Insurance
Title insurance has been widely available in Mexico only in the last few years. In this time, leading US title companies have developed a sophisticated understanding of Mexican real estate and are providing excellent products.
Title Companies And Information Resources
The two companies with significant presence along the Nayarit Riviera are Stewart Title and First American Title.
Houston, Texas
Click here for a
good selection of Stewart Title articles on Mexican real estate. Note that older articles may not fully reflect current conditions.
Mitch Creekmore, VP Mexico
(800) 729-1900
(713) 625-8753
Stewart Title Guaranty de Mexico S.A. de C.V.
Acapulco, Guerrero
Click here for
another good selection of Stewart Title articles on Mexican real estate. Note that older articles may not fully reflect current conditions.
Alvaro Palma, General Manager
(877) 822-6040
From Mexico
(800) 506-6666
(55) 5249-7200
Sunrise, Florida
Turalu Brady Murdock, VP Latin America
(877) 641-6767
(954) 839-2900
x188
Dallas, Texas
David Wiesley, VP Mexico
(214) 979-0003
The following title companies also do business in Mexico:
New York, New York
Rodolfo Rivera, VP International
(314) 856 8780
San Miguel de Allende, Guanajuato
William Signet, Pres. Mexico
(877) 252 6326
Title Insurance In Mexico
Title insurance in Mexico generally costs 0.5% to 1.0% of the purchase price. Higher costs than in the US reflect additional title company risks (according to MLS Vallarta, title company profit margins average 8%). It typically takes 1½ to 2 months to obtain a policy. When issues are found, title companies will attempt to correct any defects to avoid future problems. Your title company should conduct a detailed examination of the following:
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Title documents (deeds, wills, trusts)
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Plats and land surveys, as well as easements
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Development permits
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Municipal and county approvals
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Outstanding mortgages, judgments, and liens
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History of tax payments
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Recording and registration compliance
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Notario procedures (see below)
Your policy covers the legal defense of your title or the insured value, if this is unsuccessful. This includes what you would likely expect, such as:
1) Recording errors
2) Liens, taxes, and other encumbrances
3) Access, encroachments, and other boundary issues (note that many US policies do not cover all these items)
Your policy should also cover the following issues pertinent to problems that have occurred in Mexico:
4) Fraud, misrepresentation, and impersonation
5) Secret marriages and undisclosed heirs
6) Incapacity of parties
Escrow Accounts
Mexico does not have escrow companies, such as exist in the US and Canada. Fortunately, title insurance companies are now providing this service and it is advisable to use them when purchasing individually titled lots and homes. Earnest money (depositos condicionales) is typically 10% of your offering price. In the past, it has generally been best to hold these funds in a US dollar account, given peso devaluation trends. Given the recent weakness of the US dollar, it is worth considering your options as to which currency is likely to hold up better.
Predevelopment Investments
Another popular vehicle for purchasing property in Mexico are pre-development purchases, where you receive ownership through a
Certificado de Derechos Fideicomisarios
(Certificate of Benefits in a Trust) prior to taking title. While pre-development purchases obviously involve a higher degree of risk, they can also provide a relatively secure opportunity for substantial savings and much higher investment returns. You are essentially engaging in a partnership with the developer. The key to investing successfully in this potentially lucrative market is to be certain that you are committing to a sound project and working with a reputable developer with a proven track record in Mexico.
Notarías
Notarías
are a unique feature of Mexican real estate transactions.
Notario
is commonly translated literally as “notary.” This is inaccurate; a better term would be “official legal transaction certifier.”
Notarios
are public officials who have given up private practice to become agents of record. They are appointed by State governors to legally consummate any property conveyance, including wills, business contracts, and real estate transactions.
Notarios
authenticate documents for legitimacy and form, and act as official recorders. To be considered for an appointment (which is lifetime), candidates must be licensed attorneys (possessing a cedula profesional), at least 35 years of age, who have practiced law under the supervision of a
Notario
for at least three years, and who have passed two separate and stringent licensing examinations. The majority speak English.
The
Notario
is not an individual advocate. He or she is equally responsible to both parties in a transaction. For personal representation, you must hire a private attorney. In a typical real estate transaction, the
Notario
will prepare a deed of conveyance based on the purchase agreement (have your agent draw this up, not the seller). This is typically either a
Contrato de Compraventa
(Purchase Sales Agreement) or a
Contrato de Promesa
(Promissory Agreement). As part of this process, the
Notario
will:
Obtain a permit from the Ministry of Foreign Affairs for you to purchase property if your agent has not already done so (this is simple and relatively fast)
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Examine the seller’s documents to assure their legitimacy
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Search public records to verify the title (Certificado de Libertad de Gravamen)
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Search public records to ascertain if there are liens against the property (Certificado de Libertad de Gravamen)
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Determine if there are property tax or utility assessments due (Certificado de No Aduedo)
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Collect all applicable property and capital gains taxes from the seller
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Collect all applicable transfer taxes from the buyer (about 1-4% of the official appraised value; the exact percentage is determined by the individual States)
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Properly register and record the transaction (your agent should verify that this has been done!)
It is a good idea to request paid utility bill receipts from the seller to be certain you are not stuck with them after you take ownership. After this work is complete, both parties meet with the Notaria for the formal conveyance of the deed (escritura). The Notaria then records this instrument with the public registry.
Given these significant responsibilities, Notarios charge a fee of 1.5% of the transaction value. The buyer pays the Notario’s fee and the other closing costs. Ask your Notario (as well as your broker) for an estimate of closing costs. The seller pays the broker’s commission (typically 6-8%). An independent commission sets this amount. The Notario does not insure title or bear legal responsibility for defects, except in the unlikely case of fraud or gross negligence on his or her part. Notarías also do not act as escrow agents.
Here are links to two local
Notarías
and a real estate attorney. You should perform your own due diligence before making a selection.
Nuevo Vallarta, Nayarit
Janaina Menezes Camargo
(322) 297-0846
Bucerías, Nayarit
Teodoro Ramírez Valenzuela
(329) 226-8000
Cadena Asociados (private attorneys)
Puerto Vallarta, Jalisco
Claudia Georgina Cadena Luna
(322) 221 5092
Click here for a tutorial on Mexican taxes by Claudia Cadena.
Professional Realtor Associations
Mexico is developing professional real estate associations with enforceable codes of ethics. The following Realtor organizations are active in Mexico:
Asociación Mexicanas Professionales Inmobiliarios AC (AMPI)
AMPI is associated with the US National Association of Realtors1
(NAR).
AMPI is also associated with
The International Real Estate Federation
(FIABCI)
Property Insurance
As with many other choices of service vendors, your best bet for property insurance is to ask existing residents for suggestions. You should perform your own due diligence before making a selection.
Valerio Direct Insurance
This useful website offers easy online insurance explanations and quote comparisons for various types of insurance:
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Home, condominium, and business insurance
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Health, travel, and life insurance
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Auto (with either US, Canadian, or Mexican plates) and boat
Click here
for a Valerio tutorial covering key insurance information.
Lewis and Lewis Insurance
The Lewis and Lewis site provides coverage details for auto, boat, plane, homeowners, and medical evacuation insurance.
Click here for an informative article by international insurance broker, Jim LaBelle.
Follow the link to Mexican Insurance Professionals for additional good information on car insurance.
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