TalkBaja.com » Baja Real Estate Advice / Discussion » Before you even think about buying property

I am so lucky to have found this website. I have so many questions on purchasing real estate in Mexico. I will start with a few simple questions, but I am sure I will have many more as my Baja journey progresses.

1.What is the best way to find real estate to buy in a area you are interested?

2. If Mexican Real Estate agent are not licensed why use them? Do you need a lawyer to finalize your purchase even if you have a realtor?

3. How much does a bank trust cost? Are there monthly payments after the trust is done?

4. How much is Title insurance? What does it cover?

5. How much are the closing cost and what is it for?

Thanks in advance for the help?

Originally Posted by douglas117

I am so lucky to have found this website. I have so many questions on purchasing real estate in Mexico. I will start with a few simple questions, but I am sure I will have many more as my Baja journey progresses.

1.What is the best way to find real estate to buy in a area you are interested?

2. If Mexican Real Estate agent are not licensed why use them? Do you need a lawyer to finalize your purchase even if you have a realtor?

3. How much does a bank trust cost? Are there monthly payments after the trust is done?

4. How much is Title insurance? What does it cover?

5. How much are the closing cost and what is it for?

Thanks in advance for the help?

All good questions Douglas. We should be able to give you some help but it's too much for one or two posts. How you buy your property depends on whether or not you are a Mexican- so answers will vary a bit from your exact situation. We have buyers, sellers and Realtors on the site and hopefully they will give you some input.

1. I think most people will tell you to scout out the locations you are considering in person after doing on-line research. There is something called Baja MLS, but it's not like the MLS north of the border. When you drive through the area you will see a combination of private and Realtor for-sale signs. Write down the names and numbers and then go back on-line again to do your homework. Once you zero in on your area, I'm sure we can give you a few names of Realtors to work with. Many here will tell you to rent first. Another smart option is to do a lease/option on the house you want to buy first.

2. Why do you need a Realtor? I don't know. My Realtor sold us the lot, is an attorney to complete the legal sale and also the builder who built our house. It was a one stop shop for us, don't know what it looks like to use three different people. Someone here will though.

3. Once you set up the 50 year renewable Bank Trust you pay annually. Not sure the cost but it is better to own the property as a Mexican if possible so you don't have to deal with it at all.

4. Title insurance is of unknown value here. Some say it only covers the cost to research the title but I've read policies that cover more. What title insurance does not cover though- is any claim made in the Federal Zone (direct oceanfront sand properties) or any property that never had a legal land title issued to begin with (the biggest problem here). There are sample Land Titles posted on the site so yo know what to ask for and what to look for. There is also a sampling of the "Stewart Title Insurance" policy attached to this post that tells about coverage and exclusions. I'm not sure the cost. Trusted branded Real Estate names like "Stewart Title" in Mexico are NOT the same as their North of border associates and don't assume they are the same people with the same coverage protection- they aren't.

5. Real Estate transactions here are finalized by a "Notario". They are not the same as a notary in the USA. Our "closing" was in person with the land seller and we handed the Check across the table. I don't recall a long list of items to pay for- just the land, the Realtor commission and the fee for the Notario.

Good luck on putting together your buyer strategy. Let us know how you progress.

Originally Posted by douglas117

I am so lucky to have found this website. I have so many questions on purchasing real estate in Mexico. I will start with a few simple questions, but I am sure I will have many more as my Baja journey progresses.


2. Do you need a lawyer to finalize your purchase even if you have a realtor?

4. How much is Title insurance? What does it cover?



Thanks in advance for the help?

We have purchased and sold a few properties in Mexico. Nothing recently so I can't comment as to the cost of services.

As mentioned above, you don't need a lawyer to finalize the purchase, but In every purchase we've hired an attorney to review the draft fideicomiso, title documents, and all work done by the Mexican Notary. In every case the attorney wound up finding mistakes, or changing wording to make the document clearer.

One example I can remember is that in one sale, the Notary didn't mention the sellers wife in any of the documents. The attorney corrected it, gave a draft revision to the Notary, and the Notary changed the documents to include the wife and her signature. The attorney told us that if the wife hadn't been included, it could leave an opening for her to make a claim on the property in the future. Something simple, but I wouldn't have caught it. There have been other similar errors or irregularities that attorneys have caught also, but none of them come to mind right now.

