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

For all the reasons stated above Title Insurance in Mexico isnt worth the Ink and Paper it uses.
In the other world all contracts are Legal and Binding If the Author and other party are.
1. Of sound mind.??????????
2.Does not break any Local or Fedral Law.

I would certainly defer to the on-site experience of folks like Dennis and Wooosh in Baja real estate matters.

Stuff that we're pretty confident about in the US or Canada don't survive across the border.

Title Insurance us certainly one of those concepts, it just doesn't mean the same thing in Mexico that it does in the US.

That said, it is a buyers market, and it is worth exploring outside the box approaches to buying. Especially if the seller is located NOB and needs OUT NOW!

In a lease/option, you hold a lot of cards, one of which is posession of the property. typically at the end of the option term, an escrow is opened automatically. The tricky part is that the buyer is dependent on the seller making a cash deposit into escrow funded with the option payment and any accrued monies from rents to be applied to the down payment. If they don't make that deposit you may have little recourse, Perhaps do all the option/lease/rent payments through a US escrow company who will pass through what is due the seller and deposit what is due the buyer?

Perhaps I'm just exersizing a fantasy here.....probably the first time that's happened on TalkBaja, eh?

Originally Posted by Islander

Perhaps I'm just exersizing a fantasy here.....probably the first time that's happened on TalkBaja, eh?

Actually, it would do all who are less than intimate with the system a world of good to "exorcise" their preconceived notions before taking on the real estate establishment here in Mexico.

Originally Posted by DENNIS

Actually, it would do all who are less than intimate with the system a world of good to "exorcise" their preconceived notions before taking on the real estate establishment here in Mexico.

Agreed, and yet some of the experienced here have done lease/options as both buyers and sellers, and had it work out. So, who knows?

Some with experience say "No leased land", and yet, others have had it work out. So who knows?

Try anything, but cover your tail, get professional (not forum) advice and then get some more professional advice.

Originally Posted by Islander

Agreed, and yet some of the experienced here have done lease/options as both buyers and sellers, and had it work out. So, who knows?

True. It's a gamble although we've only heard of the successes. It would be interesting to hear how these dealings went while being scrutnized while in litigation. That was my only point, that when progress outruns the calendar down here, it probably won't have an agreeable outcome.

Originally Posted by DENNIS

True. It's a gamble although we've only heard of the successes. It would be interesting to hear how these dealings went while being scrutinized while in litigation. That was my only point, that when progress outruns the calendar down here, it probably won't have an agreeable outcome.

If a lease/option is doable and enforceable, it would be good to get all the info on what works and doesn't. A lease option down here would likely be a very long lease- since no traditional 30 year mortgages at 3.5% (LOL) are available. As mentioned- that's a long time to trust someone holding your money for you (the % of rent applied to purchase). You'd always worry about it. If the house you want to buy is vacant, you could play the safe route and rent it for a year- and then offer to buy it. But you won't get to lock in the price (presumably at the bottom of the market now?) and they don't get a big cash payment up front. (IMHO prices aren't going anywhere with the inventory of vacant coastal homes this high. High end golf course homes are probably the exception- the uber-rich got richer and it's a whole different market.)

All interesting and scary posts since I last checked the thread. So the best I can do is cover may ass in as many ways as possible in order to make a clean purchase and to avoid legal problems down the line.

One of the area i will be looking at to buy a lot is the shipwreck outside of Camilu, it seems to be a community of Americans right? Many of those homes have been there for years. So if there were problems with this land, it would have probably already happend..RIGHT??? I will also be looking in the San Quintin area. I dont expect to make any offers this weekend when i am down there. the bottom line for me is.. I will never have a beach front lot in the USA... and more people pay more for their car than I will pay for a lot in Baja. So in my opinion, the benefit out weighs risk.

Here are a few thing that i will do to cover my ass.

I am meeting with a real estate agent who has been in the area for many years that I have done reserch on he seems like he is good... I will PM you his name

I will get title insurance,

The Notario, lawyer, RE agent and any of my new friends here will look at the paperwork before i give any cash.

The bank will check the paperwork when I get the Fedi right???

What else can I do to make a clean purchase????

