Mexico a unexpected visit

[Tomcal]

Thanks Lurker!  I have already brought one guy up from Sao Paulo and possibly bringing two up in May. Airfares from Brazil to Mexico are relatively cheaper in the May thru Sept season!

[Tomcal]

Hey Lurker,  I have already brought one guy from S.P. last trip and there are several I am thinking about for the next trip!  there is so much going on that this morning I cancelled my trip to Brazil this weekend and wont' be back until late may!  so when I go back to Mexico in 4 weeks to close on the house I am think about bringing one or 2 of the guys from Rio  the fares on Copa airlines from brazil to Mex are pretty reasonable.

[ferrar]

On 14/03/2017 at 1:29 AM, Tomcal said:

I will take possession of the house in 30 days.  The.process has been pretty easy so far. I have both a Mexican and American(living in Mexico) real estate agents working with a attorney in mexico. You have to put 10% down to start the process and the 90% balance at the closing! Then about another $10.000. - $12,000. In MexicanTax and "closing costs on top of the final purchase price.  But not much red tape actually a lot less paperwork then buying a home in the U.S.

Congratulations Tom on your upcoming purchase!  Clearly you have done your homework.  Like some others on the forum here I have taken that step in Brazil - and it is somewhat of an understatement to say that as an expat you really must keep your eyes peeled!

Just curious, as I have zero personal experience in Mexico real estate, but have taken a quick look at some of the websites.  Is your property far enough from the shoreline  that you don't have to deal with the fideicomisso system that apparently non-Mexicans would otherwise have to navigate; if not, how strong an impediment was that to you - if at all - in making your purchase decision (maybe you just asked for a discount)? 

[Tomcal]

Ferrar,  the fideicomisso was not really a impediment after talking to both lawyers and Americans living there....the short version is it is a way for the banks to get around the law which had the original intent of keeping foreigners from buying land close to the border or coast to avoid another "Alamo"!  You own the house but the bank keeps the deed and leases the land in 50 year increments to you.  If you sell after 10 years the person gets a new 50 year lease not the remainder of your lease as some "experts" claim.  They cannot sell your house and as evidenced by the number of Americans owning condos/houses in Cabo and Cancun and Playa del Carmen as just a few examples, it is safe.  I have about 18 MD colleagues who have all had homes in Cabo San Lucas for 5 - 15 years with no problems and they all have fideicomissos.  

[ferrar]

Thanks Tom, very informative.    Like yourself in the properties closed on in Brazil I have always sought out independent legal counsel, and followed fairly closely the process, which saved a lot of potential headaches.   One particularly tricky purchase was an estate sale from the (eventual) heiress.  You can negotiate a nice discount in such cases, but you absolutely need to do your homework; I would not have bothered but really wanted this particular property.  The most common errors that local lawyers tell me that expats make here are not properly researching title issues (no real title insurance exists here and non-owners have been known to sell a given property multiple times!!); not checking outstanding liens or property taxes or utilities; and even not researching certain claims against the former owner himself that the new owner can be on the hook for (this is Brazil!).   

[Tomcal]

Yes like Brazil there is no such thing as title insurance in Mexico! The real estate salesman told me that is why there are a fair number of vacant houses in this city because in mexico if a couple have 5 kids and each of those kids have... lets say 4 kids each,  all 20+ heirs have to sign off for it to have a clear title!  He told me of one very diserable property in town which has 56 heirs and they can't find 8 of them so the house has sat vacant for 4 years! I bought my house from a American couple who totally rehabed it 6 years ago so the title was clean!

[ferrar]

That scenario is very common here as well!  The vast majority of the properties on the market in Rio and Bahia (the two markets I know) have major title issues.   One reason for that here is apparently the estate taxes at the state level that are imposed on inherited properties.   The issue is not so much the rate (mainly 4-5% in most states) but the appreciated value - market valuations are updated frequently by tax-hungry states!  So heirs tend not to pay, and they cannot take proper title to the property, although they have possession rights.   Brazil does not force sales of inherited homes or family businesses for unpaid estate tax - which I believe is different from the US(?)  So you have generations of family properties that have never paid the tax, and so also have no possibility of sale - unless they negotiate a hefty discount to account for the chain of accumulated unpaid taxes....

Speaking of succession, one point that you have probably already researched but I just mention as I would be interested in this as a potential buyer in Mexico:  would the 50-year clock re-start for your intended heirs?  And would your US estate documents be recognized, or would you have to set up say a local will.

[Tomcal]

1 hour ago, ferrar said:

....

Speaking of succession, one point that you have probably already researched but I just mention as I would be interested in this as a potential buyer in Mexico:  would the 50-year clock re-start for your intended heirs?  And would your US estate documents be recognized, or would you have to set up say a local will.

The 50 year lease re-starts when you sell the property. for example the couple i am buying from have 43 years left on their lease but when i close it becomes a new 50 year lease.