How Long Does it Take to Close on a House in Mexico?

So you have been enamored with Mexico and have looked into buying a house there. You've checked the listings, consulted with a real estate agent, and have found the perfect property for you. Now, you're wondering how long the entire process will take and how much time you have to wait until you've closed on the house of your tropical dreams.

One thing you need to know is that the process for real estate property closing in Mexico looks different for foreigners compared to the process that locals have to go through.

Nevertheless, it is important to acquaint yourself with the process of purchasing a house in Mexico as a non-resident before you dive into it head first.

Understanding the Property Closing Process in Mexico

Closing a real estate transaction in Mexico can be complicated and intimidating for Canadians. Not to mention scary. For one, there are things you don't know and you will be required to put your trust in a real estate agent who will most probably be a stranger. There's also the language barrier problem and it's easy to get lost in translation.

That is why it pays to know how the process of closing a property in Mexico looks like.

Generally, the typical process looks like this:

1. The buyer looks at real estate property listings and finds the property they like to buy.

2. The buyer and the seller reach an agreement regarding the property's purchase price and the purchase terms. The parties can do this formally in the form of a purchase contract that their attorneys create, or they can do this informally in the form of a purchase offer.

A formal contract in Mexico is enforceable through court action, just like it is in most other countries. This contract is a promise by both parties to fulfill their respective obligations, and neither party should take it as a guarantee of anything.

3. Both parties come up with escrow instructions then send them, along with the purchase contract or agreement, for approval by an escrow company.

4. The buyer makes the initial deposit for the property, as agreed upon with the seller. This initial deposit will fund the escrow account. The escrow company or agent notifies both parties when the deposit has come through.

5. The buyer completes the application packet for a bank trust. They will pay the fees -- like the bank fees and government permits -- to get the bank trust process started.

6. It is recommended that the buyer get title insurance, which comes with its own forms and fees. This insurance policy is around 0.55% of the property's purchase price, which already includes "gap" insurance but excludes attorney research fees. Gap insurance covers the buyer for up to 90 days from the moment of signing before a notary public until the notary registers the bank trust with the local government.

7. The buyer applies with the Mexican consulate office or foreign affairs office for an FM3 resident visa. This visa application will take up to 10 days or less after the buyer provides the proper documentation. Some notaries allow buyers to use their tourist visas to prove their legal status in Mexico. However, the FM3 resident visa is recommended for tax-related purposes.

8. Both parties get a Mexican notary to create their bank trust. The notary will require fees to be paid upfront. These fees will cover notary work, appraisals, surveyor fees, and a variety of certificates, among others. The parties may ask for a review of the bank trust document before closing because such review isn't automatic and has to be requested explicitly by the parties.

9. The buyer deposits the balance of the purchase price into the escrow account.

10. The buyer pays final closing costs on the closing day. These costs include registration fees and transfer taxes, among others. The fiduciary bank is likely to have signed the documentation by then.

11. The escrow disbursement instructions are signed by the parties at the closing. These instructions tell how the proceeds of the purchase will be distributed by the escrow agent. 

12. The buyer can immediately take physical possession of the property after the closing, which is typically 30 to 90 days after the original purchase agreement. 

13. The buyer can ask to get a copy of the bank trust from the notary a few weeks to three months after.

14. The notary registers the bank trust in the property registry. Meanwhile, the buyer ensures that the property is also registered in the catastro or the city’s urban department so that they get proper credit for the property tax bills. This also ensures that the previous owner’s name is struck from all records that relate to the property.

Of course, this is if you are purchasing your property with your own funds and are not taking advantage of certain financing options. Otherwise, the process may involve more steps and closing may take longer.

How Long Do You Wait Until A House in Mexico Can Be Officially Yours?

Once you have picked a house or property to buy, you still have a considerably long way to go before you can officially call the property yours. The process of closing the transaction can go smoothly and quickly if you have the right people working with you. These include the real estate agents, the lawyers or the notary, the escrow agents, the foreign affairs ministry, the surveyors, the trustee bank personnel, and the closing coordinator, among others. These people will help ensure that things are done in a timely manner. Of course, you can always expect delays, and these delays will call for your patience and understanding. There are no shortcuts when it comes to these things, especially if you want things done legitimately.

So how much time are we talking about? Provided there are no unnecessary delays, below is an idea of how long the closing process will take.

Day 1 of the process starts when the seller accepts your offer to purchase the property. The seller can execute the official purchase offer on the same day, as well as execute an escrow agreement with the escrow agent. As long as you have all your documents and other requirements ready, you can get this step done efficiently and fast.

