FREQUENTLY ASKED QUESTIONS

What is the difference between a trust and a promise to trust at closing?     When closing on a trust in front of the Notario all beneficial rights of interest transfer to the buyer. When closing on a promise to trust the seller retains legal title and buyer has only equitable title, no beneficial rights of interest transfer.

What is the investment clause in a trust? When purchasing raw land in excess of 2000 sq. meters a minimum investment of i.e., 250,000 USD shall be made by the buyer within prescribed amount of time i.e., 24 months. The larger the property the larger amount of investment to made by the buyer.

What is the difference between an apostille and a notary certification? A Notary certifies that the person or persons signing the documents are the people they say they are and is verifying their signature.  An apostille certification by the Secretary of State certifies that the Notary’s signature is authentic and that the Notary’s signature is recognized by the State.  An apostille certification is recognized world wide except for Canada.  Canadians use the Mexican Consulate to certify their documents.

What is the difference between joint tenants with rights of survivorship and tenancy in common? Joint tenants with rights of survivorship have an undivided interest in the whole meaning if one of the parties dies all their interest passes to the other owner(s). Tenants in common have divided interest and upon the death of one of the owners their interest passes to a third party.

What is the difference between a closing company, an escrow company and a title company? A closing company processes the paperwork to create the trust, the escrow company holds the funds and disperses them upon instruction by the parties to it, and a title company researches titles to real property and insures it.

What is a permit thru the Ministry of Foreign Affairs? The permit allows a non Mexican to hold property in a restricted zone in Mexico.

Why does a buyer need title insurance? To insure the property that is being purchased is free and clear of liens and encumbrances except those revealed in the title i.e. rights of way, mortgages, restrictions.

What are capital gains taxes? This is a tax to the seller by the government on the sell of real property wherein the tax is based on the difference between the amount paid for or registered value in the trust or escritura and the amount the property sold for minus certain costs and fees allowed by law. The amount of the tax is 25% of the sales price or 33% of the gain whichever is lower.

What is a “preventative notice” filed at the recorders office? A notice filed on a specific property notifying any interested party that the property is to be transferred.

What info do we need from the buyer? Copy of passport and page 24 of passport, copy of current driver’s license, copy of current paid electric bill from home address and copy of marriage license if married. Copy of the tourist visa and ask if they will be getting a mortgage on the subject property and if they are planning to file a corporation or family trust.

What is a beneficiary information sheet and why does the closing company need it?  This form tells the bank and Notary how the buyer is going to take title and who the primary and substitute beneficiaries are and all of their contact information.  The bank and notary must have this information in order to draw up the new Trust or Escritura.

What is the name of the County Recorders Office in Mexico?  The Public Registrar’s office in Catastro ( the land registry office )

What is Cession of Rights in a Trust?  It means that the buyer is assuming the seller’s exiting Fideicomiso with the remaining years on it and having it put into his or her names(s). Saves money and time by not having to get a new permit.

Who signs the Trust at close?  The buyer and then the seller sign.  The next party to sign is the Trustee bank after all signatures have been taken. Then the Notario initials each page certifies the document with a stamp and signature; then sends it to recorded and officially registered by the county recorder.

What are the 5 ways to purchase property in Mexico?  Cash, seller carryback, mortgage, 401 K and refinancing or mortgaging a property in the States or Canada.

Is there an exemption on Capital Gains on raw land, agreements or Promise to Trust?  No to all three.