Legal Services Riviera Maya

LEGAL SERVICES

WE ARE ENGEL & VÖLKERS PLAYA DEL CARMEN

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WE ARE ENGEL Engel & Völkers is one of the world’s leading service companies specialized in the brokerage of premium residential and commercial real estate.

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VÖLKERS In our flagship office in Playa del Carmen we offer white glove legal services to guarantee our clients a high-quality experience.

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With this guide we will explain some frequently asked questions about acquiring property in Mexico.

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How can foreigners acquire property in Mexico?

In Mexico, foreigners can directly acquire properties outside of the restricted zones. Restricted zones are those that are 50 kilometers from the coast and/or 100 kilometers from international borders.

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Considering that Quintana Roo embraces the wide coastline of the Caribbean Sea, it is a restricted zone, therefore the law establishes that the acquisition of land will be through an ownership transfer trust.

The trust allows foreigners to acquire absolute and irrevocable rights over the property, they are established with a duration of 50 years, and are renewable.

The constitution of the trust is done with the mediation of banking institutions authorized by the Mexican banking laws.

This implies that you will be the trustee and will have all the rights to sell, lease, improve, exchange, use, bequeath and encumber the property, while the bank will act as the trust bank.

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Can I acquire in co-ownership?

Yes, for joint ownership, both co-owners will be designated as principal trustees. It is common for such co-owners to designate themselves as substitute trustees, and they may also appoint other third parties, such as their children, as substitute beneficiaries in case of death.

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What are the formalities of the Trust?

The duration of the trust is 50 years, and it can be renewed.

The contract is executed before the faith of the notary.

P e r m i s s i o n f ro m t h e M i n i s t r y o f F o re i g n A ff a i r s i s re q u i re d ; t h e b a n k c a r r i e s o u t the formalities.

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What documents does a foreigner need to be able to buy a property in Mexico?

Passport

Immigration form

Proof of address

* In case of being married we will need the marriage certificate.

Is there an age limit to buy a property?

No, in Mexico there is no age limit to purchase a property.

Is there a minimum income required to purchase a property?

No, only to have sufficient resources to purchase the property.

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Can you buy a property if you are retired?

Yes, in Mexico the laws guarantee that all people can purchase property regardless of their age or occupation.

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What is the role of the Notary Public in Mexico?

The Notary Public is a very important person, since he/she is the only one who can give legitimacy to the transaction through a public deed (title) that the trustor shall grant to the trustee before his faith.

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What happens after I sign the public deed?

The Notary sends the deed to the Public Registry of the Property, he will give you a ticket of its inscription called “boleta de registro”.

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Does the buyer need to be in Mexico

to close the purchase of the property?

No, you can grant a power of attorney at the Mexican embassy or consulate in your country to a person who is in Mexico and send it by courier.

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¿What are my closing costs?

• Notary Public Fees.

• Closing Attorneys Fees (if applicable) • Escrow Fees (if applicable)

When this service is requested, a closing cost will be prepared that will include notary fees, transaction tax and legal fees, which will range from 6% to 8% of the total transaction amount.

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Do I need an attorney?

Yes, the real estate transaction involves the execution of legal documents that must be reviewed, so it is important to have the advice of a real estate attorney to guide you through the entire process. Engel & Völkers has a team of experienced real estate lawyers who will assist you during the transaction.

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documents by email to the lawyers?

Yes, the documents must be scanned and visibly legible (preferably in color) so it is possible to make an online purchase.

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Does the buyer have to own the property for a minimum time before reselling it?

No, there is no minimum time required for a resale in Mexico.

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How do I transfer a Title?

As the beneficiary of the trust, you must instruct the bank to transfer the title if the buyer is a Mexican citizen or assign the rights of the trust contract to a foreign buyer.

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CLOSING COST When buying a property, it is important to consider that a side of the price of the transaction, a closing cost must be paid, which will assure you that the property you are acquiring in Mexico will be legally yours, so you can put your mind at ease.

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These closing costs range from 6 to 8% of the value of the property, this percentage will depend on the value of the property, the higher it is, the lower the percentage of the closing costs you will have to pay, due to the provisions of several laws that regulate this matter.

The closing costs include the following payment terms: notary fees, duties and taxes, trust incorporation fees and expenses, and closing and escrow fees, each of them will be explained below.

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What are the Notary fees and why should they be paid?

The Notary is a very important person during the closing process, since he is the one who will give legitimacy to the transaction through a public deed that the seller or trustor will grant to the buyer or trustee before his faith for such reason according to the Notary Law it is established that the Notary may charge fees for his services, and these will depend on the amount of the transaction.