Originally Posted by DENNIS

True. It's a gamble although we've only heard of the successes. It would be interesting to hear how these dealings went while being scrutnized while in litigation. That was my only point, that when progress outruns the calendar down here, it probably won't have an agreeable outcome.

Very true, and a point well made.

Originally Posted by Woooosh

A lease option down here would likely be a very long lease- since no traditional 30 year mortgages at 3.5% (LOL) are available.

Nor is a "very long lease" available. By law, ten years less a day is the max for a lease.
As you well know, long term leases are offered every day, but they are meaningless and can't be enforced in court.
No other lease options either. You know....10 and 10 and 10 ad infinitum. It's all nonsense that the lessee has to be aware of because it's not up to the lessor to tell him that leases must be rewritten at the end of each successive ten years.......that is, rewritten according to the lessors specifications.

Now we all know why the word "gringo" translates to "sucker" in some circles.

Originally Posted by douglas117

I will get title insurance,

What else can I do to make a clean purchase????

I don't think you'll get real title insurance, but look into it. What underwriter in his right mind would cover this?


Here's one thing you should keep in mind, and it's just my opinion:
If an Ejido is even remotely involved in your aquisition of a piece of property, turn it down........even if it's free.
Then....pick up your toys and run as fast and as far away as you possibly can. Don't look back........just run.

At the risk of continuing the lease/option topic further than it deserves, I want to clarify what I meant:

Buy an 3 to 5 year option to purchase a home at a price you stipulate at the beginning.
Say you pay $5,000 for the option on a home you set the sales price at $100,000
Then you agree to a rent payment and set a share of that rent to be applied to the purchase price. In my experience I paid a slightly higher than market rent, but had 50% of the total rent applied to the purchase.
So if typical rents for a home like the one you are negotiating for are around $500/month, offer $750/month with $500 per month to apply toward the purchase.
So, after 3 years you would have paid $5000, plus another $18,500 from your monthly payment.
Thus you've paid the seller almost 25% of the purchase price.
In the US, this would set you up to get 75% financing, which is pretty doable even in todays tight market.
In Mexico you probably won't have the option for bank financing, so you would either need the seller to carry a note secured on the property, or find your own US-based financing of some sort.

I agree that this is stretching things a long ways, but I can also imagine a US or Canadian seller who just wants to have the responsibility to maintain and secure an un-used Baja home removed and replaced with some cash flow. The option locks you in more than if you were just a month to month tenant, and they have a little bit of cash to deal with their own immediate needs.

This approach works in very few cases in the US, and even fewer in Mexico, but it's not impossible, and if you structure the contract right, with sufficient PROFESSIONAL advice, you might pull it off.

Now, if you run this by a Notario and he tells you that this is not workable in Mexico, I would accept it and drop the idea all together.

I know that a lot of Americans have had their Mexican real estate dream home turn into caca in their hands, but it doesn't have to happen to everyone.

But, as many have said, things in Mexico are very different than in the US, and even familiar terms (title insurance) don't mean in Baja what they mean NOB. Make no assumptions.

Originally Posted by DENNIS

I don't think you'll get real title insurance, but look into it. What underwriter in his right mind would cover this?


Here's one thing you should keep in mind, and it's just my opinion:
If an Ejido is even remotely involved in your aquisition of a piece of property, turn it down........even if it's free.
Then....pick up your toys and run as fast and as far away as you possibly can. Don't look back........just run.

Don't be afraid to ask to for the National Land Title issued by the SRA. All the land of Mexico is owned by the gov't until transferred out with that one page doc. We bought our central Rosarito lot in a long established fraccionamiento (building lots carved from one large parcel) without a hiccup. We did it as Mexican nationals and took it out of the bank trust it was in to get the "escritua" (title papers). There was no mention of title insurance even being available then (2005). It was mostly the big projects offering it. Years ago I went through our title papers and never saw the National Land Title or even a copy. Knowing what I know now, that would be something I should have asked about.

