This is just a very basic introduction about how to buy real estate in Baja. First of all, let me assure you that, yes! You, as an American or foreign investor, can buy real estate in Baja and have permanent ownership of that land. There are no 99 year leases, nor can the Mexican government take away your property. In Mexico, however, there is often a big difference between buying property and owning property, so we want to teach you all we can to help you make good decisions.
In the U.S. and Canada, receiving title for property is simply taken for granted. You know you are purchasing deeded property and that you will receive that deed shortly after closing. While titles do exist in Mexico, they are NOT guaranteed and cannot be taken for granted. There are many people who control property without having deed to that property. That’s the first thing you need to check before entering into any type of contract. If you can’t get a deed, you may only be granted temporary control of the property. Getting title is not difficult, but there’s a definite learning curve you have to follow to get it. There are many different ways to control property in Mexico, but the most common for foreign investors is to purchase a fideicomiso, or Mexican bank trust. Mexican nationals typically use an escritura publica. These are the two highest forms of title in Mexico.
It is highly recommended that as a first-time buyer of Baja real estate you use an escrow account, just like you would in the U.S. or Canada. Even if a lawyer or other professional tells you it’s not necessary, using escrow is the best way to assure you don’t lose money. Just make sure the person managing your escrow has plenty of experience working with escrow accounts and closing real estate deals here in Baja.
For your first Baja real estate purchase, we recommend using a pair of experienced professionals to help you close – a Baja real estate agent with experience in closing transactions and using escrow accounts, and a reputable closing coordinator who will keep in contact with all involved parties and help with all necessary paperwork. This combination is very important in making sure that title and ownership will be transferred from seller to buyer in the fastest, most economical manner possible. You may find an attorney who promises to do that for you, but beware: while he may be able to do it, lawyers tend to take much more time (more than 60 days) and charge much more for their services. For those reasons, we can guarantee that you will have a better closing experience if you stick with an experienced Baja real estate agent and a reputable closing coordinator.
Next, you need to investigate whether you are purchasing property in a fraccionamiento or a condominium regime with a homeowners’ association (HOA). Fraccionamientos have much looser regulations and rely on government agencies and utility companies for all services, while owners are directly responsible for the development and maintenance of a condominium regime. Each HOA has its own reputation to consider as well, so be sure to talk to other owners in that community to see what they have to say.
Finally, let’s talk about financing. If at all possible, you want to arrive with cash in hand as it is very difficult and costly to obtain financing from a Mexican bank. Mexican banks often advertise lower rates than they actually offer, approval can take up to four months, closing costs for such loans are usually high, and many times the financing does not even go through. If you’re not able to bring all of the cash with you, try to bring a large sum. Since most homes in Mexico are owned free and clear, many owners are willing to offer partial financing for a serious buyer with a large down payment.
We hope this information has been of assistance to you, and we encourage you to keep reading and learning all that you can before making your big Baja purchase.
By: Mario Restrepo