Real Estate Closing 101
Do you know the meaning of…
These are several useful common terms that can be found and applied to a foreign buying real estate in Mexico.
Apostille. This is a legal certification of a foreign Notary Public’s seal. In the USA, this certification is performed by the Secretary of State of the state in which the Notary Public resides. Mexican authorities may require this for documents notarized in the USA. The Apostille is used in several countries, Canada not being one of them.
Assignment of Rights. Term used when the seller of a property currently has a Fideicomiso and transfers his rights to a seller without the need to create a new Fideicomiso.
Balloon Payment. The remaining balance, at maturity, on a loan that has not been completely repaid through periodic payments. Once paid, the outstanding balance is zero.
Capital Gains Tax. It is the tax applied to the gain in the sale of a property. Currently the rate is 35% for foreigners though there may be some exceptions depending on the seller’s nationality or origin.
CC & R’S. Rules of general application governing the relations between land owners in a specific subdivision, development, condominium development or cooperative housing facility.
Certificate of No Lien. The document issued by the office of Public Registry of Property and Commerce certifying there are no recorded liens against the property.
Closing Costs. Monies spent by a party in completing a transaction, over and above the purchase price, including: legal fees, taxes, trust fees, mortgage application charges, registration fees, appraisal fees, etc.
Earnest Money. A sum of money given to bind an offer or agreement, which is usually deposited into an escrow account.
Escrow. The deposit of funds with a neutral third party who is instructed to carry out the provisions of an agreement. The escrow company’s role in a closing process is merely to hold funds and disburse as instructed.
Fideicomiso. Trust in which foreigners can own land within the restricted zone (100 kilometers from the country boarders and 50 kilometers from the coast in Mexico). The buyer of the property is designated beneficiary of the trust where a Mexican bank acts as fiduciary and carries out the instructions of the beneficiary who has the same rights as an owner would have.
Fiduciary. A Mexican bank who holds title and control over property and manages it for another person called a beneficiary. A Fiduciary cannot act on a sale or a lien unless it is instructed by the beneficiary.
Homeowners Association Fees. They are charges paid to the Homeowners Association by the owners of the individual units in a condominium or planned development and are generally used to maintain the property and common areas.
Notary Publics. Attorneys specialized in Real Estate Law who have been appointed by the State Government. They are the only ones authorized to convey Real Property rights.
Official Appraisal. A type appraisal required for basically any real estate transaction even if there is no financing involved. This appraisal may not reflect the commercial value of the property as it is based in values approved by the Municipal Government by zone.
Power of Attorney. A legal document that authorizes another person to act on one’s behalf. They can be granted in Mexico without any special requirements. If they are granted abroad, the Apostille may be required.
Promissory Note. The primary legal financing obligation in which the borrower promises to pay back a sum of money borrowed.
Promise to Trust Contract. A promissory agreement that is executed once both parties have agreed to the basic conditions to purchase the property.
Public Registry of Property and Commerce and Catastro. Central recording entities for all public documentation concerning property. In order to ensure its ownership rights against the seller and third parties, a buyer must record all property transfer at the Public Registry of Property and Commerce and Catastro in the jurisdiction in which the property is located.
Survey. A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
Trustor. The person who brings the property to a Fideicomiso, which is usually the seller.
Using a competent, professional and well established Closing Company, particularly one familiar with the specific market in which you have chosen to invest in your real estate in, is key. For more information about real estate and the closing process in Baja California Sur, or other terms and the services Pacific Closing Company can provide you, send us an email to email@example.com