The attorney we've used is : Vernon Penner http://www.mexicolaw.com/

He works well with Notaries and can suggest changes to documents without offending the Notary.

Along with the attorney, we also buy title insurance. It's just another means to check if the history of the property is as advertised, plus it offers some assurance that you won't fall victim to any 3rd party claims.

All these extras will most likely add around $2000.00 + dlls to your purchase, but to me, it's well worth the peace of mind.

BigWoo. Great post- thanks for sharing the info. From your post I would gather there is no set form to be used for a sales transaction. This seems like an ineffective way to make a transaction for the exact reasons you mentioned. Good on you for passing it by an attorney who knew how to "finese" the Notary. Seems to me the first step in identifying and resolving the land title issues for Baja would be making a standardized sales form that addressed the property's ownership chain and identifies all parties who could make claims in the future.

Maybe they have one by now... I know the bigger Mexican agencies have in-house training, not sure if that would trickle up to a Notary to get on the same page.

Sometimes* it is better to drive through the area you are interested in and look for private sales, or ask around. People know people..........also, you may want ask a local engineer or architect.

*YMMV = Your Mileage May Vary

Hey boss. Check your P.M.'s. I left a little blurb for you. RL.

Thanks to all of you who have posted... Keep the info coming....

Our place in Baja outside El Rosario is on former ejido land. My father-in-law (en paz descanza) was a mover and shaker in the local ejido and arranged for his four kids to each get a parcel of land. We have a document that is signed by the ejido to free it from the ejidos control and I know my wife and her brother went to Ensenada, Mexicali and I think they paid an attorney in Mexico City to help them get the properties "legal".

What that all means I haven't a clue.

Originally Posted by BigWooo

One example I can remember is that in one sale, the Notary didn't mention the sellers wife in any of the documents. The attorney corrected it, gave a draft revision to the Notary, and the Notary changed the documents to include the wife and her signature. The attorney told us that if the wife hadn't been included, it could leave an opening for her to make a claim on the property in the future. Something simple, but I wouldn't have caught it. There have been other similar errors or irregularities that attorneys have caught also, but none of them come to mind right now.

Also, check to verify that other family members don't have a similar claim on the property. The situation that comes to mind is an estate in which one family member has control, but several others may have a claim.

Originally Posted by Woooosh

All good questions Douglas. We should be able to give you some help but it's too much for one or two posts. How you buy your property depends on whether or not you are a Mexican- so answers will vary a bit from your exact situation. We have buyers, sellers and Realtors on the site and hopefully they will give you some input.

1. I think most people will tell you to scout out the locations you are considering in person after doing on-line research. There is something called Baja MLS, but it's not like the MLS north of the border. When you drive through the area you will see a combination of private and Realtor for-sale signs. Write down the names and numbers and then go back on-line again to do your homework. Once you zero in on your area, I'm sure we can give you a few names of Realtors to work with. Many here will tell you to rent first. Another smart option is to do a lease/option on the house you want to buy first.

2. Why do you need a Realtor? I don't know. My Realtor sold us the lot, is an attorney to complete the legal sale and also the builder who built our house. It was a one stop shop for us, don't know what it looks like to use three different people. Someone here will though.

3. Once you set up the 50 year renewable Bank Trust you pay annually. Not sure the cost but it is better to own the property as a Mexican if possible so you don't have to deal with it at all.

4. Title insurance is of unknown value here. Some say it only covers the cost to research the title but I've read policies that cover more. What title insurance does not cover though- is any claim made in the Federal Zone (direct oceanfront sand properties) or any property that never had a legal land title issued to begin with (the biggest problem here). There are sample Land Titles posted on the site so yo know what to ask for and what to look for. There is also a sampling of the "Stewart Title Insurance" policy attached to this post that tells about coverage and exclusions. I'm not sure the cost. Trusted branded Real Estate names like "Stewart Title" in Mexico are NOT the same as their North of border associates and don't assume they are the same people with the same coverage protection- they aren't.

5. Real Estate transactions here are finalized by a "Notario". They are not the same as a notary in the USA. Our "closing" was in person with the land seller and we handed the Check across the table. I don't recall a long list of items to pay for- just the land, the Realtor commission and the fee for the Notario.

