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52 613 116 6827 ~ From USA: 530-786-4395

109 Oriente Jose Maria Morelos and the Malecon at Hotel Las Cabanas de Loreto

Loreto, B.C.S., Mexico 23880



Closing Process

Overview of Real Estate Closing Process in Loreto BCS

Beautiful ground level condo with large terrace + garage

Closing a purchase in Mexico is more complex, expensive to the buyer, and lengthy, than is typical in the United States.   The purpose of the exercise in both locations is to get good clean ownership from the seller to the buyer.   The roles of the various participants are different here, though, and some of the steps have no counterpart in an American closing.

Once buyer and seller have agreed to the sale by signing a purchase and sale agreement (often with some revisions and addenda), the real work begins.   A closing office, or an independent attorney, will coordinate all the steps required.  Buyers must apply for a permit for a new trust, or to transfer an existing one.  That is obtained from the Foreign Affairs department, and the Mexican bank that will be the trustee makes the application.

Among the first things a buyer has to do is thus:

  • Fill out a form identifying himself and anyone else who is going to be a first-level beneficiary, plus successor beneficiaries, in much the same way he would for a lawyer drafting an American trust.   Once this document and fees (see the next article, on closing costs) are given to the bank, it sends the application.
  • At the same time as the trust permit is applied for, the closer will order an official appraisal called an avaluo, and also order certificates that the property is in the name of seller and is free from liens, and also that the annual real estate taxes are paid.
  • The closer will also gather proofs of identities of all parties involved (passport copies, usually) and of their residence (usually in the form of a current utility bill from buyer’s home).
  • The closer furnishes all this documentation to the notario.
  • In this same period, the closer will obtain a US-style title report, which will be required to obtain title insurance if it is desired (see the separate article on title insurance).  This report traces seller’s title back to a point at which it is certain that the title is good (often to a deed signed by the President of Mexico conveying national land).

When all these items are in place, the notario can begin drafting the “deed” (see the separate article on notarios and their key role, and on the trust itself, called a fideicomiso).  For foreigners this instrument is both a transfer of title from the seller to the new trustee and the document that establishes the trust, and with it the new trust relationship between the trustee bank and the buyer/new owner.  If there is a lender involved, which is more and more often the case, a special form of the same trust will be used providing security for the lender (much like an American deed of trust or mortgage), thus involving a fourth party to the paper.   This document will often be 25 to as much as 50 legal size pages in length, especially if there is a lender, each paragraph and statement in it must be correct, and is cross-checked by the notaria against source documents, and the process therefore typically takes weeks to complete.

The draft deed must then be reviewed and approved by each of the participants:   new trustee bank, seller’s trustee bank, buyer, seller, and lender if there is one.   Each may have corrections.   When all corrections are made and agreed to by everyone, a date can be set for the parties to sign.

At the closing itself, the closer or a translator will explain the content of the instrument to the buyer, if necessary, making sure that each name is spelled right, the relationships are correctly described, the alternate beneficiaries are properly identified, etc.   After last-minute corrections are made, the trust is signed by all parties, and buyer and seller sign an escrow disbursal order giving the amounts to be wired by the escrow to seller, to the real estate brokerages, and to anyone else who is to be paid from seller’s proceeds.

Any of these steps can take weeks.   Sometimes errors or discrepancies are discovered during the process — and sometimes at the last minute, requiring a postponement.    Please be patient.   But please also stay in touch with your closer and work with him or her, and you will get to that magical day when everyone signs.

A word about powers of attorney:   because of the inherent uncertainty and possibility of delays, either buyer or seller may choose to give a power of attorney to someone — often a member of the closer’s staff.   If a power is to be used, that fact must be disclosed to the notaria in advance, and the details of the power, identification of the person given the power, etc., furnished, since the power itself will be recited in the final document.  Also, if the power is to be executed in the US, it will be signed before a notary, and then the notarization “apostilled,” (a process of certification of the notarization by the individual state’s Secretary of State that is provided for in an international convention that both Mexico and the US are signatories of).   For Canadians, whose country is not a signer of the convention, the document must be signed at a Mexican consulate.