Agricultural Lands in Mexico
It is possible to purchase these types of lands; however, the sale itself requires an agreement from the entire community itself. This is a process that can take time and expertise, and it’s best to consult with a firm that specializes in this particular area of real estate law.
If you wish to purchase agricultural lands, you will first need to obtain the proper legal and consulting fees and adjust all of your time-scale expectations since all negotiations involving this are likely to take quite a long time and are much more complex in nature.
It may also be a good idea to obtain the appropriate legal counsel if you are considering purchasing agricultural lands, such as a Notary Public, who will check for all proper titles and ensure that all correct procedures are followed to make sure that private title ownership is assured.
The Role of a Notary Public
Whenever you make any kind of property investment in Mexico, perhaps the most important person you will deal with is a Notary Public, who is appointed by the State Governor, which is the highest seat in the State Public Office. A Notary Public is able to both witness and certify all kinds of important business documents, as well as manage and secure storage of many important records.
In Mexico, the deed to any property must always be prepared by a Notary Public. You will be able to choose which Notary Public you deal with, and this should be the first or second person you call, other than your attorney. This person will help to make sure that all of your permits and other documents are in order so that your transaction can take place as planned.
Common Checks That Need to Be Made
Your attorney and Notary Public will work to perform multiple checks on the property to make sure its history is clean and that the land has no liens attached to it. Furthermore, the Notary Public will also check to ensure that all necessary land taxes have been paid over the past five years and that all utilities have been paid for the past two years. Under Mexican law, after these amounts of time have passed, you are in no way responsible for these debts.
Property Purchase Procedure Outline
If you have hired an attorney, they will act as an intermediary between both you and the person who is selling land in Mexico. The process varies in each particular case, but it typically will go like this:
- Find a property that you like and verbally agree on a price
- Draw up a provisional sale agreement, after which the buyer will pay a deposit of 5% to 10% with cancellation penalties set in the event that either party pulls out of the agreement
- Establish a property trust only if the property is inside the 50/100km coastal zone
- Obtain permission from the Foreign Secretary’s office to purchase land, in which you will then be asked to sign the Calvo Clause, which states that you will not look for any kind of foreign jurisdiction in dealings that involve your property transaction
- Contact the Notary Public if you are planning on purchasing property from a real estate developer
- Obtain copies of any deeds from the seller
- Ask a Notary Public to arrange an appraisal of the land
- Provide the Notary Public with official documents that will prove that your stay in Mexico is legal
- The individual selling the land will be required to present documents to the Notary Public including the deed, tax receipts, and utility bills
- Speak to the Notary Public to obtain their assistance in calculating the Capital Gains Tax to determine how much of this you will need to pay
In terms of payment, regardless of the particular method you will be using, you or your attorney will need to have the necessary funds available to hand over at the office of the Notary Public on the date in which the deeds are signed over to you.
Furthermore, cash or other type of monetary instruments that exceed a certain amount of money are required to be declared whenever you enter Mexico. There are no limits of how much you can transfer in or out of the country; however, amounts over that limit are to be declared on a special form when you pass through Customs.
Selecting the Right Location
Always make sure that you are familiar with the location in which you are looking to acquire property. Furthermore, make sure that you ask yourself how marketable the property is in its current condition and location. This is especially the case if you are considering renting it or selling it at a later date. Furthermore, never purchase something in an area just based on how it looks. Consider renting something nearby for starters just to get a feel of the area.
Buy, Build, or Fixer-Upper?
Buying land and placing a house on it will give you a much better value for your money; however, you will have more time, expense, and effort involved with managing a project. It may be a good idea to stay in Mexico for the entire process, even if you have to hire an architectural firm.
All in all, you may find that you’ll get more for your money when you build a new project or renovate a current one than by purchasing something existing. However, it’s important to keep in mind all of the extra effort that’s involved for something like this. If you are unable to stay in Mexico for the entire period of the process, you may be better off purchasing something that’s already been built.
Building Regulations and Standards
There are really no official building regulations and standards in Mexico. If you are purchasing a property that’s already been built, you should consider hiring a surveyor to check out everything before agreeing to buy the property or do anything involving any actual money.
If your house is being built, talk to the architects and have them show yo examples of work that they’ve done before. Furthermore, take the time to go to the actual places to see them rather than just settling on looking at the photos.
Costs of Taxes and Mexican Property
When purchasing property in your country of residence, you usually have to deal with costs such as taxes and agent fees. Mexico is generally the same; however, the net value of these costs may be lower, although this is not guaranteed since professional fees have greatly risen.
Here are some of the taxes and fees that are required to be paid, the costs of which you can obtain more information on by contacting a Notary Public:
- Acquisition Tax
- VAT (Sales Tax)
- Appraisal Tax
- Registry Fee
- Public Notary Fees
- Bank Trust
- Lawyer/Attorney Fees
- Land/Building Surveys
- Foreign Office Permit
- Service Fees
- Title Insurance
Costs and Taxes When Selling Property in Mexico
Whenever you sell a property in Mexico, you will be responsible for any fees of professional services that you contract, as well as the following fees and taxes:
- Mexican Tax on Property Gains (Capital Gains Tax)
- Foreign Tax on Property Gains
- Agent Fees
Regardless of whether you are purchasing or selling a home, you will need to work hard to manage all of your expectations when it comes to time scales. The real estate market in Mexico is extremely regionalized and also localized in some cases. What will influence how long it takes your property to sell is the location on where you intend to buy or sell. Here are some factors to keep in mind with various situations:
- Buying a Home: negotiating with family members, other interested parties, grappling with various Mexican cultural behaviors, etc.
- Selling a Home: location, time needed to sell the property, amenities, condition of the home
- Closing: paperwork, legal procedures