Originally Posted by Woooosh

Don't be afraid to ask to for the National Land Title issued by the SRA. All the land of Mexico is owned by the gov't until transferred out with that one page doc. We bought our central Rosarito lot in a long established fraccionamiento (building lots carved from one large parcel) without a hiccup. We did it as Mexican nationals and took it out of the bank trust it was in to get the "escritua" (title papers). There was no mention of title insurance even being available then (2005). It was mostly the big projects offering it. Years ago I went through our title papers and never saw the National Land Title or even a copy. Knowing what I know now, that would be something I should have asked about.

As I understand it, the large developers brought in Chicago and Stewart Title to help foriegn buyers feel like they were protected. Title Insurance is only as good as the policy exclusions to coverage are. And I think that it is unlikely that a buyer would see a dime from his title insurance policy if the title was contested. The advice and research of yoru Notario are worth far more than your US-based title insurance policy.

Originally Posted by Islander

As I understand it, the large developers brought in Chicago and Stewart Title to help foriegn buyers feel like they were protected. Title Insurance is only as good as the policy exclusions to coverage are. And I think that it is unlikely that a buyer would see a dime from his title insurance policy if the title was contested. The advice and research of yoru Notario are worth far more than your US-based title insurance policy.

BINGO. But they didn't exactly bring in Chicago and Stewart Title companies, their title polices or their coverage, just their name. The south-of-the-border company is a separate entity that was meant to reassure you. Another thread has a sample title policy and the exclusions. By Mexican law all contracts have to be in Spanish, although most have side by side translations. The exclusions cover most of the nightmare land scenarios in this thread.

But looking forward, what are the Realtors and developers of Baja doing to reassure investors? Anything? There could be a list of projects and areas of Baja where land titles have been issued and your investment risk is lower. People need to know they are actually buying something. The prices are right and it is a buyer's market, but no one wants to flush their money away. That's not investing. The next wave of investors has the benefit of all this on-line info that didn't exist six years ago. They'll find good deals in safe areas. At least that's the plan. Right?

Don't know if it's true, but I've heard that the exclusions can be insane, like not covering any claim the initial title search didn't turn up. I mean, say what?

I was going to buy title insurance because it was relatively cheap, but the service at the time (2005-06) was so incompetent that I canceled because it was going to delay my closing. My property was in an established neighborhood and had a clear title history, but after six or seven weeks the title company hadn't even looked it up at Catastro. Turned out they were selling the service but didn't yet have anyone in La Paz to actually do the research.

so maybe i am getting ahead of my self... how much is the environmental study cost? i understand you need to have one done before you build on a lot

Originally Posted by douglas117

so maybe i am getting ahead of my self... how much is the environmental study cost? i understand you need to have one done before you build on a lot

I've heard numbers in the thousands of dollars, but strangely enough, the stories all came from down south. I've never heard any groaning from up here. Doesn't mean there are no fees, just means I've never heard about them.
That's one of the few advantages of building on leased land in a rural setting. Mine for instance. There are no fees for studies. No licenses or taxes either.

Originally Posted by douglas117

so maybe i am getting ahead of my self... how much is the environmental study cost? i understand you need to have one done before you build on a lot

We got our Environmental Impact Study about two years ago. Then, in BCS the cost was between $8000-$12,000 dollars depending on how remote you are and who you use to do the study. I have no clue if the cost is the same in BC.

Be sure that whoever does the environmental impact study (EIS) has a 100% success rate at getting them approved. This is another unregulated area where you can get ripped off very easily. Anyone can submit a study, but if SEMARNAT rejects it because it's not done properly, you won't get your money back. You have to start over.

If you have already cleared the land, or built anything before getting the study; you cannot get an (EIS) without first paying a fine to PROFEPA ($10,000 dollars in BCS)

Many of our neighbors have built without an EIS and have not been fined, or inspected by PROFEPA...they're $12,000 dollars richer. Just saying.

Originally Posted by BigWooo

Many of our neighbors have built without an EIS and have not been fined, or inspected by PROFEPA...they're $12,000 dollars richer. Just saying.

That is one thing I have learned down here. Most Mexicans follow the idea that it is easier to ask for forgiveness than permission. And almost always much cheaper too.

Here's some bathroom reading ..........All you ever wanted to know about the Fideicomiso........and thensome:

http://www.unige.ch/droit/mbl/upload...ire_RETTEG.pdf