Days 2 to 14 typically represent the due diligence period. Within this period, you make the agreed-upon initial deposit and pay the escrow fee. You can get this done within three business days after the seller accepts your offer.

Your realtor will also be submitting the fully accepted offer, the IDs of both parties, the escrow notification letter, and all of the seller's ownership documents to the closing company or closing officer. The closing officer will contact you when the initial deposit has been received. They will give you an estimate of the closing costs and let you know of other settlement requirements and closing information. The closing officer will work with you and your lawyer to determine how you will take the property's title. They will also work through all the due diligence conditions and requirements set forth in the purchase agreement.

During this period, you and the seller, with the help of the realtor, will remove any contingencies and finalize necessary inspections or inventories of the property. The parties will need to remove all the conditions under the agreement that would delay the earnest money deposit.

Should you continue to commit to buying the property, the realtor, through their corresponding broker. will provide you with the escrow agreement for the earnest money deposit. Should you decide not to move forward with the purchase, the realtor will facilitate the refund of the down payment or initial deposit. They will also notify the seller that the transaction is going to be canceled.

Day 15 typically marks the end of the due diligence period and on this day, you will execute the escrow agreement with the escrow agent. You will then make the earnest money deposit provided for in the agreement. You will only deposit the balance due after you subtract the initial deposit you already made. In other words, if the earnest money is $100,000 and you have made a $10,000 initial deposit, all you need to do is deposit the balance of $90,000. 

You will also need to deposit the pre-closing fee, which depends on how much the closing company is charging. This fee is going to be applied to the closing costs that will be due at closing, and offset the pre-closing costs pertaining to the permits and certain other requirements.

Not paying the earnest money deposit within five days means that you will be given more days to cure it. If no extension was negotiated, the transaction is canceled without further obligations of the parties. The escrow agent will also return the initial deposit you've made.

On Day 16 to 60 represents the period where title is transferred from seller to you. Here, both parties will complete all pending documentation and give these to the closing agent or the notary in order to complete the transaction file that the notary will submit to the trustee bank.

The closing officer will provide the trustee bank and the notary the transaction file complete with all requirements. The notary will then prepare a capital gain tax estimate for the seller's review. The taxes are calculated as the value of the seller's purchase of the property and the current sale price of the property.

The notary will prepare the trustee bank instruction letters to be signed by both parties. These letters serve as a notification that the property has been sold. The notary will be appointed as the official who is overseeing the sale of the property. The notary's office will sign the deed of title at closing on behalf of both parties so neither you or the seller need to be present.

Instructions by both parties will request the Foreign Affairs Permit from the Ministry of Foreign Affairs. This is a requirement for any non-Mexican citizen buying property in Mexico.

The notary will prepare the Deed of Title that is held in trust for the trustee bank's review. This Deed of Title is also called Trust Deed or Fideicomiso, which is the system under which a foreigner can own parcels of land in coastal and other specific areas in the country. The trustee will then authorize the Trust Deed to be executed by the notary.

Day 60 to 65 is the period for settlement and closing. Once the notary receives the trustee bank's letter of instruction and is authorized to close the purchase on behalf of both parties. Moreover, the notary will notify you to fund the escrow as soon as possible or within five days of the established closing date. 

The closing officer will prepare a draft settlement for both parties' review. You and the seller will authorize and sign the final settlement statement provided by the escrow agent. After which, you will fund the escrow with the remaining unpaid amount of the purchase price. You will also pay the balance of the closing costs, as well as any additional fees.

The escrow agent will confirm that the funds have been received for the escrow. The notary will provide the escrow agent with all the documents needed for the Transfer of Title, including a copy of the executed Trust Deed, certificates of no liens and no tax debt, and a letter of confirmation that the title of the property has been duly transferred to you by the seller. Once the escrow agent reviews and verifies these documents, they will give the go signal for the escrow funds to be released to the seller within two business days.

After the funds are released, the transaction is considered successfully closed.

The Property Sale Has Been Closed. What Happens Next?

Following the transfer of title, the notary will take steps to register the now-updated Trust Deed with the local Municipal Tax and Public Registry Offices. All the requisite sale and acquisition taxes will be paid by both parties.

Within 10 to 14 days, and after you pay the acquisition tax, the notary will issue you with a simple copy of the Trust Deed.

After all these steps have been taken, the property is deemed officially yours.

Want more Tips for Buying Property In Mexico? Subscribe to get hot new tips in your inbox + exclusive new listings every Sunday. www.mexcanrealty.com/sign-up-for-newsletter

Would you like assistance with your property search?

We are here to help. Please tell us a little about you: