Buying Real Estate in Costa Maya Mexico.  When is the best time to be buying beach front property in Mexico or property in a growing tourist area? The sooner the better!

The nearby Port of Costa Maya has more cruise ships docking than ever before along with a significant increase in destination visitors, infrastructure and the recently added Mayan Water Park in Nuevo Mahahual is drawing more tourists and investors to the area.

Real estate and construction near town has increased significantly in the past several months.  With the ongoing rental shortage, Buying even a small rental property reaps rewards, don’t miss out on this upswing!

What Costa Maya Realty can do for you:                                                                                                                                             
Once you have communicated what type of property is of interest to you, we can make suggestions of specific properties and arrange to show them to you, and also make some inquiries of any for sale by owner or other non-exclusively listed or non listed properties on your behalf.

  • Your understanding and best interest is our top priority at every stage of the buying process in order to help you reach an agreement with the Seller.
  • We will prepare an offer to purchase to present to the Seller, and request any furniture, boat, etc., you may want included in your offer, followed by counter offers if necessary.
  • We review the property titles to all of our listings ensuring that you are buying the exact property as listed.
  • Costa Maya Realty can refer you to local attorneys to handle the real estate transaction on your behalf.  The formalization of a final contract and titling is done by a special type of attorney appointed for land transfers called a Notorio Publico.  If you are a foreigner, an attorney will also apply for your permit from the Foreign Affairs Ministry, whether you title the property in a “Fidiecomiso” (a trust held for you by a Mexican bank) or a Mexican corporation, (which an attorney would have to set up for you).  See METHODS OF TITLING, below.

Buyer Beware!

  • If you see something like this, we suggest you run the other way!  “No incluidos, los honorarios del 5% + IVA del precio de venta, pagaderos por la parte compradora a la agencia en concepto de gestión en la compraventa.”  Translated it is saying “Not included, fees of 5% + VAT (16%) of the sale price, payable by the buying party to the agency for management in the sale.”  That equates to a 21% sales commission, paid by the Buyer, rather than the typical 6-10%, which is paid by the Seller.
  • You should never give cash to a seller, or write a check out to a seller for a “deposit” or earnest money.  All earnest money or deposits should be held in escrow by a known title company, or a Notorio. 
  • There’s a lot of gorgeous land, however, just because it may physically appear buildable, does not equate to the proper zoning or type of title to allow immediate or even future construction.  Even one lot being adjacent to another one with a building on it, does not mean that lot is buildable.  
  • Closing and obtaining title to a property will always involve a written contract beyond the offer to purchase, and signing additional paperwork with a Notorio Publico.

Some factors you may want to consider in choosing a Real Estate Agency:

  1. Does the agent have actual training in the USA with ethics and jurisprudence courses completed?
  2. Does the agent represent a reputable Real Estate Agency specializing specifically in the Costa Maya area?
  3. Does the Agent live in the market area and have intimate knowledge of and familiarity of our area, or are they only here part-time or live in a different city, such as Playa del Carmen?

Buying real estate in mexicoBUYING REAL ESTATE IN MEXICO NEAR the COAST or BODY of WATER
Purchasing real estate anywhere in the world is no trivial matter, but thankfully, buying property in Mexico is not difficult or risky if you utilize trusted resources, and follow the appropriate steps.  The territory of Mexico within 100 kilometers of its national borders and within 50 kilometers of its coastlines is referred to as the “Restricted Zone”.  In accordance with the Mexican Constitution and Mexican Foreign Investment Law, foreigners are prohibited from directly acquiring title to land within the Restricted Zone.  (This designation was originally envisioned as a national security measure intended to protect the country from foreign-assisted ocean invasions from abroad).  Mexican citizens can purchase real estate in the Restricted Zone under the normal laws and regulations.  However, in an effective effort to encourage foreign investment in Mexico, the restrictions on foreign ownership of properties in the Restricted Zone have been substantially eased in the past two decades, as outlined below.Once the decision has been made to purchase a property, we will prepare and present the Offer.  Earnest money payments should never be paid directly to the Seller.  Rather, earnest money payments should be deposited in a certified escrow account either through the Realtor’s escrow agent or through an optional, certified title company such as First American Title or Stewart Title, and be legally designated as a partial payment against the sales price.  If the sale does not proceed to closing due to an issue with the Seller, the escrow agent or title company will return the deposit to the Buyer.  The amount of the escrow deposit is typically 10%, however, in Real Estate, terms are always negotiable between the parties.The buying process in Mexico involves the services of an attorney and a special type of federally-sanctioned attorney, known as a Notario Publico.  A Notario in Mexico is not the same thing as a “notary” in the U.S.  In Mexico, Notarios are Federally-appointed and are near the top of the legal system.  It is their job to assure that the purchase and sale transaction, the “Compraventa”, conforms to all legal standards and that the chain of title is undisputed and clear of all encumbrances.  In this respect, the responsibility of the Notario is very similar to the responsibility of a title insurance company.  The Notario is responsible for reviewing all the closing documentation from the Seller and delivering the documents to process the transfer of title.  The Notario should provide you with a detailed proposal and timeline for their work before you move forward with them.  It often takes 90-180 days to complete their due diligence and submit the proper paperwork.The anticipated closing costs should be estimated in writing by your Notorio at the time you agree to use their services, as the closing costs are customarily paid by the Buyer.  The Seller is legally obligated to pay any capital gains taxes, and the Realtor’s commission.  The Buyer and Seller are free to negotiate costs.

