So, after a lot of searching, you have finally found your perfect Cabo home. You have made an offer that has been accepted, and now you are waiting to close on your new home. In many cases, it can take up to three months or longer to obtain the necessary documents to close, commonly because of the trustee bank’s delay in transferring the title. Most buyers are eager to get into their new homes, and sellers are anxious to collect their money and move on.
Real estate closes in Los Cabos
There are two methods to close on your newly purchased home in Los Cabos. The typical and most common close is what is known as a “Normal Close” or “Hard Close.” A Hard Close occurs when all documents required to perform a legal transfer of the property have been obtained by the closing agent, and all purchase funds and buyer expenses, like closing costs and property acquisition tax, are in escrow. The closing agent will set a closing date where the buyer and seller or their designated POA (Power of Attorney) will attend and sign the required documents. At the end of the signing, funds in Escrow are transferred to the seller, and the new owner is presented with the key to their new home. The transaction is complete and is now officially closed.
Early Possession – Soft Close
Less common but performed regularly is what’s called a “Soft Close.” A Soft Close occurs when the seller allows the buyer to take possession of the home almost immediately, and the buyer agrees to transfer a percentage of the purchase price (~80%) to the seller before the actual official title transfer. This type of agreement, called a “Promise to Trust,” allows the buyer to enjoy the home immediately, and the seller can now access most of the funds. Both parties must agree to provide a POA to the closing agent so that the closing agent may perform the hard close on all parties’ behalf when all the required paperwork has been collected. The POAs to the closing attorney along with the Promise to Trust Agreement ensures that no party can back out after possession occurs.
A Soft Close will always be followed with a final Hard Close where the official title transfer is completed and remaining funds are released to the seller.