I just bought my home in front of the beach. Can anyone build in front of me?

Answer:

All beaches are public in Mexico. Beaches belong to the Mexican government for the use and enjoyment of all.

No one can buy in the maritime zone. The adjoining landowner to the maritime zone should pay the annual taxes on this adjacent land and should work to acquire the concession agreement to this area.

Paying the annual small amount of tax for the concession in front of your land only gives you the first right to proceed with the concession agreement. You need to hire an expert lawyer or qualified professional to work with the government on acquiring the concession of the federal zone for as long a period as is possible to be granted. Be sure you have the concession documented in your beneficiary rights of your fidecomiso.

The term of the concession agreement can be 10 years, 20 years, whatever is being done at the time you make your formal request. There is a substantial cost required in obtaining the formal concession from the government, and it is not automatic.

There is an annual tax due, as well. Do not confuse the small yearly tax on the concession as the same thing as a formal concession agreement for determined period. Your yearly tax then will be related to the formal concession agreement.

Recently, the ongoing tides and currents has accrued land on some of the beaches between the federal maritime zone and private land. The fideicomiso (not related to your trust) in Vallarta has sold some of this land to properties in front of this new land. When the currents change again, this land can also be for a time inside the maritime zone as nature continues to change.

Question: Can I bring in household goods and my car into Mexico on my FM3?

Answer:

Yes, if your residence visa is current, you may import your car. You can also drive your car in on a tourist visa, but you will need to drive back out and re-enter according to whatever rules are in place at the time.

Contact your nearest Mexican Consulate for more information about the requirements for using your visa for these import purposes.

There is a time limit in which to bring in household goods once you have activated your visa.

Question: Is there escrow in Mexico to hold the deposit of funds required in my purchase agreement?

Answer:

Escrow is available in Mexico, and certain Mexican banks and US and Canadian escrow companies are permitted to hold your money as a third party. Check which ones you may use through your Ampi real estate agent and/or Mexican attorney.

Escrow laws are rare in Mexico as in general the country does not use escrow for purchasing property. Therefore, ask what jurisdiction the escrow contract is in if you are using for a purchase or sale.

Question: Should I get title insurance?

Answer:

You should consider title insurance if you are paying more than a million dollars for the property, there is a history of issues on the property, or you are buying next to the maritime zone.

Make your decision after you have researched this question thoroughly to your satisfaction with the help of a competent and honest bilingual attorney well versed in maritime law.

Question: What is an exclusive listing agreement on property in Mexico?

Answer:

An exclusive listing agreement in Mexico is like those in the US. A real estate professional is given the exclusive right and responsibility to market the property and receive offers to present to the seller. The seller agrees to compensate his exclusive agent for accepted offers during the term of the exclusive listing contract. The real estate professional may agree to offer the property to other real estate agencies and to pay them a fee or percentage of the real estate commission on the property.

The exclusive listing agreement and compensation to the real estate professional applies to all offers, regardless of who brings in the buyer. If there are exceptions permitted in this agreement as to whom may be named as an exception where no payment is due the broker, this must be mentioned in the agreement.

Question: Why are buyer closing costs so much higher in Mexico than in the US? Why doesn’t the seller or mortgage company roll these costs into the purchase price and loan?

Answer:

If you are purchasing in the restricted zone in Mexico, you will be required to acquire your property through a fidecomiso bank trust. The bank trust holds the property and cedes to you the rights to own, build, remodel, sell, tear down, or bequeath the property to someone else. There is a cost associated with applying for and receiving permission to buy as a foreigner. There is an annual fee to the bank for administration of the trust.

But the single largest expense is usually the acquisition tax to acquire the property. This is a % of the property value from a chart, (Jalisco) or a percent of the sales price (Nayarit)

This article is based upon legal opinions, current practices, and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller conduct his own due diligence and review.

harriet@casasandvillas.com

HARRIET COCHRAN MURRAY