Buying a home in Cancun

[TNCJ1]

We are looking to buy a house here. Actually have one picked out that we like. It is between Cancun and Playa. We plan on using it as our and our familys vacation home and renting it out when we are not their.My question is this, if you own property there does this in anyway help or speed up the citizenship process? As we also intend to retire here when that time comes. Any and all help,thoughts, ideas or responses welcome

[Windknot]

Owning property outright is not a possibility here in Mexico, (within 50 km. of a navigable waterway or other "restricted" zone) unless you become a citizen, OR one of you was born here. In that case, just put the property in that person's name, and you're good to go.

Other than that, you will have to pay what is known as a "fideicomiso," or trust to the Federal Government, which will be managed by a local bank, either in Cancun or Playa. You will then have to pay this "trust" once a year. Mine is 8125 pesos a year, or roughly $645 USD. Very reasonable when you consider property taxes NOB. Of course you will also have to pay a "predial," which are your actual Mexican property taxes, and these are a joke. Mine last year was 753 pesos, or $60 USD. My house is worth between 3 and 3.5 million pesos, if that is any help for reference purposes. However, I live in Veracruz, so.....your predial may be considerably higher.

As far as "citizenship" goes, I would forget that, for at least as long as your house is only a vacation/Winter home. You can enter for 180 days on an FMT, if you just come down for a few months and then leave for the rest of the year.

If in the future you decide you want to live here more permanently, I am assuming you will be applying as a "rentista," or retired person, and that you do not wish to work in Mexico. If that is the case, the best you can do for your first year, is an FM-3 visa, which is good for one year. After that, you can apply for an FM-2 inmigrado visa, also good for one year and more costly by about 800 pesos a year for renewals, than the FM-3. But it will say you are a resident of Mexico, and I have found that I am "treated better" with my FM-2, than I was with the FM-3. (Although I was never treated badly with the FM-3, either...So far, I'm talking about border checks, aduana, and the like. If you're a resident, you're more likely to get a free pass and/or less scruitiny)

The drawbacks to the FM-2 is that it costs more, but only for 4 years after you have your first one. After 4 years and 6 months, you begin the process for permanent residency, and when that is granted, you are done with annual trips to INS, which in Cancun, is evidentally, a pain in the a**. In Veracruz, we have our renewals in 3 days. The other drawback is that the FM-2 places definite limits on how long you can be out of country in those 5 years total, and that limit is 18 months. I find this to be plenty liberal for my purposes, but your situation may be different. However, this is something to consider.

Beyond that, there is "citizenship," and I do not profess to know anything about this. You have to be fairly fluent in Spanish, and there is an exam to take which at least up to last year, was a real bear. Some Mexican scholars could not pass it.I think you have to be a resident, before you can be a citizen, but I could be totally wrong here. There are several naturalized citizens on this forum, so they can advise.

[TNCJ1]

Thanks for the response. We knew about the fideicomiso. And we were told that the yearly taxes on the house we are looking at runs around $45 USD. Very cheap considering that what we pay in the US now is around $5000.

As for the 180 day FMT. Is there a limit on how long you have to be out of Mexico before you can receive a new one? Can we just cross the border for a night, or would we need to come back to the States for a few days and visit the kiddos?

Also we live in Texas close to the Mexico border now, could we start the rentista process here or does this have to be done where you will actually be staying? We are looking to try and get most of this accomplished within the next couple of years. So that when it is time to make the move hopefully most everything will already be in place.

[gabesz]

Just for your info on the Fideicomiso-Try to stay away from Banamex(part of Citibank) sicne they keep raising their rates each year to higher and higher amounts. Scotiabank is better in the long run and their rates do not increase as fast as Banamex.

[sickofsnow]

We've been happy with Bancomer as well. Living in a condo, having our trust with Bancomer has been a lot easier when it comes to our annual meeting paperwork - no receipt of trust payment needed to vote.

[V]

Who's the cheapest, at the moment, on the fideocomiso?

