Closing Costs in Mexico, Part 2

In Part 1 of our "Closing Costs in Mexico" post, we went over the differences between closing costs in Mexico and the U.S., as well as the difference in property taxes. Today we are going to explore the third party fees that make up the closing costs.

Foreign Ministry Permit (SRE-Secretaria de Relaciones Exteriores) - This is a fixed cost that the notary must process through their agents.

Registration in Foreign Investments Registry (RNIE) - The trustee is responsible for registering the Deed within 30 days after it has been granted.

Trust Set Up Fee- This is the one time fee to set up your trust (fidecomiso) when buying property located in the restricted zone.

Trust First Year Fee- This is an annual fee charged by the bank in order to maintain your trust (fidecomiso).

Escrow Fee-In Mexico, the earnest money deposit will go into an escrow account held by a title company and money will be disbursed accordingly.

Notary Fees- These fees are regulated by a fee list, but vary from state to state.

Local Transfer Tax (ISAI-Impuestos Sobre Transmision Patrimonial) - This tax is similiar to a sales tax and is calculated by a table. It is usually around 2.5% of the home value.

Registration in Public Registry Trust-The Notary is in charge of processing the sales price of the home and the loan amount through the Public Registry.

Certificate of Freedom of Liens- This fee is to ensure that the property that you are purchasing is free of liens.

Catastral Appraisal- This is the tax appraisal in order to determine the value for tax purposes.

What is Ejido land?

"Ejido" is a piece of land where a group of people live and work and determine the best use for the land. The concept of ejido land is Pre-Hispanic and the concepts behind the ejido come from democratic communism. In 1917, an article in the Mexican constitution was created and stated that ejido land could not be sold. The article was ammended in 1992 to give ejido owners title to land used for farming and ranching, which allows them to sell their land to private parties, including foreigners.

Much of the confusion about Ejido land stems from the Punta Banda case in Ensenada. Many Americans became nervous about purchasing property in Mexico after they saw news reports about Americans expatriates in Ensenada whose land and homes were "taken away" from them. So what really happened?

• The Americans were sold land by someone who did not have the legal right to sell the land
• Purchasers ignored the fact that the land was in litigation when they bought it
• The deals seemed too good to be true, and in the end, they were

Purchasing property in Mexico can be just as safe as in the U.S. or Canada. Many companies such as First American Title and Stewart Title now offer title insurance for property in Mexico.