CHAPALA REALTORS
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Buying and selling Ajijic and lake chapala mexico real estate. the legal process.
Foreigners can buy real estate in the Lake Chapala area. The only restrictions are:
– Financing is hard to obtain so real estate purchases are almost always made in cash
– Ejido land exists on the outskirts of the Lake Chapala area and cannot be bought by foreigners. Ejido property is land granted by the Mexican government to a group of individuals for agricultural and ranching purposes.
In the Lake Chapala area many legal documents are both in Spanish and in English for the convenience of expats. The Spanish version is the legally binding contract.
The asking price of many properties for sale is expressed in USD but the selling price of those properties is the price in Mexican pesos on the day of closing.
Conveyances of title are executed by the parties before a notary public/notario who is a licensed attorney appointed for life by the governor of the respective state.
THE NOTARIO
The notario is appointed by the buyer but represents the buyer, the seller and the government. The notario has the duty of verifying that
- the proper title is being conveyed,
- the respective no-liens certificate and no property tax debt certificate have been obtained,
- a property appraisal has been done,
- the transfer tax has been paid,
- and the description of metes and bounds of the property has been properly transcribed in the corresponding background section of the public instrument that contains the title deed (Escritura Pública) whereby title to a property is conveyed.
All real estate transactions must be recorded in the Public Registry of Property in the appropriate jurisdiction.
THE BUYING PROCESS
The buyer receives the title deed approximately two months after signing the documents before the notario. It is crucial to use a reputable notario as there is no state guarantee of title.
Beneficiaries/heirs (natural people) can be named in the title deed which nomination can be changed by a subsequent will. In Mexico September is the best month to have a will drafted as notario’s will give a discount.
If buying the furniture as well as the house, we will enter into a separate purchase agreement for the furniture. If furniture is mentioned in the deed, on the subsequent sale of the house 16% tax – IVA has to be paid on the furniture sale after a professional appraisal.
My office will assist you in setting up your services in your name like electricity, internet, television, phone, etc.
The total closing cost is between 4 and 5% of the purchase price depending on your new home’s purchase price. Ownership transfers on closing i.e. the moment of signing documents by buyer and seller at the notario’s office.
The selling process
Selling a property and relocating is the start of a new stage in your life. You have been through the buying process, so you are aware that the buyer nominates the notario and that ownership and usually possession transfer on closing.
To sell Lake Chapala real estate several documents are required. The documents that may take time to assemble are listed here so you can prepare:
- the title deed of your property,
- Your RFC. This is the Mexican tax number which is used like the SIN in Canada and the social security number in the US. Registration for an RFC is compulsory for Mexican nationals and all legal foreign residents since November 2021.
If you do not yet have an RFC I can give you the contact details of someone who can take you to a SAT (IRS or CRA equivalent) office in Guadalajara and assist with translations. - Telmex or CFE statements with your property’s address. All registered property owners need to have their RFC on a utilities bill.
Before your property is listed on the Chapala MLS, a notario will calculate CGT (Capital Gains Tax) payable by you if any so you are aware in advance of this expense if applicable.
In order for the cost of improvements of and/or services in connection with your house to be deductible from the taxable amount, you need to have a factura which is an electronically processed legal receipt for goods and services