[gabesz]

Originally Posted by sickofsnow

We've been happy with Bancomer as well. Living in a condo, having our trust with Bancomer has been a lot easier when it comes to our annual meeting paperwork - no receipt of trust payment needed to vote.

Many condos do not demand the receipt of the trust fee to allow you to vote. That varies by the condo. If a condo has problems then they will want to see the receipt of the paid fees since that way they can control who can and cannot vote.

[gabesz]

Originally Posted by V

Who's the cheapest, at the moment, on the fideocomiso?

Not sure who is the cheapest, but Scotiabank seems reasonable compared to Banamex as far as I know and is cheaper then Banamex for the past 3 years in a row. Plus if you need the paperwork for voting at an assembly Scotiabank is easier to deal with compared to Banamex where they have no clue what they are doing and tend to lose papers constantly the last minute before the assemblies. I do not know how Bancomer or other banks rate comprably to Banamex or Scotiabank.

[johndish]

as the owner of a house in cancun and the vast over supply of housing in Cancun I am not sure that now is the best time to get in. Of course you could be buying at the bottom but, I would assume that you would be able to find great rentals for yourself and would not rely on any rental income as part of your payment structure.

[CancunMole]

We bought our Cancun Casa three years ago. Here are some links that we found helpful:

http://www.paseroabogados.com/realestate3.html

http://www.playarealtyexecutives.com/Mexico_Closing_Costs/page_1806599.html

http://www.settlement-co.com/closingcosts.htm

http://www.mexicolaw.com/LawInfo05.htm

http://www.mexicolaw.com/Nafta.htm

http://www.mexicorealestateinfo.com/legalinfo.asp

http://www.cancun-webs.com/cancun_legal_services/inicio.htm

http://www.mexicorealestateinvestment.org/

US and Mexican Taxation: US Tax Return Filing Requirements for Fideicomisos

There's also great info here at this site that can be found via the Search function.

Another thing too to be aware of is that if you rent your property out, while as a US citizen the income/expense will be claimed on your US income taxes, you also are suppose to file a Mexican income tax form even though no tax would be due.

[sickofsnow]

Originally Posted by gabesz

Many condos do not demand the receipt of the trust fee to allow you to vote. That varies by the condo. If a condo has problems then they will want to see the receipt of the paid fees since that way they can control who can and cannot vote.

Then our condo only requires Banamex receipt...not any others. I was told this was Banamex's "requirement". I guess that is not true. I wonder why our condo requires only Banamex then?

[CancunMole]

Originally Posted by sickofsnow

Then our condo only requires Banamex receipt...not any others. I was told this was Banamex's "requirement". I guess that is not true. I wonder why our condo requires only Banamex then?

Did the selling party also suggest the Notario to be used? It could be that the sellers had already set up to use a specific Notario and bank to keep things common and simpler for all closings within the Condo complex. Hey, LOL, could be a little kick back going on too but as long as all your documents are in order, so what?

[sickofsnow]

Originally Posted by gabesz

Many condos do not demand the receipt of the trust fee to allow you to vote. That varies by the condo. If a condo has problems then they will want to see the receipt of the paid fees since that way they can control who can and cannot vote.

Originally Posted by CancunMole

Did the selling party also suggest the Notario to be used? It could be that the sellers had already set up to use a specific Notario and bank to keep things common and simpler for all closings within the Condo complex. Hey, LOL, could be a little kick back going on too but as long as all your documents are in order, so what?

The kick back scenario wouldn't surprise me! My realtor recommended the notario that we used to close. I would not recommend him though, not thorough at all. He missed the fact that the previous owner hadn't paid beach taxes in over 10 years. Caused a big problem for us when the time came for us to pay the beach tax...fortunately, it all worked out ok with the help of another owner in our complex. When I contacted the notario about it, he basically said it was our problem, not his. He would not even talk to me. As for the trust paperwork, personally, I prefer not having to produce the trust receipt during the annual meeting, anything to do with our trust, even paying it, seems to turn into a production!

[TNCJ1]

Thanks every one. Answered some questions... also brought up more. such is life though. lol.

[Kathleen-MD]

I own a home in Cancun and it is on the water. You can own on the water but you will need to buy a bank note first. That was easy. The lawyer helped us when we went to settlement.

Right now I am selling the house in Cancun. Things have come up where it will not be possible for me to live in Cancun for an length of time and it is best we sell it.

If you are interested in any more information let me know

[TNCJ1]

I will PM you and get together there. Thanks

[CancunMole]

Originally Posted by Kathleen-MD

I own a home in Cancun and it is on the water. You can own on the water but you will need to buy a bank note first. That was easy. The lawyer helped us when we went to settlement.

Right now I am selling the house in Cancun. Things have come up where it will not be possible for me to live in Cancun for an length of time and it is best we sell it.

If you are interested in any more information let me know

By bank note are you referring to the fideicomiso which is the trust instrument (held by a Mexican bank) that all foreigners must have to own property along the coast and borders, or something different?

Also, one must be aware that property owned on the water, whether on the beach or the lagoon, is liable for an additional tax, a Federal one, in addition to regular property taxes (predial) that are paid to the city.

[T.J.]

Kathleen,

Mole asked exactly what I was going to ask. It is my understanding that the Constitution prohibits foreign ownership of property within 50km of the border of any country or the Caribbean, Gulf, Pacific, etc. The fideicomiso is the way this is gotten around for individual ownership. A Mexican corporation is the other way and there is no requirement now for a Mexican to be an officer, director or shareholder, but there must be two shareholders. The intent of the law is that corps be for investment only and the trusts for your residence, although many people just do what they please in this regard, and sometimes pay dearly down the road.

Just my two centavos worth.

[deherald]

Ive been coming to Cancun twice a year for 3 years now and love it. I am going back in December, this time not staying at an AI. My fiance and I have been talking for a long time about purchasing a place in Cancun in a few years(Once our mortgage is gone). I was wondering about a few things, and i thought many of you could chime on in.

If you have a trust, can you lose your property just because? There was an article in the Cincy Weekly about a family who lost a home in Cabo because of citizenship issues.

Where did you find your house? Are the internet deals too good to be true, Town home/condos in the 40-60 range?
How much are groceries?

How much are your utilities?
Electric?
Do you use your AC?
Internet? How is the speed?
In the states we have Vonage and all our calls to north America are 30 a month flat rate. How much for phone?
How did you find your property? Have you tried to work at all? I'd love to sale time shares in the summer, would this job be hard to obtain?

Just found this thread and it is very helpful

[V]

deherald- just a suggestion- why don't you add a little more detail, describing your idea of the life you'd like to live here, then others can respond with their experiences.

The reason for this is that "expenses" are so elastic, and everything depends on your requirements- I'm talking about things like how big a place, where located, how cool do you want to stay, do you require a pool, how often do you like to eat out, and at what kind of places, etc.

There will be people who follow the lifestyle you would require, and they can tell you exactly what it costs them, as well as provide answers to all the other questions you've got.

If you're curious what the extreme low end of expenses here might be, you could glance at this thread-

http://www.cancuncare.com/forum/livi...-security.html

[gabesz]

Originally Posted by deherald

If you have a trust, can you lose your property just because? There was an article in the Cincy Weekly about a family who lost a home in Cabo because of citizenship issues.


Where did you find your house? Are the internet deals too good to be true, Town home/condos in the 40-60 range?



Internet? How is the speed?

In the states we have Vonage and all our calls to north America are 30 a month flat rate.

No you cannot lose the property due to citizenship unless you lied on the original purchase papers with the notary. The only reason you could lose the property is if you do not pay your annual fideicimo fees to the bank or any mortgage that you may have.

Contact Carmen Pino Bianca who is on this site at times. She is one of the best out there and also is from the US originally.

Internet speed is not the same as the US. Its adequate but not like you can download serious large files or heavy gaming.

You can bring the Vonage line along with you for vacations or if you move to Cancun. So you can have the same features you have now and keep the same number no matter where you may be.

[Windknot]

I must be missing something here. I have had my house for over 4 years, and my fideicomiso hasn't gone up one centavo, except for when they raised IVA one percent. (effective this year, mine went up 70 pesos). I believe I was told that your fideicomiso could not go up, and that was federal law. Y'all's banks must be adding their own service charges or something, in which case I feel sorry for you guys, because you're being taken advantage of.

I even question if a fideicomiso is subject to IVA in the first place, and have had a lot of trouble getting a definitive answer to that question. I mean, for sure I'm not going to ask the bank!!

Losing one's property is usually an ejido issue. Some folks south of Puerta Vallarta are going through that problem right now. It has happened many times in Cancun, and in fact throughout the entire Yucatan peninsula, where there is a lot of ejido land. In my opinion, the only solution is to hire several lawyers, independent of one another, and have the escritura scruitinized with a fine-toothed comb. Very basically, the original purchaser of the property should have had EVERY member of the ejido family with the rights to the property, sign off on his rights to the land, before he purchased it.

Another tip when buying waterfront, is to be sure the landowner has the rights... and has also paid (is up-to-date) on the comission for the federal zone, which extends from the high tide mark, to 15-45 meters inland, depending on where the property is located. 15-20 meters is more the norm. Anyway, failure to do this means that someone else can come in, pay the comission and put up a business or even a house on that land....and you are powerless to do anything about it. There goes your view, and water access! just food for thought.

[Windknot]

To answer your other two questions, You have to be out of country for either 24 or 48 hours (It's one of those things where, if you hadn't asked, I could have told you for sure) But since you have family NoB, why call attention to yourself by pressing the limit? My advice, if you're going to buy property, is to go ahead and start out with the FM-3. You'll be done with the process just that much sooner. Then as soon as you can, go for the FM-2, and for the same reason PLUS....you never know what is going to happen in the future with all this border hassle. Mexico is notorious for copying the US in its policies, and you just never know what might happen. As said, with an FM-2, you are a resident of Mexico. An FM-3 is really nothing more than an FMT with a one year time limit, instead of 6 months.

And unfortunately for some, as of this year you cannot obtain an FM-3 in the states any more. They have to be applied for in the Mexican State where you intend to live.

[TNCJ1]

So the Realitors there do not do the back ground work of making sure that the house is up to date and has a clean title? The realtor's only job is to find you the house?

If this is the case does anyone have any idea about what the cost would be to hire the lawyers to do the background work for you?

I assume that if you just pay cash for the house that the fideicomiso has to still be set up. Or is paying cash a whole other situation?

[sickofsnow]

When we bought our condo, we were told that the Notario takes care of all the paperwork and makes certain there are no leins on the property etc. The realtor we used, gave us advice, and was there when we signed the paperwork with the Notario, but they had no responsibilites.

Well, our Notario missed the fact that our Beach Taxes weren't paid in 10 years. We were responsible for 10 years worth of taxes - PLUS INTEREST (interest is the killer as beach tax is cheap)! Although that all ended up working out OK...it could have been worse...long story.

The Notario is supposed to do all the title checks on the property, but really has no responsibility to do a thorough job at it. I'm not sure what I would do if I were to purchased another property. Obviously, I hold little trust in a Notario. I probably would talk to my real estate agent and say that I want paperwork from the Notario showing he checked to make sure the Predial Taxes were paid, the Beach taxes were paid, the condo fees are paid, no leins etc... Before I'd sign anything at closing.

You might want to hire a Real Estate Lawyer, I'm not positive but I do believe you would still have to work with a Notario. Not sure a lawyer would do a better job. I'm not sure if there are Title check companies in Mexico.

I'd just be careful when using a Notario. I was hoping to just get some advice from the Notario that screwed up my Beach taxes, and he was all happy to speak to me until he found out he screwed up, then he wouldn't take my calls.

Originally Posted by TNCJ1

So the Realitors there do not do the back ground work of making sure that the house is up to date and has a clean title? The realtor's only job is to find you the house?

If this is the case does anyone have any idea about what the cost would be to hire the lawyers to do the background work for you?

I assume that if you just pay cash for the house that the fideicomiso has to still be set up. Or is paying cash a whole other situation?

[T.J.]

If you are a foreignor, you need a Fiedeicomiso or a Mexican corporation, no matter what, unless you are brave enough to title it in the name of a Mexican citizen, which has been known to happen.

It amazes me that people would rely solely on the advice of a broker, who makes zero if the deal does not close, and/or a Notario, who has no legal or fiduciary obligation to anyone, for what amounts to legal advice. That is what lawyers are for and you need a good one, experienced in real estate matters.

GET AN ENGLISH SPEAKING LAWYER, HOPEFULLY BY REFERRAL FROM ANOTHER NON-MEXICAN SATISFIED CLIENT, WHO WILL WORK FOR YOU AND PROTECT YOUR INTERESTS.

[gabesz]

Originally Posted by sickofsnow

When we bought our condo, we were told that the Notario takes care of all the paperwork and makes certain there are no leins on the property etc. The realtor we used, gave us advice, and was there when we signed the paperwork with the Notario, but they had no responsibilites.

Well, our Notario missed the fact that our Beach Taxes weren't paid in 10 years. We were responsible for 10 years worth of taxes - PLUS INTEREST (interest is the killer as beach tax is cheap)! Although that all ended up working out OK...it could have been worse...long story.

You had a bad Notary who did not do their job right. Most can do it right but you pay more for the better Notaries. Expect about 5% of the purchase price for the closing expenses if not more.

Lawyers in Mexico are not as well trained legally as the Notary. The word of the Notaries is taken as law since they are more of a legal authority then any attorney Anyone can claim to be a lawyer with minimal training compared to the USA where you have to pass the bar exam.

[sickofsnow]

Wish I could blame it on a cheap Notario, but unfortunately, we had a well respected realtor and a VERY well respected and definately not a cheap Notario ... We just got one who happened to screw up and didn't stand behind his work. I've been told that none of them do, because they don't have to.

I get that everyone makes a mistake...even the brightest of professionals, but I guess I would have liked some assistance with settling the problem. I got nothing...not even directions to the beach tax department (it wasn't easy to find--especially for a newbie to Cancun).

Not sure if an attorney would have done a better job though.

I think we got off pretty lucky. A neighbor of ours had a friend, who had a friend, who had a friend... and we got off for about US $260 to the Beach Tax Department. Surpisingly, we tried to privately tip the beach tax official that was helping us and he didn't take it. He saved us about US $2700. Great deal if you ask me.

Originally Posted by gabesz

You had a bad Notary who did not do their job right. Most can do it right but you pay more for the better Notaries. Expect about 5% of the purchase price for the closing expenses if not more.

Lawyers in Mexico are not as well trained legally as the Notary. The word of the Notaries is taken as law since they are more of a legal authority then any attorney Anyone can claim to be a lawyer with minimal training compared to the USA where you have to pass the bar exam.

[matkirk]

Someone told me that foreigners can't buy a house that has an outstanding mortgage on it? It has to be paid off completely in order to get a fidecomiso? Is this true or can you buy a house where the owners are still paying a mortgage?

[V]

I don't know the answer to your question, Matkirk, but we've begun looking again and the question always comes back to- do we really want to be here, long term?

Cancun, while having its attractions, is lacking in charm, which makes it a tough place to consider a long term solution.
_____________________

In celebration of its tenth anniversary the Universidad del Caribe offered a free concert with a German symphony orchestra and night of opera: the soprano was superb, with tones ringing like a glass bell, as she glided through my favorite arias for sopranos.

The press said 2,000 were in attendance, perhaps demonstrating a hunger for just a little more culture among those who have, for any number of reasons, adopted Cancun as home.