If you are looking for a list of Mexico real estate agents, developments and services from all destinations in Mexico, make sure you check out www.Mex-RealEstate.com. We have listed all real estate vendors we could find for you use. There is also a real estate forum so you can ask and answer questions.

 

Welcome to our Mexico Real Estate Blog

19 May

We hope you will find some useful information on this blog. We also offer a web directory of real estate vendors in Mexico and a Mexico real estate forum. You can visit those sites by clicking on the links to the right.