Puerto Vallarta Real Estate Articles

Your experience of owning and enjoying a home has begun. You may hire someone to manage your property, you may rely on advice from friends, or you may choose to handle the details yourself. In all of these cases, you will find that you will enjoy your ownership more if you take the time to learn how to source reliable information. A survey conducted by AMPI Vallarta two years ago, revealed that owners are not very informed as to what the cost is for maintaining their property. Here are some suggestions for your transition into becoming a happy, responsible owner of your newly acquired condo, villa or lot.

Escritura or Deed You may not be required to be at the closing of the sale in the notary's office. In any case, the notary will have at the closing, copies of the deed or escritura that are signed by the seller and the bank trustee. You should keep a copy of this document for your records, until you receive the recorded escritura. The original may take weeks to be returned to the notary's office. Your escritura is numbered on the front page and is the reference number in the public records. You need to keep a record of this number as well as the date the trust is established and which notary transferred the property.

It is not the responsibility of the notary's office to notify you when the public deed is returned. You will need to contact the notary to pick up the document or give written authorization to someone to receive it. The cost of the escritura has been included in the fees you have paid at closing. Certified copies can be an extra charge. It is a good idea to have one or two certified copies available when you need to show proof of ownership. Put the original escritura with your other important papers.

Transfer of Utilities Before or during closing, you need to complete forms signed by the seller transferring the telephone (if you have purchased the phone line in your agreement) and utility contracts. If the utility contracts are not being transferred, you will be opening new ones and the seller will need to cancel the old ones. In addition to the proper forms, you will need copies of photo ids of the seller and yourself. Someone will have to go to the different offices to change the accounts, and in some cases pay a deposit.

Visa You may apply for an FM3 visa to stay in Mexico for longer periods of time than you are permitted on a tourist visa. Your FM3 will list your residence in Mexico. You may apply for an FM3 at the consulate in your home state or make application at the immigration office here. You will need to present certain information, depending on whether you are applying for a retirement or working visa. If you obtain the FM3 in the states, you must go to immigration when you arrive and have the visa finalized. This is very important. I have met people who have not realized that there is a time limit for the completion of their visas. Because the applicants failed to go into Immigration at the Marina and have their thumbprint included, they will be required to re-apply for a new visa and pay the start-up fees again.

Every year, on the anniversary date, the visa will expire if not renewed. The usual procedure is to go 30 days in advance and request the renewal. There is a government fee to renew in addition to more paperwork. If you have someone help you with this, you can expect to pay his/her fee, as well.

Payment of Utilities: A propane gas contract will designate how often you want the fuel delivered to your residence. There are various private companies providing propane within the Bay. In the spirit of healthy competition, you will find that some of the gas companies are offering extra incentives to get your business. They may offer to maintain your gas tank as part of their service.

If you don't establish a contract, you can order the gas, as you need it. Keep in mind that there may be delays due to holidays, lack of supply or other customers in line ahead of you. You may find yourself out of gas on a Saturday afternoon with no possibility of having the tank refilled until the next business week.

For either a contract or open account, the payment has to be made at the office of the gas company or paid at the time the gas is received. The gas contract should be in the name of the owner and have the correct address of the property.

The CFE or electric bill is delivered every two months. This is an important receipt to keep. The electric contract should be in the name of the primary beneficiary named in the escritura and should be mailed to the address of the property. This is one of the utility bills that the notary will accept as proof of your residency. Some notaries also accept gas receipts. Many notaries use your telephone bill for proof that you are occupying your home. Again, the correct name and address should be on these receipts and you should keep the originals. You may also have a monthly cable or satellite television bill. The electric and telephone bills can be paid at local banks during certain hours, through the due date. When the bill is past due, you have to go to the proper utility office for payment.

The telephone bill is mailed every month. There is a basic rental or usage charge and long distance calls usually show up 30-60 days after being made. A residential line provides for 100 local calls (not cellular or 800 calls) at no extra charge. You are charged for calls over 100 for the month and this will be shown on your bill. Cellular calls are shown separately and can cost as much as long distance calls. Commercial or business lines do not have the 100 calls per month allowance and you pay for all local calls.

If you own a condominium, some or all of the utility bills may be included in your monthly fee. You will need an official receipt from the condo association.

I do not recommend pre-paying utility bills. Many notaries will not accept these receipts as proof of your occupancy in Mexico.

For good record keeping and timely payments, you should have all contract number information written down as well as the dates that the bills are usually due. Statements requiring payment can show up two days before or the very day that they are due. Many local bills are mailed from Mexico City or Guadalajara, and don't make it to your doorstep with much time left to pay. If you don't receive the bill in time for payment, go or send someone to the utility office and pay it anyway, using the account number and address for verification of your account. When you receive the bill, keep it with your receipt of payment. If you open a bank or investment account, have the bill mailed to your home address.

