Overview of the closing process
in Mexico real estate transactions

Closing a purchase in Mexico is more complex, expensive to the buyer, and lengthy, than is typical in the United States. The purpose of the exercise in both locations is to get good clean ownership from the seller to the buyer. The roles of the various participants are different here, though, and some of the steps have no counterpart in an American closing. 

Once buyer and seller have agreed to the sale by signing a purchase and sale agreement (often with some revisions and addenda), the real work begins. A closing office such as Century 21’s, or an independent attorney, will coordinate all the steps required. Buyers must apply for a permit for a new trust, or to transfer an existing one.

That is obtained from the Foreign Affairs department, and the Mexican bank that will be the trustee makes the application.  Among the first things a buyer has to do is to fill out a form identifying himself and anyone else who is going to be a first-level beneficiary, plus successor beneficiaries, in much the same way he would for a lawyer drafting an American trust. Once this document and fees (see the article, on closing costs) are given to the bank, it sends the application.

At the same time as the trust permit is applied for, your client services agent will order a special form of appraisal called an avaluo, and also order certificates that the property is in the name of seller and is free from liens, and also that the annual real estate taxes are paid. The client services agent will also gather proofs of identities of all parties involved (passport copies, usually) and of their residence (usually in the form of a current utility bill from buyer’s home).  The client services agent furnishes all this documentation to the notario.

In this same period, if buyer is getting a title report and/or title insurance from one of the US title insurers, that application will be made and the research begun (see the separate article on title insurance).

When all these items are in place, the notario can begin drafting the “deed” (see the separate article on notarios and their key role, and on the trust itself, called a fideicomiso).  For Americans this instrument is both a transfer of title from the seller to the new trustee and the document that establishes the trust and the new trust relationship between the bank and the buyer/new owner.  If there is a lender involved, which is more and more often the case, a special form of the same trust will be used providing security for the lender (much like an American deed of trust or mortgage), thus involving a fourth party to the paper.   This document will often be 25 to as much as 50 legal size pages in length, and even more if there is a lender.

The draft deed must be reviewed and approved by each of the participants:   bank, buyer, seller, and lender if there is one.   Each may have corrections.   When all corrections are made and agreed to by everyone, a date can be set for the parties to sign.

Any of these steps can take weeks.   Please be patient.   But please also stay in touch with your client services agent and work with him or her, and you will get to that magical day when everyone signs.