As a Canadian you can legally buy a house in Mexico, provided you follow a few simple guidelines. This step-by-step house buying guide is designed to help Canadians who are looking for a vacation home in Mexico understand the buying process and develop a better sense of why Mexico is such a great place to invest in real estate.
Read on to see the rules for buying property in Mexico as a foreigner and learn why millions of Canadians and other expats from around the world have already decided to invest in a vacation home in Latin America’s second largest economy.
Steps to Buying Property in Mexico As a Canadian Citizen
It’s actually very simple and straightforward for Canadians to buy property in Mexico, but it’s also necessary to exercise some basic due diligence and develop a clear idea of the process, as well as your budget and main property objectives before taking the plunge. Here are five steps to buying property in Mexico as a foreigner, designed to help you navigate the sale process after you find the property of your dreams!
1. Make an Official Offer
Work with your trusted local realtor to settle on an official offer on the property. Although Mexican law recognizes verbal agreements, the offer and acceptance should be in writing to ensure there is no confusion about the terms and conditions. Your real estate agent will send the offer in the form of an “Offer to Purchase” contract, which details the main terms of the sale and includes the price, payment details, earnest money and deposit information. A deadline for the seller to accept or reject your offer is also typically included, then you will be expected to make an earnest money deposit immediately if the seller accepts your offer.
2. Draw Up a Promissory Agreement
After the earnest money has been deposited, your English-speaking Mexican attorney will draw up the promissory agreement (contrato de promesa in Spanish), which binds the buyer and seller to a specific timeframe during which the buying contract much be executed. Intended to lock down the basic terms of the sale, it is a binding agreement that also gives all parties time to produce all required paperwork. Under Mexican law, if all terms and conditions of the promissory agreement are met, neither party can back out of the sale. Once signed, your attorney will also need to obtain a bank trust (or fideicomiso in Spanish) permit from the Ministry of Foreign Affairs.
“During this time, your lawyer should also be verifying the legal status of the property", wrote Live and Invest Overseas. “If everything is in order, the notary and attorney will work with the bank to have the trust (fideicomiso)
Here are a few items that will be provided by the seller that your English-speaking Mexican attorney should definitely review:
- Right of Transfer
- Terms of Purchase Contract
- Certificate of No Encumbrances
- Certificate of No Tax Liability
- Property Appraisal
Here’s a list of documentation typically required of foreigner buyers (including Canadians) who are in the process of purchasing property in Mexico, which your notary will then file at the public registry:
- Driver’s License
- Recent Utility Bill
- Incorporation Documentation (If applicable)
3. Execute the Purchase/Sales Agreement
At this point, the bank should have already received the trust permit from the Ministry of Foreign Affairs, so you should be able to start the closing process, which will include transferring the property title into the fideicomiso. Your lawyer should also be able to start the closing drafts for the deed, then work with the notary and bank to review the final version.
4. Close and Transfer the Title
After verifying that everything is correct and the closing paperwork is ready, you will receive a due date for the final closing costs, when you will also sign the deeds, settle any other outstanding payments and transfer the title to the bank trust / fideicomiso. The notary will also issue an official copy of the deed at closing, which serves as your first proof of ownership. Within three months, the Public Registry issues a final deed that includes copies of all certificates and other paperwork related to the sale of the property.
“When buying property in Mexico, the delivery of your land and taking of title are different steps”, wrote Live and Invest Overseas. “This means you don’t immediately take possession of the property at closing”.
5. Complete a Walk-Through Before Delivery of Unit
After closing, you will complete a walk-through of the property before final delivery, just to make certain it is in satisfactory condition before you take possession. Finally, you will sign a delivery statement that contains the official delivery date of the real estate and take possession of your new home!
Top Second-Home Destination for Canadians - Why Mexico?
Considering the monstrous freeze that grips Canada each year during the seemingly endless winters, it’s not surprising to learn that so many Canadian citizens own a vacation home in Mexico, where the climate is just as warm as the culture! Over the last few years, more high-net-worth Canadians than ever before have settled on Mexico for vacation real estate investments, thanks in part to the highly favorable environment for Canadian dollars. In fact, two recent studies by the international real estate search portal Point2 Homes, which ranked the top 30 home-buying destinations outside of Canada, found Mexico is the top location for Canadians who purchase a home abroad.
“Canadians love Mexico”, wrote the Vancouver Sun. “Mexico stands out as the first choice for Canadians buying abroad”.
According to the study, the top destinations in Mexico for Canadians are Puerto Vallarta on the west coast and Playa del Carmen in the Caribbean region, which has also held the title of the fastest-growing real estate market in Latin America for some time. The city’s location just south of Cancun also means Playa del Carmen has modern infrastructure and high occupancy rates, leading to high yields.
Of course, Mexico is also brimming with remarkable excursions and unforgettable activities, many of which simply can’t be found anywhere else in the world. In addition, the winter weather is ideal in most (if not all) of Mexico’s top destinations, where mild temperatures, plenty of sunshine and picture-perfect beaches await!