Closing Costs

Explanation of Closing Costs
The closing procedure generally takes from 30 to 45 days and these costs are paid by the buyer.

Note: All amounts are in US Dollars, with an exchange rate of $10.50 pesos per dollar.

When a property is acquired through a Purchase-Offer or when a Trust Transfer Domain is carried out before a Notary Public, in order for them to be legally constituted they must meet with a series of permits and expenses, which are described as follows:

l.- TRUSTEE FEES: These are charged on a yearly basis and are paid upfront. They may vary according to the transaction and considering the property and the trustee; nonetheless most of them charge $450. in properties priced under $700,000.00. For properties priced up to $l,500,000 they charge $600. and over $1,500,001.00 they charge $1,000.

In Addition to this all the Trustees collect the same fee for the Trust Acceptance, which is charged only once.

2.- FOREIGN AFFAIRS PERMIT (SRE): This is a permit that the Notary Public or the Trustee process through their agents and they may cost $1,100. as a maximum fee; this may be in proportion to the agents fees, since the permit fee from the Foreign Relations Office does not vary.

3. NATIONAL FOREIGN INVESTMENTS REGISTRATION (RNIE).- The Trustee has the obligation to process the registration of the Deed within a 30 day period after the granting and the cost per fees and rights may vary from $285 to $330 according to the Trustee.

4.- NOTARY PUBLIC FEES: These are regulated by a fee list authorized by the Notary Law valid in every State. Sample fee list is as follows:

From $1,000 up to $9,523 = 2% From$9,524 up to $1,9047 = 1.15%
From $19,048 up to $47,619 = .85% From $47,619 up to$71,428=.65%
from $71,429 up to $95,238 = .50% From $95,239 up to $476,190 =.25% from $476,191 and over =.20%.

(Note: The fees can be for a lesser amount but never for an amount over this fee list.)

5.- PROPERTY ACQUISITION TAX.- This is a State Tax. The notary Public is responsible to charge and declare it without surcharges. In the case of the State of Nayarit this takes place within a 30 day period after the granting of the Deed. It is 2% based on the highest value of the previously authorized construction appraisal.
In the case of the State of Jalisco it takes 60 days. This tax is charged based on the construction appraisal value using different percentages and fixed amounts. It is important to mention that in order to calculate this tax you must apply a special procedure and the real closing costs cannot be determined on your own, a notary must determine these costs.

6.- APPRAISAL AND DIVISION: Your cost is calculated as follows:

on values up to $250,000 = 3%
$250,001 - $500,000 = 2%
$500,001 – and up = 1%

(Note: These percentages may vary according to the appraiser’s criteria.).

7.- PUBLIC REGISTRY RIGHTS.- This permit can be processed through the notary. Once the corresponding rights are paid, the notary will be able to process the registration in the Local Public Registration Office where the property is located. The costs vary as stated by the valid law in every State.

8.- NO LIENS CERTIFICATE
NO LIENS ON PROPERTY TAX, NO LIENS ON WATER OR MAINTENANCE FEES
The notary has the obligation to check that the subject property has no lien. The notary will gather the certificates from the corresponding Government offices and from the Condominium administration. This charge is normally not more than $60

9.- OTHER CHARGES. This depends on the notary and these can be: Travel expenses when there is need to sign documents. Copies and other administrative costs. This is usually not more than $767

10.- TITLE INSURANCE.- This varies according to the value of the transaction and the Insurance company but it should not exceed 0.5% - 0.7%

11.- ESCROW ACCOUNT.- In order to manage the funds for the purchase of a property it is recommended to open an ESCROW. The fees are $500 as opening costs.

It is important to mention that all the aforementioned expenses are mandatory and they must be made. In the case of a Trust Transfer Domain for a Purchase-Offer you can omit steps 1, 2 and 3.

With this information our clients can determine the real closing costs. Nevertheless, it is very important to visit your notary for assistance or if this is not possible then you should go to a Real Estate Agency which has qualified personnel to supervise your closing.

All of this information about closing costs it is necessary to have an idea of what your closing costs may be and according to my expertise in this field, I prepared a chart which can help determine the approximate costs very fast.

(ONLY WHEN CONSTITUTING A TRUST)

Up to $20,000 17%
From $20,000 to $50,000 10% to 15%
From $50000 to $100,000 7% to 10%
From $100,000 to $150,000 6%
From $150,000 to $250,000 5%
From $ 250,000 to $450,000 4%
From $450,000 to $1500,000 3.5%
$1500,000 and over 2.5% al 3%

Closing Costs for Buyer & Seller
Closing costs for the buyer are different from what many foreigner buyers first expect in Mexico. Because the majority of the Cancun and Riviera Maya are in the restricted zone, a foreigner buyer must own his residence in a trust.

This trust is administered by a Mexican bank and has its own cost. A buyer may consider a new trust for 50 years, renewable, or assume an existing trust.