Insurance. You can buy insurance in Mexico to cover your home, your car, and your health. There are excellent companies in Mexico. They may be a subsidiary or partner of American or European counterparts. There is a large insurance brokerage company in California who writes policies through Mexican companies, and bills from their US office to your US address. You may not get a reminder of a policy about to expire. You or your manager need to be sure the payment is made on time.

If you own a condo, the building should have a master insurance policy to cover the overall structure and common area. This expense is usually paid from the condo budget. You can supplement this coverage with an individual policy for your interior and contents.

Earthquake insurance is available in addition to fire, theft, glass breakage, and liability. Remember you want to insure for replacement cost, not market value. You should not include the land in the replacement amount.

Car insurance is available through these same companies. Medical insurance can be purchased as well. There are insurance brokers here as well as agents who work for a particular company.

Real Estate Property Tax Every year you will need to remember that the property tax is due. If you pay in January or February, you can save on penalties or interest. Property taxes are due every two months, so there are 6 periods in a year. As the tax is low compared to what you may be use to paying, I recommend that you pay for the entire year in advance. The bill is paid at the municipal building in the Office of Catastro. The receipt is the official "del impuesto predial." Your receipt will have an account number for the property. Without this reference number, you will have difficulty asking for the bill for payment. You will not receive a reminder or a bill in the mail. You or someone you delegate will go to the tax office to obtain the bill in order to pay it.

Bank Trust Fee Each year your bank trust administration fee is due on the anniversary of the date of the trust. The official bank receipt or factura has its own internal account number. This is not the same as the number of your escritura. The bank trust account number is important for you to use when you are making any contact with the bank.

The bank holds the property in trust and you are the beneficiary. There will be occasions when you need a letter from the bank authorizing you to take a certain action on your behalf. An example is the right to vote or give your vote to a proxy in the yearly condominium meeting. The bank has to give you permission in writing in order for you to represent yourself or have a substitute. The letter of authorization from the bank should be taken to the condominium meeting and given to the person authorized to receive these letters. These authorizations become part of the legal documents that back up the decisions at the condominium meeting.

You may need the bank to give written permission for other purposes, also. The bank can charge other fees in addition to their yearly one. In the case of death of one of the primary beneficiaries, the bank should issue a letter acknowledging the current beneficiary. This letter needs to be an attachment to the escritura. The heirs must take the initiative to get the letter.

Your trust document names the primary beneficiaries and designates who inherits the property in case of death. If there are two or more primary beneficiaries, they can designate that the survivor (s) inherit the rights of the deceased. When the primary beneficiaries have died, the secondary beneficiaries should already be named as heirs with the percentage acquired by each. The bank will need to issue a letter acknowledging who the current primary beneficiaries have become. The original trust continues. There are some people misinforming foreigners and charging them to create a new trust when it is not necessary. Do not be a victim.

The bank may not send you a reminder that the yearly administration fee is due. Your responsibility is to make the payment on time without advance notice. You will want to keep records of when and where your trust and tax payments are to be paid. You want an official receipt for these payments.

Staff You may want to hire people to help maintain your home. If you are in a condominium, a full staff may already be in place. The condo may provide maid service, or you may choose to hire your own.

Your experience here will be lot more pleasant if you take the time to learn about employment practices in Mexico. If you have an employee, you have certain responsibilities to that person, financially and legally. The law and in some cases, the influences of a labor union, defines your legal and financial relationship with the person working for you directly. You may also have outside services provided by a gardener, pool man, an attorney and an accountant. Your legal relationship with them is different from the worker in your direct employ.

An employee has rights, including days off for holidays or the right to receive overtime. Get a list of the official holidays in your area. There may be local customs to give days off for personal events in the life of your worker. The salary includes 15 days at Christmas and is not an option or bonus. The amount of vacation time is established when a worker is hired. If they don't stay with you for a year, you may still owe a portion of the vacation time and the holiday salary. There is a formula that an accountant or informed administrator can use to determine the amount of money owed to the worker. Vacation time increases for your worker on the anniversary date of their employment.

An employee has the right to receive medical care. You may be required to cover their dependents as well. The government insurance program covers a number of benefits, including credits for low-income housing. If the proper insurance is not in place, you may have the responsibility for paying for the claims out of your personal funds.

The subject of worker benefits under Mexican law is complex. You need to take the time to find a person qualified to help you understand the basics and to take the proper steps to protect yourself while you take proper care of your staff.

If you are an owner in a condominium, you need to know if your board and administrator are aware of the laws and that they follow them properly. Owners are at risk financially if they delegate the responsibility to someone who does not make proper informed decisions. You also need to have a working knowledge of the condominium laws, which were revised in Jalisco in 1995.

Knowing what to expect from the person performing a job for you, is very important. Many times, skills need to be improved through more training. Understanding and patience will go far here. It is best to work with the "status quo" until you have had time to learn why things are done in a way that may be different from your own experience.

"Unless you try to do something beyond what you have mastered, you will never grow." C. R. Lawton.

This article is based upon legal opinions, current practices and my personal experiences in the PuertoVallarta-Bahia de Banderas areas. I recommend that each potential buyer conduct his own due diligence and review.