https://costamayarealty.com/buying-real-estate-in-mexico/Required closing costs include:

  • a 2% transfer tax imposed by the Federal government, based on the assessed property value
  • a 0.5% appraisal fee based on the assessed property value
  • fees to obtain proof of property tax payments, electric, water and federal zone statuses, etc.
  • a fee to conduct a title search, etc.
  • the Notorio’s fees
  • *other miscellaneous expenses such as office expenses or travel costs are not included.  All totaled, these closing costs normally amount to 6-7% of the selling price in this area.

How can I pay for a property?

  1.  Cash
  2.  A bank loan in your country, or HELOC on a property within the USA.  Financing through a Mexican bank is rare
  3.  IRA funds
  4.  Seller financing.  Sellers will sometimes provide financing.   We can assist you with making these arrangements using  standardized contracts that protect the interests of both the Buyer and Seller.

METHODS OF TITLING

There are two formal and well-defined methods that allow foreigners to indirectly acquire title to properties within the Restricted Zone. As you might expect, there are pro’s and cons to each method, based on your goals for the property, such as: rental income, or having a business, versus living in it full-time. These options are best discussed with your accountant and attorney.

(1)  Foreigners can form a Mexican corporation with two members constituting the Board of Directors, with or without the participation of a Mexican citizen. There are no investment restrictions on foreign-owned Mexican corporations buying and developing property in the Restricted Zone. A foreign-owned Mexican corporation can own the property in perpetuity.
There are several types of corporations, each with its own suffix. Choosing which type of corporation to set up is important for tax purposes abroad and in Mexico. Discussing your goals with your attorney and/or accountant on both sides of the border will save you time and money in the long run, by understanding the benefits and costs involved with each.Two common types of corporations utilized are the the S.A. de C.V. and the S. de R.L. de C.V. The S.A. de C.V. is essentially a negotiable stock corporation of two or more persons whose liabilities for acts of the corporation are limited to their capital contribution. An S. de R.L. de C.V. is a nonnegotiable stock limited liability corporation of two or more persons whose liabilities for acts of the corporation are limited to their capital contribution.Typically the cost of establishing a Mexican corporation is approximately $2,000. As in most developed countries, a corporation must file annual financial reports and be responsible for annual taxes on any income from the activities of the corporation. An accountant in Mexico can file income taxes for you for about $500 per year to keep your corporation in good standing.

(2)  Alternatively, foreigners can establish a bank trust, known as a Fideicomiso, which holds title to the property for fifty years, has your beneficiaries listed on it, and it can be perpetually renewed, so it is rather simple to leave it to your heirs, and so on. The Fideicomiso allows the Seller to irrevocably transfer the property to a legal bank trust and then allows the buyer complete access to that property, including its resale. There are no restrictions on the use of the property, including renting or leasing it.  Establishing the trust costs about $2,000, and banks typically charge an annual fee between $500 and $900 to maintain the trust.Costa Maya Realty & Mahahual Mexico Real Estate Services.  Offering properties along the Caribbean Sea in southern Mexico.