Good luck on putting together your buyer strategy. Let us know how you progress.

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Are you Mexican Woooosh?? why no bank trust?

Can you recall your closing costs for everything? I have been told it is over several thousand bucks... may be a deal breaker for me at the moment. i will be SOB over the weekend so i will have more info when i return...

Lease Option is a good way to go in a buyers market like this one.

Wooosh, Would that be a pretty complicated contract?

The buyer gets a committed tenant/buyer, and the buyer gets into a place with not much more than a deposit down. Plus some percentage of your rent can go toward a down payment.

The way it works is that you BUY an option to buy the house, and that money is all that you have at risk. Fulfill the terms of the option agreement, and the money you spent on the option applies to the down payment. Bail out, and the seller keeps your option payment.
If you go this route I suggest buying an option for as long a term as possible, not less than 2 years.
Then ask that 100% of your rent apply to your down payment. (you probably won't get this, but negotiate as high a percentage as possible.
When we did this, we gained most of a 10% down payment between the rent and option payment, then asked the seller to carry a 10% second, which meant that we could get an 80% first, which was much easier and cheaper than was a 90% first.
When you go this way, your home search becomes more about the deal and less about the house. You might look at 20 places before you find one you like and will consider a lease/option sale.

It's a good time to get creative, especially with some American's 2nd home in Baja that they don't use, can't sell and are afraid to rent or leave empty.

Good luck!

Originally Posted by Islander

Lease Option is a good way to go in a buyers market like this one.

Wooosh, Would that be a pretty complicated contract?

The buyer gets a committed tenant/buyer, and the buyer gets into a place with not much more than a deposit down. Plus some percentage of your rent can go toward a down payment.

The way it works is that you BUY an option to buy the house, and that money is all that you have at risk. Fulfill the terms of the option agreement, and the money you spent on the option applies to the down payment. Bail out, and the seller keeps your option payment.
If you go this route I suggest buying an option for as long a term as possible, not less than 2 years.
Then ask that 100% of your rent apply to your down payment. (you probably won't get this, but negotiate as high a percentage as possible.
When we did this, we gained most of a 10% down payment between the rent and option payment, then asked the seller to carry a 10% second, which meant that we could get an 80% first, which was much easier and cheaper than was a 90% first.
When you go this way, your home search becomes more about the deal and less about the house. You might look at 20 places before you find one you like and will consider a lease/option sale.

It's a good time to get creative, especially with some American's 2nd home in Baja that they don't use, can't sell and are afraid to rent or leave empty.

Good luck!

Since this arraingment is unheard of down here, it will never get past the notary, and that would be required to have a contract.
One more detail....the parties entering into a contract in Mexico have to be current with immigration or the contract won't be enforcable in court.
All of the creative thinking you're putting into this is stillborn the minute it comes south through the border. Mexico is still very simplistic.

Originally Posted by DENNIS

Since this arraingment is unheard of down here, it will never get past the notary, and that would be required to have a contract.
One more detail....the parties entering into a contract in Mexico have to be current with immigration or the contract won't be enforcable in court.
All of the creative thinking you're putting into this is stillborn the minute it comes south through the border. Mexico is still very simplistic.

Au contraire.....the arrangement Islander suggested is done down here. The first casa I built here re-sold several months ago on a lease/option. As Islander described, the down payment is non-refundable if the buyer decides to opt out of the purchase for any reason & it is refundable if the seller decides to opt out of the sale.

Having bought 3 properties & resold two of those, I've discovered that the Notario will write up; or accept an independently negotiated legal sales/purchase agreement; for whatever terms & conditions both buyer & seller agree to in writing. As long as neither party is asking for any terms which would actually violate Mexican law, the Notario will write the contract for any terms & conditions buyer & seller agree upon.

Granted, lease/option probably isn't a common local practice & it might be difficult or impossible to get a Mexican seller to agree to this type of transaction, but it does happen down here & it is legal.

I actually did the reverse of this....I sold Casa #1 & rented it back from the buyer for a year while Casa #2 was being built. Buyer & seller (me) agreed to unique terms & the Notario wrote it all up into a legally binding document.

I agree with longlegsinlapaz.

I know of several people and properties that have or are in the process of changing hands.

