Puerto Vallarta Real Estate Articles

Question to ask

Recently, I have observed misunderstandings or misinformation that have come up in the process of a closing of a real estate transaction or in discussions at a yearly condominium meeting of owners. Here are some questions that you may want to ask if you are in either of these situations. Correct answers should help clarify the situation and enable you to make better decisions.

CLOSINGS IN REAL ESTATE TRANSACTIONS

At which bank will you put your trust? What are the conditions under which the bank can charge for their administration fees? What inflation factor do they use or can you get a flat rate? Do you have to pay in US dollar equivalent or in pesos? What menu of services does the bank perform and what can they charge? When is the yearly administration fee due? How are you notified when it needs to be paid? Where is the payment made? What is the official receipt? Are there late fees? Can you pay early?

If you use an escrow account to protect the purchase funds, who can hold this escrow? What does the escrow holder charge for their services? Under what terms do they hold and release the funds? What are the logistics of how the money is transferred and disbursed? Are the escrow funds held in a separate account or a general fiduciary account? What happens if the closing doesn't occur? What happens if the closing is delayed? Are there additional fees for continuing the escrow account for a period of time?

When are funds held as US dollars and when do they have to be converted to pesos? Who or what type of company is authorized in Mexico to hold escrow funds? Since a notary does not handle the purchase funds, what are you options?

How does possession work in Mexico? Will there be parties in possession at closing? What if the property you are selling/buying is leased? What are the laws governing possession?

PESOS AND US DOLLARS

What is the difference in the rate in buying dollars and selling dollars? How is the conversion disclosed by the bank/caja de cambio who is changing the money?

Can you have a US dollar account in Mexico? What are Mex dollars? Can you negotiate the rate when making a transfer into Mexico from a US dollar account?

Are cashier's checks from the US considered cash and liquid in Mexico? How does the process work of cashing a cashier's check? How can personal checks be cashed?

COURIER SERVICES

What is the best way to send important documents into Mexico? Is there a courier that insures the documents/materials being sent? What is the best way to send important documents out of Mexico?

KNOWING HOW TO PROVIDE ACCEPTED DOCUMENTATION

What is an apostille? When is it needed? What papers needed to be certified? When do you need to provide an original of a document? Can you laminate your birth certificate to protect it and still use it as an original?

What does an FM3 provide for you in the way of rights and responsibilities? What is required for a FM3 if you are retired or not working in Mexico? When and where is the thumbprint done to finalize the visa?

What permits and process is required for you to be able to work in Mexico?

INSURANCE

Do you need a Mexican driver's license? Do you need car insurance here?
What other types of insurance do I you need if you are living in Mexico? Does US insurance pay if you live here?

TAXES

What is IVA and how is it charged? Do you owe taxes in Mexico for a Mexican plated car? When and how are property taxes charged and paid? Where do you go to pay the property taxes? Is it important whose name the tax bill is in?

Federal zone payments: Do you pay for any federal zone or maritime concessions if your property abuts these zones?

What is a federal maritime concession and how do you get one? What taxes or rent do you pay?

Do bank accounts pay interest and charge taxes automatically or are you responsible for payment?

If you earn income in Mexico, what are the taxes should expect to pay? What expenses can you deduct against this income? Will you have to pay taxes in both countries?

CONDOMINIUM LAW AND MEETINGS

The civil code of Jalisco updated the condominium law in l995. The state of Nayarit may have a different code.

When does my building hold their annual meeting? What are the basic laws for operation of condominiums?

How do you get the right to vote or represent myself at the meeting? How do you appoint a proxy?

What is your percentage of ownership including private use and portion of common areas? How is your condo fee related to this ownership? What happens if you don't pay your fees on time? What rights do you have as an owner in relation to your unit and the common areas?

How is the vote counted in the official condo meetings? How is your percentage of ownership related to your vote?

What can be done if owners are in arrears on their fees? When and how can special assessments be legally required of owners?

How is a meeting conducted and documented so that is legal and the decisions made are binding on the owners? How is a meeting legally called?

What if you want or have pets? How are parking rights determined?

What does the law require for a reserve account? What expenses can be used from this account? Can owners be reimbursed for expenses?

What are the business of a general meeting and the percentage of vote required to make a decision? What is a legal quorum?

What is the business conducted in a special meeting and what is the percentage of vote required to pass or decline an issue? What is a legal quorum?

Who is Hacienda and what does it have to do with the operation of a condominium?

How does the accountant show the income and expense statements? How are expenses paid and where is income deposited? Who signs the checks?

What are the powers and functions of the administrator? What is the difference between "persona fisica" and "persona moral?"

What are the powers and responsibilities of the board of directors of the condominium?

What is the condominium regime? What is an Association Civil? What does non-profit mean in the case of a condominium?

What roles do an attorney and a notary play in regard to holding legal meetings and filing minutes of the meetings?

In regard to real estate transactions and official condominium meetings, what is the requirement regarding the use of a translator? When are the times that an official translator is required?

What are the largest expenses in a condominium project? What is the difference in the fees for condos that are full-service versus condos that pay some utilities and services separately? What is a reasonable range of fees to expect?

When do you need the use of you own attorney? When do you need an accountant? When do you need the services of a real estate professional?

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