Wisely Buying Mexican Real Estate
Lately I’ve become privy to a bevy of preventable errors buyers encounter when buying Mexican real estate and wanted to share common errors so your purchase is more joyful. Now, here are some serious negatives but allow me to preface the bad with good. I love living here and am a big advocate of buying your home (my adult children will confirm my nagging for home ownership). However, these are some things to avoid and why they occur.
The appeal of building a home escapes me. I did it once at 22 and learned though it was a fairly pleasant experience for me, and the home funded my first foray in entrepreneurship, I’d never do it twice. I much prefer buying the builder’s spec houses that have sat for a while so he or she is anxious to sell.
But if build you must, be sure to have the same type of contract you’d have in the North including dates, construction goals, penalties and deadlines before money changes hands. Baffling how many don’t and are tied to contracts requiring payment when no construction has even occurred.
Don’t just rely on your agent, investigate your builder’s reputation if buying new construction. Talk to neighbors and others that used the same builder. Go to the courthouse and see how many suits, past and present, are filed against the builder by home owners. Sure, all this takes time but will save you loads of time down the road when living in a house that leaks like a sieve or has foundation cracks in the first year.
I admit even this one surprised me for sheer audacity but confirm with your closing attorney before transferring a peso the deed is ready to be handed over to you at closing. Some sinister builders come to closing with a litany of excuses for not having your deed ready then. Walk away!
If your deed isn’t at closing you will spend yet another small fortune in an attempt to get it later making ever selling the home a nightmare.
Confirm with service providers your new home has all the necessary utilities. A slimey builder will illegally tap into lines so the house shows with electric but once you move in you’ll find yourself without electricity, internet and such. A real buzz kill if you, like most everyone, works from home.
First step is to find if the POA/HOA is legitimate. If it is, your property is listed in your deed as a condo with required association fees. Sounds simple right?
It’s not. Some of the largest and most successful neighborhoods in town are not legitimate condos (meaning subject to fees, not necessarily an apartment). To have required fees a builder registers each home as a condo and sets aside a parcel of land for public recreation. Less savory builders don’t want to set aside any land for a park and instead try to institute an association after the properties are sold.
This situation is always a mess! Some homeowners won’t pay as they don’t have to and some developers become Nazi-esque restricting access to your home. For instance in my little hood alongside centro the developer left once his lots were sold. Then out of the blue, his cousin appeared one day who owns no property, and wants 6000 pesos a month for you, or anyone, to access your home.
None of that is legal but in country with more pressing problems, no one really cares. Only 3 of the 50 home owners pay him but those who don’t face constant access problems. One day the cousin even blocked the Red Cross ambulance for nearly two hours for a neighbor that didn’t pay him! Sadly, illegal POA/HOAs become a matter of life or death.
Why Is This?
Two root causes promote these real estate shenanigans. Here lawyers refer to one as the Margaritaville Effect. Simply put, folks on vacation like doing drugs. If buying a second or third vacation home chances are the buyer is middle aged and their drug of choice is booze. As any high schooler can confirm, booze lessens your defenses and decision making abilities.
The other cause is both more culture-oriented and tactile.
Books are written on how the US is a fear-based economy. Builders depend on simply scaring a foreign home owner into submission into paying their monthly fees. Others are more cruel and will monitor your schedule to then pay someone to rob your home. See what happens if not paying for the part-time security guard a mile from your home?
Suddenly, here a buyer is looking at real estate and is invited to the builder’s son graduation, marriage, birthday or such because that buyer is “like family”. The hugs, kowtowing and inclusion are enticing. Lawyers that practice construction law in the US sign contracts in Mexico a kindergartener could point out the obvious liability issues.
What to Do?
Just like Sister Mary Torture advised me in school, do your homework. Your agent is lovely but he, she or Hershey isn’t plunking down the hundreds of thousand for your vacation home, that’s just you. So….
- Talk to potential neighbors
- Talk with folks that used your builder
- Visit the courthouse
- Have your closing lawyer verify your contract before signing
- Have your deed waiting for you at closing.
- Research if your home is a condo and if any association fees are legitimate. The ambulance situation is terrifying and best avoided when possible.
Lastly, walk your new hood on different days and times. What seems like a quiet street at 3PM could be a morning drop off zone for parents of schoolchildren blocking the street with fumes for hours. Perhaps it is on the active evening bus line and quieter to buy a block over. I’ve talked to new neighbors that seriously believe our neighborhood that is surround by easy access fields is, somehow, fenced.
Again, owning and living in Mexico is wonderful particularly if you avoid the problems you can and accept those you can’t avoid.