Real estate advances lure foreign investors
Martes 27 de marzo de 2007
Experts say that the process of buying property in Mexico has changed substantially in recent years. For instance, title insurance and the wide availability of mortgages have added a new level of security, and has led to an increase in the number of foreign buyers.
Still, buying in Mexico remains a complicated and sometimes frustrating process for the uninitiated.
Stewart Title, which began offering title insurance in Mexico in 1993, has had its Mexico business triple in the past three years, said Mitch Creekmore, a senior vice president at Stewart International and co-author with Tom Kelly of “Cashing In on a Second Home in Mexico.” “You have to do your own due diligence,”Creekmore said.
Longtime participants in the real estate business cite these common obstacles:
-There are restrictions on foreign ownership of land within 50 kilometers, or 31 miles, of the coast and 100 kilometers of the border.
– In most cases, any residential buyer who is not a Mexican citizen must place the property in a Mexican bank trust, or fideicomiso, which is controlled by the buyer and easily renewed after 50 years.
-The national real estate association, Asociacion Mexicana de Profesionales Inmobiliarios, recently signed an agreement with the National Association of Realtors in the United States that allows its members to use the Realtor designation. But there still is little oversight.
“You have to have a reputable broker, period,”said J.P. Money, who runs www.mls4rivieramaya.com, a property listing service. “Ask for references, and ask people who have bought from them before.”
-Although the practice is technically illegal, it is not unusual for a seller to record a much lower purchase price to avoid taxes and then an unsuspecting buyer, trying to resell the property, is called upon to pay tax on the recorded increase in value.
“Buyers need to be sure the full price is recorded on the deed,”said Linda Neil, founder of the Settlement Company, a transaction consultancy based in La Paz, Mexico.
-Some buyers are shocked to find that closing costs can be as much as 10 percent of a property´s value. Fees for condominium associations and maintenance also may add to a transaction´s overall expense.
-Tracking a property´s title can be difficult. Large tracts often are controlled by ejidos – collectives of landowners – and in some cases sellers do not have full title to the land.
“Probably the biggest land mine is distinguishing the difference between private property and ejido land,”Neil said. “If title insurance won´t cover the title, that´s a big red flag.”
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