Cabo San Lucas Condo

Financing Real Estate in Mexico

Up until recently cash was the only way to buy property in México. Many people find it better to find their own financing by leveraging their own residence. There are a number of companies who offer US Mortgages for Mexican property and also available to Canadian citizens. The rates approach those offered in the United States. With financing available means that owning your vacation dream home in Los Cabos is possible. If you are planning on purchasing our condo or another location, it would be wise to contact the mortgage lender and become pre-qualified. Many companies will pre-qualify over the internet or by telephone.

US Mortgage companies only loan on completed construction.

You might want to talk to Mike Houston here in Cabo San Lucas he is also the American Consulate representative here. He represents MexHomeLoans and is quoted to say “Bankers are the only professionals more risk careful than insurance companies. Some are now actively participating in our market. When we issue a loan on a Cabo property, we’re basically becoming 70% partners with the buyer. We are not going to invest that much unless we are sure it is a safe venture.”

The mortgage lenders here are very meticulous about protecting their investment and yours. The loan products being offered now include fixed rate mortgage secured by the Mexican property at a competitive rate. Most brokers are getting their funding through GE Money or GMAC Financial.

 For Pre qualified loans check with www.mexhomeloans.com

Or another option is talk to Rob Woddard at 1-800-449-9990 or e mail him at

rob@e-yourloan.com

Owning Property in Mexico and WHAT is a Fideicomiso?

Foreigners can own property in México. The right is guarantee by the Mexican Constitution, Article 27. If the property is within 50 km of an ocean or 100 km of the border one must hold the property in trust with a Mexican bank. That trust is known as a Fideicomiso and will contain something knows as the Clavo Clause. This clause states that the Mexican government grants you all the rights, privileges and benefits of a Mexican citizen as pertaining to this property and you promise to consider yourself Mexican as it pertains to this property. This translates to the effect that the government cannot and will not do anything to you or your property that they would not do to a native born citizen. Chapter 11 of NAFTA (the North American Free Trade Agreement) offers additional protection for U.S. and Canadian Citizens.

How did all this happen you might ask and wonder why? It is very difficult to change a Constitution of any country. Mexico has some old laws that resulted from unfair treatment in the past by foreign countries (Spain, France, and USA).  And not wanting foreigners to control and buy up their best land laws were passed. But as the modern society starts to emerge, México realized they were losing a tremendous amount of investment and revenue for their coffers. So to get around these old laws they come up with the idea of the Fideicomiso (a fiduciary trust).

When you buy the property it is placed in your name on the tax roll just like in US. The banks hold a piece of paper which you pay a small yearly ($350-$500.00) fee depending on the bank. It is like a small additional tax that is all. You have this trust for 50 years and renewal for another 50 years. When you fill out the paper for the Fideicomiso you name a benefactor, whom would receive the property in the event of a death. There are no inheritance taxes in México. All that is needed is a certified copy of the death certificate and the bank will place the remaining years of the fideicomiso in the new name.

Title Insurance

Title Insurance is available from several companies, not required by law. There are several title major U. S. companies including First American, Fidelity and Stewart Title.

The transaction is formalized by a Public Notary. A “Notario” in México is a government appointed Attorney who had intensive training, testing and apprentice and is in charge of various legal transactions that only a notary can do, including real estate. 

The Notary and Closing

The Notary is in charge of tracing the history of ownership of the property, it’s physical properties, confirming that it is registered property with the civil authorities, certifying there are no liens or legal encumbrances, identifying all parties in the transaction, collecting taxes due, and checking all paperwork, including the trust is correct and according to the law. The “Notario” is further assurance that a sale is safe, secure and your rights are being protected.

Each step is to protect you and your investment.

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