Are foreigners required to pay duties and taxes like nationals?

In Mexico the duties and taxes are established in several Laws, which must be complied with by nationals and foreigners who decide to acquire properties in our country, since when they buy, they are subject to the Laws of this country, for such reason they must pay them in order to have legal certainty of the operation.

What does the payment of duties and taxes include?

The payment of duties and taxes includes the following concepts:

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Public Registry of Property.

To issue notices (informs that a transaction will be carried out with a certain property so that no one else can enter another transaction for that property) and inscriptions to give certainty about the owner of the property.

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ISABI (3%).

It is the Tax on the acquisition of the property, which is equivalent to 3% of the value of the property, in operations in U.S. dollars is calculated at the exchange rate of the day of the operation.

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Closing Government Documents.

The lien free certificate certifies that the property to be acquired is legally in order to be sold.

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Appraisal.

When a property is purchased, an appraisal of the commercial value of the property must be made, so that the corresponding tax payment is in accordance with the average of the sale value and the appraised value.

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Why do I have to pay fees and expenses to set up a trust?

Foreigners in Mexico cannot directly acquire property in the restricted area, which refers to 100 km from the borders and 50 km from the coasts. Therefore, property acquired by a foreigner in this zone will have to be acquired through a trust.

The ownership transfer trust is a contract through which a real estate property can be affected for the use and enjoyment of one or several foreigners for up to 50 years and which can be renewed, for its own benefit or for the benefit of a third party, entrusting the realization of such purpose to a trust institution.

The trust has 3 parties: the trustor (the person who contributes the property to the trust), the trust bank (the banking institution that will maintain the trust, this trust institution) and the trustee: who will have all the rights and benefits of the property subject to the trust, and may appoint one or more substitute trustee(s)

For its creation it is necessary: The permission of the Ministry of Foreign Affairs (SRE), where it will state which is the property that will be subject to the trust, who are the trustor and the trustee, the duration and the terms and conditions of the trust.

Initial expenses for the opening of the account in the trust bank, such account will be solely and exclusively for the payment of the annual administrative expenses.

The annual payment to the trust bank for administrative expenses.

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Is it important to pay for closing services?

I n o rd e r t o c a r r y o u t a s a f e o p e r a t i o n a n d g u a r a n t e e that the whole process will be done in the correct way it is necessary to count with the help of a corporate l a w y e r w h o k n o w s t h e w h o l e p ro c e d u re a n d p ro v i d e s the support, so that on the day of the signing of the public deed, the property that you are about to acquire is safe.

The services provided at the closing are: • C o u n s e l i n g b e f o re , d u r i n g a n d a f t e r t h e c l o s i n g .

• Request of all the necessary documentation for the closing.

• Review of each of the documents so that everything is in accordance with the law.

• Preparation of the contracts and documents necessary to achieve the closing.

• Attention to every detail of the closing.

• O p e n c o m m u n i c a t i o n a b o u t t h e c l o s i n g p ro c e s s .

• Scheduling of the closing so that it is in time and form as agreed between the parties.

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It will be a pleasure for Engel & Völkers Playa del Carmen to assist you and provide you with the best buying experience.

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It will be a pleasure for Engel & Völkers Playa del Carmen t assist you and provide you with the best buying experience with your advisor.

What is an Escrow for?

Escrow is a legal instrument by which a third party holds the money assets and payment instructions for the buying and selling parties until certain conditions agreed upon by both parties are met.

The third party is a mediator that suppresses the risk for both parties in a transaction,such as the sale of a property, whether it is a house or land, finished or in process of construction, through cash concentration accounts and is responsible for dispersing the money, by mutual a g re e m e n t .

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How does Escrow work?

When it comes to real estate transactions, Escrow is used to temporarily hold the buyer’s earnest money (or good faith deposit), which demonstrates a level of seriousness in pursuing the eventual purchase of the property.

After the offer is made, and accepted, the buyer will transfer the earnest money to an escrow account to demonstrate to the seller of the property that the purchase is serious. Once the transaction of the property is closed and all the necessary documents are signed, the escrow company releases the escrowed funds to the corresponding persons, according to the instructions that were initially given, such as the application of the payment of the property, notary fees broker’s commission, among others.

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C O N TA C T Y O U R P R O F E S I O N A L A D V I S O R ENGEL & VÖLKERS Playa del Carmen 10 Avenida Norte y calle 14 Local 1 Zona Centro,77710 Playa del Carmen Quintana Roo. Phone: +52 998 580 8488 w w w. p l a y a d e l c a r m e n . e v re a l e s t a t e . c o m

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