The notary gives the estimate of closing costs for the trust and associated fees. It is customary for the buyer to select the notary. The costs are given in pesos at a conversion rate selected by the notary or requested by the buyer. The rate is adjusted closer to closing, when the final payment is made. Customarily, the buyer pays a deposit of 50% of the estimated costs, so that the notary can start the application for ownership and order the appraisal. The appraisal is not a market appraisal, but one from which the city computes the property taxes.

The seller should know before closing if he has capital gains costs. However, many times this information is learned upon the written agreement of a sale, when the seller’s documentation is taken to the notary.

For a foreigner to be exempt from capital gains tax on a Mexican residence, he must have a permanent visa, such as an FM2 or FM3 and satisfy the notary with documentation of expenses, such as gas or electric bills for the property that he is selling.

If the seller has an existing trust, the bank charges a fee to cancel it, if the new buyer is not assuming it. The seller can also be responsible for the payment of the real estate commission, including iva or sales tax.

The seller should pay also, the proper portion of property taxes, his current trust fees, utilities until date of closing, condo fees and assessments, contributions to city services being charged to his neighborhood, and what other costs are negotiated between buyer and seller.

The buyer will work off the estimated statement from the notary, and when the final 50% is paid, should receive a formal paid receipt.

The Closing Cost Estimate from the notaries all follows a common format:

The Property Value of Sales price is given in Dollars and the selected exchange rate. The Property Value is then given in Mexican Pesos.

The notary’s fee is a percentage of the sales price in pesos and averages from .007-.01 percent. This includes the professional fee, a charge for office supplies, and iva. The notary’s fee is sometimes negotiated.

The transfer or acquisition tax is approximately 2% of the appraisal value. The notary will order the appraisal to be done by an authorized appraiser. This value will also establish the basis for the yearly property tax. The law changed in 2002, whereby the transfer tax is charged on the appraised value instead of the sales price.

Additionally, there is the cost to apply or register the trust in Mexico City. Foreigner ownership of real estate is recorded at the Foreign Affairs Registry in Mexico City.

The buyer pays for the cost of certificates to show that there are no liens of record prior to sale and that the property tax has been paid. An additional certificate will show that the water bill (Seapal) has been paid, if the property has this city service.

The bank will also charge a set-up fee or assumption of the trust, plus the first year administration fee in advance. There is a yearly fee for administration of the trust, due on the anniversary date of the formation of the trust. These fees currently run from $350US-$700US a year, depending on the bank.

The costs for closing for the buyer who has a trust, average 4-7% of the sales price. The sellers in this area consider the transfer tax and trust cost to be the responsibility of the buyer. A Mexican citizen does not have the cost of a bank trust, but pays the other normal fees charged by the notary.

For many first-time buyers, it is a shock to realize that closing costs are more than is typically paid in the US and Canada. It is important to budget for this expense when you are determining the overall cost of the purchase.

If a bank or title company escrow account is used to hold the purchase funds, there is an additional one-time charge averaging $500US. Title insurance can also be selected and can be 1% of the sales price. Currently, no Mexican companies offer title insurance, but insurance can be obtained from US companies registered in Mexico.

If you are building in an area that is overseen by an environmental impact agency, there is a cost for an ecological study before a permit to build will be issued.

Additionally, if you have an attorney working for you, you will have the cost of his fees as well.

Although closing costs for the buyer can be substantial, I recommend that you not try to take a short cut. To protect your purchase, you need to have the trust and public deed. To do this, you must go through the proper channels with a notary.
The majority of pre-existing homes for sale, whether they are villas or condominiums, are offered furnished. There is no large discount in price to exclude the furniture.

If your purchase is adjacent to a federal zone, such as the ocean, a river or a federal highway, you should have the concession researched. If you want the private use of the federal zone, you enter into a lease agreement and pay an annual fee. By paying for the concession, you have the use of the federal zone under certain guidelines. Many homes have terraces, beach palapas, pools or landscaping on the federal zone. Construction of part of a permanent structure, such as a room of the house, is not permitted in the federal zone.

Closing Costs

Explanation of Closing Costs
The closing procedure generally takes from 30 to 45 days and these costs are paid by the buyer.

Closing Costs for Buyer & Seller
Closing costs for the buyer are different from what many foreigner buyers first expect in Mexico. Because the majority of the Cancun and Riviera Maya are in the restricted zone, a foreigner buyer must own his residence in a trust.

Announcements

Announcements

Closing Costs

Explanation of Closing Costs The closing procedure generally takes from 30 to 45 days and these costs are paid by the buyer.

Closing Costs for Buyer & SellerClosing costs for the buyer are different from what many foreigner buyers first expect in Mexico. Because the majority of the Cancun and Riviera Maya are in the restricted zone, a foreigner buyer must own his residence in a trust.

Announcements

Announcements

Explanation of Closing Costs
The closing procedure generally takes from 30 to 45 days and these costs are paid by the buyer.

Closing Costs for Buyer & Seller
Closing costs for the buyer are different from what many foreigner buyers first expect in Mexico. Because the majority of the Cancun and Riviera Maya are in the restricted zone, a foreigner buyer must own his residence in a trust.