Securing your title in Mexico

When to Take Title?

The right answer is very simple yet often ignored:

Even ifyou finance a property in Mexico through either a financial institution or Seller-carried notes, you should always take title on a property as soon as you take possession of it. This is how it works in the US and Mexico is no different.

Some developers and private sellers may suggest (or require) that you not close at possession of the property. Their rationale to you for this may be to reduce the upfront cash expenditures of closing fees or that they simply do not to give title until they have been 100% paid for the unit.

Note the following risks to you if the property title is not transferred to you at possession of the property:

1. You cannot receive a title insurance policy until you have title to the property in your name.
2. There may be an undisclosed lien against the property.
3. There may be a hidden claim against the property which could result in a lien against the property in the future. This will not show in a standard title search.
4. The seller can use the title as collateral for their future obligations since it remains in their name. You have no way to prevent this.
5. Your final acquisition tax rises over time as the property’s appraisal value increases. Acquisition tax is charged at closing so a rising home value could result in higher acquisition taxes.
6. The seller may not have the cash to pay their gain on the sale (if required) when you want to close and take title. This ties up the closing until the seller can come up with the tax payment. Meanwhile, your acquisition tax is also rising.

The bottom line is to take title on all real estate transactions at the same time that you take possession of the property, even if this requires a mortgage lien on the property. Watch out for anyone who suggests that you cut corners here.

You will be surprised how many property owners do not hold title on their property “just because that is way things are done here”. There are so many ifs that could go wrong if you do not take title on your property.

Always secure your investment by taking title at the time of closing.

If you are considering purchasing a property in Baja California, Mexico always procure a Real Estate Agent that belogns to any of the local Real Estate Associations, AMPI or APIR.
_________________________________________________________________Victor Loza provides real estate and relocation services for buyers in Mexico. I can be reached at (619) 730-1571 or via email at vbloza@gmail.com