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1. The word "MAŅANA" has more meanings than the limited one of "tomorrow." This one word can create a lot of misunderstanding in the beginning for a foreigner. "Some time" is a better definition of maņana. Learn to ask more specifically when "some time" or "later" is meant by the person using the word. Does "MANANA" mean tomorrow in the morning, in the afternoon, in the evening, at a certain time of the day. Does it mean another day of the week or month?
2. In a country where courtesy is used and where it is good etiquette to want your wish or request granted, it is common to respond "Yes" to whatever you want to occur. This affirmative answer, however; does not mean that your wish/request can or will realistically happen. You will find that if you are not so literal and inquire further politely, the answer is quite different. Your skill level of listening and politely asking questions can and should improve.
3. At this time, residential mortgages or financing by third parties is not common. Financing by sellers is rare and more expensive than you may expect.
President Fox and the government realize that more investments can be made in the country if attractive financing is offered and they are actively working on this issue. There are legal and professional issues which need to be solved before we will see mortgages more often.
Conventional methods used by US lenders include their need to have data such as sales figures for comparable properties, market appraisals, as well as realistic procedures for foreclosure and possession when a borrower is in default. This type of lender also needs the ability to sell mortgages to a secondary market where the proceeds are realized to invest in more mortgages.
There is also the issue of the lender wanting to qualify the borrower for the mortgage by the amount of income and debt which the proposed borrower already has. Americans are used to lower interest rates in the States, but the interest rate they will most likely have to pay to secure a mortgage on Mexican real estate is going to be higher.
Until financing is more available, most purchasers find other means to secure funds and they pay all cash for their Mexican property.
 4. There is some confusion about the status under which a foreigner can remain in the country. For foreigners, there is a tourist visa of certain duration for being in Mexico as a temporary visitor. Check what your individual country's treaty is with Mexico regarding the length of time you can be here on a tourist visa. You may also want to how you may extend it.
If you apply for and receive an FM3, you may receive one which is for retirement or one which is for work. If you are under a retirement FM3 and decide you want to work for income, you need to receive approval and have your immigration passport changed to reflect what work you are permitted to do. Americans have different permits for work than Canadians, and that is true for all foreigners. Find out from immigration what rules apply to your case. After you have had an FM3 for a period of time, you can apply to have an FM2. Find out what the requirements are and also research what limitations may apply to your residency when you change from a 2 to a 3.
5. One of the conditions which can exist when a country does not have wide-spread lending or mortgages, is that building standards can vary. There are fewer authorities to establish or oversee building specifications of much detail. Structural engineering standards for earthquakes are required by the federal/ local authorities who permit permission to build. Other than this requirement regarding construction, there are few addressing building construction standards. You should remember this when you start to purchase new or existing construction. Learn what you can require in a contact and who you can hire to help you with an inspection, if you so desire.
6. When you see a building which is not completed, it may be because the owner is building as he acquires more cash. Some homes take years for a family to be able to afford to finish with more than one level and or to be finished out with windows, doors, roof, etc. An obra negra, or building finished to the stage of cement and rebar, exists in almost every neighborhood. The owner is not required to tear the building down, or in most cases make it secure to prevent injuries to third parties. This building has most likely been paid for with cash. There is little chance that a lender is going to gain possession and take over the completion of the structure. This unfinished building is considered an investment, or money in the ground instead of the bank. The owner most likely expects to finish it someday or sell if for a profit "as is" when the market conditions warrant.
7. Professional educational requirements and licensing are not required for a person to be a real estate agent. The legal system does not distinguish who can sell real estate properties to third parties. Nor does it regulate commissions. One way you can investigate who you want to use as your agent (as well as what property you want to consider for purchase) is to ask questions and don't make assumptions. The professional real estate designations an agent has are an indicator of his/her knowledge and level of competency to assist you, but they are not foolproof. Take the time to learn more about the persons you may want to assist you in a purchase. I still thoroughly believe you need professional real estate professionals as well as a carefully selected real estate attorney to protect your interests.
8. If you are a foreigner buying within the restricted zone in Mexico, the bank trustee officer is required to sign acceptance of your fidecomiso before the transaction can be recorded and you can legally acquire the property as the primary beneficiary. For this reason, if you are getting a new trust and not assuming an existing one, you may not need to be present at the closing. You can authorize the release of purchase funds, when you know the transaction is ready to be closed in the presence of a Mexican notary public.
If you are assuming a trust, you will need to be present to sign the deed, or supply a power of attorney acceptable to the notary and the bank trustee. This is not as simple as it sounds, so ask a lot of questions. Do your research before you start the process for the power of attorney or decide to be physically present to sign the documents.
If you are a seller, you will need to be present or obtain an acceptable power of attorney in Mexico for transfer of the property.
This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer conduct his own due diligence and review.
Harriet
Cochran Murray
For
additional information on
properties, for sale or lease
within the bay please visit Harriet
Murray website, call
or e-mail me at: harriet@casasandvillas.com
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