Most of these properties are/were owned by Mexicans and the contract was with expat's.

They may not advertise the "Lease Option" but if it is presented in a format that can grab their interest I think your in.
As elsewhere there are people (Mexicans) who have money invested and want to move the property because it has been for sale for a extended period of time.

I also think it is a good option if there is serious thought about making a move but some uncertainty. It is much harder to jump in purchase then find out you don't like the move and now have to try and sell.

more great useful info! Thanks all.

I agree with Dennis on the lease-purchase agreement as it is not a familiar concept down here that I am aware of. The good news is that almost everything is negotiable down here and this is a buyers market...

Originally Posted by BajaGringo

I agree with Dennis on the lease-purchase agreement as it is not a familiar concept down here that I am aware of. The good news is that almost everything is negotiable down here and this is a buyers market...

Some things are never clear to US folks who bring south their US mindset that they have protections through a legal system that supports the weight of a man's word in a written agreement. It works well in the states, but not so much down here.
These agreements being discussed here are as foreign to the Mexico legal system as is our Bill Of Rights, and finding a lawyer to argue your case in a court that doesn't support or comprehend US laws will, at best, be next to impossible.

Any more, I couldn't care less. People don't listen to anything that they think they already know, so go back to the bar and formulate a clever contract....write it all out on a cocktail napkin, and just hope you don't get jambed up in court......which is an outcome that may be highly unlikely in a country where predator attorneys roam around like ants at a picnic.
Set yourself up for disaster and you probably won't be denied.

Originally Posted by DENNIS

Some things are never clear to US folks who bring south their US mindset that they have protections through a legal system that supports the weight of a man's word in a written agreement. It works well in the states, but not so much down here.
These agreements being discussed here are as foreign to the Mexico legal system as is our Bill Of Rights, and finding a lawyer to argue your case in a court that doesn't support or comprehend US laws will, at best, be next to impossible.

Any more, I couldn't care less. People don't listen to anything that they think they already know, so go back to the bar and formulate a clever contract....write it all out on a cocktail napkin, and just hope you don't get jambed up in court......which is an outcome that may be highly unlikely in a country where predator attorneys roam around like ants at a picnic.
Set yourself up for disaster and you probably won't be denied.

If what you are saying is "There should be no expectation of fairness" in Mexican legal maneuvers, I have to agree. Fairness and black and white ("right or wrong") in the legal system here seem to be secondary to who you know and how far you are willing to push them to support your side. It's not right. It's not helpful for investors, but it is the way Mexico operates and you shouldn't expect a fair outcome from an unfair system. jmho.

Having said that Dennis- If someone offered to lease/option your house with 10% cash down, would you do it?

Originally Posted by Woooosh

Having said that Dennis- If someone offered to lease/option your house- would you do it?

No...but mainly because of time constraints [how long will I continue to live to collect the rent] , and that I have to live somewhere.....this being my only house.
The more important reason is, I'm on leased land. In a court of law, I can't substantiate ownership of anything....not even the house.

Back to the original issue..........using a Notario doesn't necessarily guarantee a clean purchase. They have an important position....so important that they are , evidently, allowed to make mistakes, with impunity. The expropriation debacle here in Punta Banda illustrates this. There were many fidecomisos issued to the dispossessed, all through Notarios.
It seems that trying to be "legal" in Mexico is as large a gamble as is skirting the law.

Originally Posted by DENNIS

No...but mainly because of time constraints [how long will I continue to live to collect the rent] , and that I have to live somewhere.....this being my only house.
The more important reason is, I'm on leased land. In a court of law, I can't substantiate ownership of anything....not even the house.

Back to the original issue..........using a Notario doesn't necessarily guarantee a clean purchase. They have an important position....so important that they are , evidently, allowed to make mistakes, with impunity. The expropriation debacle here in Punta Banda illustrates this. There were many fidecomisos issued to the dispossessed, all through Notarios.
It seems that trying to be "legal" in Mexico is as large a gamble as is skirting the law.

All true. The problem of Notarios is compounded when other Notarios transfer the mistakes of one Notario into their work- making it all a twisted web of errors. Apparently Mexico has as secret formula where enough "wrongs" can indeed make a "right". The secret is in your connections and friends. If you can vilify the other party- you get bonus points.