Closing Costs in Mexico
real estate transactions

If you’ve been involved in a transaction in Mexico, you’ve probably been shocked at the closing costs.   If you haven’t, then you probably will be.   This is a brief explanation of what they are, and why they are what they are.

The total cost will run from a minimum of about 3% of the purchase price for a very expensive property, to as much as 10% for the least expensive one.    Some of the costs are fixed, and others are related to the price being paid.

The biggest item, in every case, will be the acquisition tax (“ISABI”), which is a flat 2% of the price stated in pesos as of the date of closing, charged to the buyer.  Since most purchase agreements are specified in dollars, the exact amount cannot be known until closing, when the current exchange rate between pesos and dollars is known, and applied to the dollar figure, and then the result multiplied by .02.

Other variable amounts, typically charged as a percentage of sales price in pesos, include:   Notary fees, appraiser’s fee, and various registration fees at the public registry.

Fixed fees include: Foreign Affairs Ministry permit and registration, and foreign investment commission, preventive notice, certificates of no liens and of property taxes paid, trustee bank’s acceptance fee and first year’s fee, closing coordinator’s fee, US bank escrow fee for purchase money control, and a preliminary title report.

The Century 21 closing coordinator will prepare and furnish the buyer an estimate of closing costs as soon as the bargain is reached.    Buyer will then be asked to deposit 50% of these costs immediately, in the special trust account Century 21 maintains for handling closing costs. The advance payment of 50% and the direct furnishing of funds for the closing office to disburse is necessary because, in contrast to US practice, substantial sums must be paid out in advance of closing, in order to start the process and move it toward that closing.

The second half of the costs are then typically due a few days before the scheduled signing. The final total of costs is not typically known until some weeks after the signing when the fideicomiso is finally presented to the public registry.  All the costs are of course accounted for in detail in the buyer’s final closing costs statement, and an appropriate refund is made if applicable. 

To download a good faith estimate of closing costs, for a purchase price of $350,000, assuming that a new trust is being created, click here. It also includes a separate figure for a title insurance policy, which you should discuss with your Century 21 agent.   Note, too, that if your purchase is financed, there will be higher fees for a few items, which you should also discuss with your Century 21 agent and your loan representative.