|
Seller’s Guide to Mexican Real Estate Transactions As the seller, transacting the sale of your property, called closing, may be impeded if you are not aware of the closing process. We have created this detailed step-by-step guide to explain your obligations, the required documents and procedures, and the expenses you may incur to complete your transaction. THE PURCHASE OFFER OR PROMISE TO TRUST In Mexico, a preliminary offer to purchase or to enter into a promise to trust (Fideicomiso) is drafted by the real estate company representing the prospective buyer. In the case of a privately drafted offer to purchase or promise to trust, use Baja Land Services, a Mexican attorney, or a Public Notary (Notario Publico) to obtain a legally recognized instrument and close the transaction as soon as possible. IMPORTANT POINTS FOR THE SELLER ARE:
THE TRANSFER OF PROPERTY OR CLOSING All sellers of residential real estate must have the following documents and procedures current and in place before entering into an agreement for sale or promise to trust. Failure to do so may result in the delay of the sale. Required DOCUMENTATION LEGAL TITLE TO THE PROPERTY — FIDEICOMISO If you are a foreign owner of residential property within Mexico’s restricted areas - 100 kilometers within any Mexican border and 50 kilometers within any coastline, including the entire Baja California peninsula – to sell your real estate you must possess title, held in a legal instrument called a Fideicomiso (bank trust) administered by a designated Mexican bank. The trust’s term is 50 years, with renewal upon request by the holder(s) of the Fideicomiso. (Prior to the 1993 amendments to the Mexico’s Foreign Investment Law, trust terms were 30 years.) You must possess a Fideicomiso before closing. For foreign ownership of residential real estate, no other type of document is valid for property transfer in Mexico’s restricted areas. If you do not have this legal instrument in place, use Baja Land Services, a Mexican attorney, or a Public Notary (Notario Publico) to obtain a legally recognized instrument and close the transaction as soon as possible. ASSIGNMENT OF RIGHTS (Cesion de Derechos) An Assignment of Rights occurs when the buyer is using the existing seller’s Fideicomiso. If a new Fideicomiso is created to hold the rights to the property, the process is the same, however, a new permit from the Secretariat of Foreign Relations is required. OWNERSHIP THROUGH A MEXICAN CORPORATION Amendments to Mexico’s Foreign Investment Law on December 28, 1993 allows ownership of commercial properties in the country’s restricted areas, provided a Mexican corporation holds title to the property; and that the property is for non-residential purposes. Should you hold title to commercial property as a principal in a Mexican corporation, you must show title through a legal deed (Escritura) or bank trust (Fideicomiso) to effect the sale. No other form of buy-sell agreement, promise to trust, or private contract will serve as proof of ownership to transfer your property to the purchaser. If your corporation does not have legally recognized title to the property, contact an attorney or Notario Publico (Mexican Public Notary). These procedures must be executed in Mexico. POWER OF ATTORNEY If the property is registered in more than one name, and you are representing all legal owners (beneficiaries of the Fideicomiso) as the seller, a Power of Attorney (Poder) is required to act on their behalf. Transfer of ownership cannot be perfected without a Power of Attorney from each beneficiary. If the Power of Attorney is from the U.S., it must be notarized in the U.S., apostilled (certified by the Department of State), and translated into Spanish. A Power of Attorney must be presented for each beneficiary of the Fideicomiso you are representing. For commercial real estate transactions, you must be the legal representative of the corporationto act on its behalf. IDENTIFICATION DOCUMENTS A valid passport and Mexican immigration visa (FM-1 Tourist Visa; FM-3; or FM-2) are required as proof of identity to close the sale of your property. For corporations, the original incorporation document and required permits and attachments must be presented. STATUS OF THE PROPERTY Manifestation of Construction and Property Improvements If you purchased your property as raw land and built or made improvements, or purchased a lot with an existing home and/or buildings and improved them, all construction and improvements must be appraised and registered with the property tax office (Catastro) and the Public Registry of Property and Commerce. Failure to do so will impair the closing and significantly increase your capital gains tax liability should there be a substantial difference between the original purchase price and the selling price. Without a manifestation of construction and improvements, the property’s value is that which is stated in the Fideicomiso holding the property in trust, or the Escritura, if applicable. In legal terms, the construction and/or improvements do not exist, and, therefore, are not transferable to the purchaser without a legally recognized and registered manifestation. PROOF OF CURRENT PAYMENTSOF PROPERTY EXPENSES All sellers must produce proof that the following expenses relating to the property are paid for the current period:
AFFIDAVITS AND ACKNOWLEDGEMENTS To close the sale of your property the following affidavits and good faith acknowledgements must be signed by the legal owner(s) of the property. If you are acting on behalf of other beneficiaries to a Fideicomiso or principals in a Mexican corporation, Power of Attorney for each party must be provided in lieu of affidavits.
SELLER’S CAPITAL GAINS LIABILITY Selling your property triggers a federal capital gains tax. Two calculation methods may be applied for residential property:
CAPITAL GAINS ASSESSMENT We recommend that all sellers know their tax liability status by obtaining a Capital Gains Assessment before accepting an offer to purchase. For a fee, a Mexican notary, attorney, or professional closing company doing business in Mexico will perform this important task. This is especially critical if the stated value of your property held in Fideicomiso or Escritura is significantly lower than the actual purchase price paid, or if property improvements and construction are not manifested at the time an offer to purchase is made. In some instances, capital gains taxes may be lower if the seller qualifies for exemptions. However, these exemptions do not necessarily remove all capital gains liability. The Public Notary (Notario Publico) overseeing the transfer of property is solely responsible for interpreting the law and capital gains calculations. Exemptions may apply to foreigners whose primary residence, income, and immigration status satisfy the interpretation of the law by a particular Public Notary. Customarily, the purchaser chooses the Public Notary. However, should the seller qualify for a capital gains exemption, the seller may elect to include in the offer to purchase that acceptance of the offer is subject to the Public Notary’s approval of the exemption. Innovative Lending Solutions, Inc. - 155 Inverness Drive West Suite 350 - Englewood, CO 80112 Office Phone: (303) 768-9955 Fax: (303) 768-9965
Colorado licensed mortgage company Nebraska licensed mortgage company Kansas licensed mortgage company: License No. 2004-4773 Florida licensed mortgage company: License No. 498892 
© 2010 Myers Internet All Rights Reserved Powered by: Myers Internet | Admin Login |
