Investment Property in Mexico
Investment property in Mexico is popular due to its warm climate, surging economy, and friendly people.
For foreigners investing in Mexico, there are considerably risks in investing in Mexico, which you should go through with a local real estate agent and real estate attorney that speak english proficiently.
Many of the potential risks that you have to face have to do with the level of legal protection for transfer of title in Mexico.
Also, real estate agents that operate in many areas, including the bigger cities, are not licensed or even bonded.
The lack of knowledge about the local real estate law and markets, even though real estate agents may be members of the local MLS, may lead to them not knowing of the title problems the properties they are selling may have.
Therefore, you need to make sure that all the bases are covered in the title transfer process, which means using legal advice that is knowledgeable about the legal requirements and process in Mexico.
Common problems also include down payments to real estate agents.This includes the use of escrow agents, which are not bonded.
A common advice from those doing real estate deals in Mexico is to use a U.S. based escrow service, but not a Mexican escrow service with an escrow account in the U.S. (that is quickly transferred to a Mexican account).
It has been suggested that a lot of Mexican properties are plagued with title problems.
To lessen these fears, title insurance might help.
However, even if you ask for title insurance and pay for it, you might not ever receive such a policy.
Also, the closing process has been characterized as complicated as well as expensive.
Also, as of writing this, the law requires, to my knowledge, that foreigners buying near the coast or border have to obtain a foreign investment permit, and are required to hold title through a bank trust (this may change at any time).
You should do your utmost to get a property with a clean title, as problems with the title can take years and years to get cleared.
For investment property in Mexico, it is advisable to use the services of a knowledgeable attorney to make sure you get clean title.
If you find your title claims going to the court, you should expect, according to some of the U.S. real estate investors operating in the area, for a slow and inefficient process, which is sometimes claimed to include corrupt elements.
When hiring an attorney, it is probably a good idea to do so well in advance. Make the best effort to hire a competent one.
You should consult your attorney at all the stages of the process, including examination of the commitment for title insurance before any funds get distributed to the seller.
For investment property in Mexico, if you decide to make an effort at figuring out the Mexican laws for real estate investing on your own as well, keep in mind that Mexican laws, including tax laws and property laws change from time to time.
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