Buying a property that is not yet built, and is located on land that is not yet urban, can be an opportunity for future capital gains, however, the investor must assume risks that can be reduced by taking into account at least the following points to ensure a secure transaction.
If you’re thinking of settling in Mexico, then you’ll need to know a bit about how the process of buying property in Mexico for foreigners will work. Here are some tips.
Tip #1 - Check property location.
The essential point is to verify if the property is within the state government's development plans, if there are adequate public utilities and communication routes and assess the time for the increase in capital gains (property´s future value).
Tip #2 - Verify the Seller.
It is necessary to investigate the ownership of the property under what terms it was acquired and under what scheme the property is being sold or if it is only a transfer of rights.
Tip #3 - Developer Verifier.
In the case of purchasing a property that is going to be built, it is necessary to investigate the developer, the architectural project, the promised renderings, verify the people who are their representatives, verify their previous projects, verify the quality of previous developments, and verify delivery times.
Tip #4 - Proposed transaction model.
Carefully review the structure offered to acquire the property, which are normally contracts of the promise of sale and a subsequent sale. It is essential to understand the terms and conditions.
It is essential to know the payment terms, partial or final delivery dates, and conventional penalties, especially for late delivery. Construction schedule delays are quite common.
Tip #5 - Check applicable permits and licenses.
The Developer must have all necessary permits and licenses for construction. Permits depend on the property. It is necessary to check that these permits are accurate, to avoid legal problems.
Tip #6 - Payment schedules.
Verify payment and interest plans. It is necessary to verify the milestones of the construction stages.
Tip #7 - Check the construction program.
Before acceptance we suggest that the quality of the constructions be inspected
Once construction reaches a significant milestone, schedule inspections to ensure the work is being carried out to your satisfaction. An independent inspector is advised to provide an unbiased assessment of the quality of construction.
Tip #8 - Formalization of public deed of sale.
A foreigner planning to acquire property in a Restricted Zone can choose between setting up a Mexican bank trust (Fideicomiso) or forming a company to understand the process of property title transfer and the associated taxes.
We encourage our clients to rely on our services to guide them through the process and ensure their interests are protected.
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