Offer to Close
The Offer to Purchase
So, after looking at many properties, carefully considering location, amenities, and budget, you have found your new home in Cabo. What next? The offer process, like the viewing process, is slightly different than what you may be used to at home. Let’s look at how a typical offer goes. Once you and your Agent have determined an offer price that you are comfortable with it’s time to write up the offer.
- An Offer to Purchase must be in both English and Spanish to be considered a legal contract.
- Within the Offer to Purchase, you indicate whether you are including the purchase of the furniture or if the home is being sold unfurnished. Most homes in Los Cabos are sold furnished.
- All offers are made in US Dollars.
- Within the Offer to Purchase, you must name a Closing company and Notario. Your Real Estate Agent can advise you on this.
- The Offer to Purchase includes a Promise to deposit Earnest money into Escrow, should the offer be accepted by the Seller.
- Other Conditions and Amendments may be attached to the Offer to Purchase such as Property Inspection and furniture exclusions.
- Earnest money, no less than $5,000 USD is required within 5 business days of the offer being accepted by the Seller. There may be multiple deposits made, as agreed to by both the Buyer and the Seller.
- Upon an offer being accepted The Closing Agent establishes an Escrow Account for the transaction. The fee for this is $750 USD and is non-refundable. All funds received from the Buyer, including earnest money are deposited into the Escrow Account.
- Offer to Purchase contracts typically have longer expiry dates as often the Seller is not residing locally, and it takes time to collect signatures.
- As at home, there may be a number of back and forth counter offers between you and the Seller until you reach an agreement.
- Once the Offer to Purchase has been accepted, the Closing process can begin. Closing on property in Mexico typically ranges between 45 and 90 days in most cases.
Offer to Purchase Acceptance
Great! Your Offer to Purchase has been accepted. There are a number of things that must happen in a relatively short period of time.
- All conditions must be satisfied in the Offer To Purchase. That may include a Property Inspection and repairs resulting from the Inspection. This will have been negotiated as part of the Offer to Purchase and is usually subject to a defined time frame and performance criteria.
- Earnest money must be transferred into the Escrow Account in accordance with the Offer to Purchase.
- You will be asked to supply personal identification in the form of a passport and/or Driver’s License as well as a utility bill from your home address.
- You are required by Mexican Law to provide your Real Estate Agent with a completed “Know your Client” form.
Once all these obligations have been satisfied, The Closing Agent begins the Closing Process, making it possible to transfer the property’s title to you, the new owner.
Closing is the final step in executing your property purchase. It is during this process, ownership of the property is transferred to the Buyer and the title and deed are signed.
When you signed your Offer to Purchase and it was accepted, a tentative Closing date is established. The real Closing date is set by the Notario Public after all documentation and permits have been completed and received and documents have been prepared for signature to transfer property to the buyer. Generally, this date is set within the last two weeks of closing. Because the Closing date is not firm, it is often difficult for Buyers and Sellers to plan flights and accommodation on such short notice to attend the Close. A limited Power of Attorney given to a trusted person in Mexico such as your Real Estate agent can complete the deed transfer signing on behalf of you.
Transferring the balance of the purchase price
Once the Notario receives the Letter of Instruction from the Bank and their authorization to close, he will inform the Closing Agent who then notifies the Buyer and the Buyer’s Real Estate agent. The Buyer is then required to transfer the balance of the purchase price of the property to the Escrow account as indicated in the Offer to Purchase.
The Closing Agent prepares Settlement Statements for the Buyer and the Seller for review and signature. Disbursement instruction is then prepared by the Buyer and Seller.
Who attends the Closing?
- The Buyer and their Real Estate Agent
- The Seller and their Real Estate Agent
- The Closing Agent
- A Spanish/English Translator (Often the Closing Agent)
The Mexican Notary Public (Notario) has considerably more responsibility than their counterpart in Canada or the United States.
The Notario is a licensed Mexican Lawyer who is certified and appointed by the Mexican Government as an official representative of that government. He is responsible for verifying facts regarding the property, ensuring the legality of the title deed transfer. The Notario is also responsible for registering the deed in the Public Registry and other applicable Government entities. Finally, The Notario is responsible for collecting fees and taxes and remitting them to the correct government entity.
Here at last, it’s Closing Day.
All parties meet at the appointed time at the Notario’s office. The Settlement Statements are reviewed by the Buyer and Seller. If the Statements are correct they are signed by each party.
The Closing Agent or Translator then reviews each page of the Title (Fideicomiso) with the Buyer to ensure the Buyer fully understands the contents of the documents. Once the Fideicomiso has been reviewed to the Buyer’s satisfaction, the document is then signed by the Buyer, Seller and/or their proxies and the Trust Bank.
After all documents have been signed, the Notario submits to the proper authorities all taxes and documents for registration.
Once the Closing Agent verifies that all documentation has been received from the Notario and all conditions of the Escrow Agreement have been fulfilled, funds are released to the Seller – typically within 24 hours of the transaction.
At the end of the signing process, the Buyer is given the keys to his new home. The transaction is fully executed and the property is now yours!