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Understanding the Closing Process Flow

Understanding the Closing Process Flow

Hiring a professional firm to handle your closing process is the first step, but do you know what else you need to ensure a successful closing?

A new country means a whole new set of rules when it comes to real estate transactions. The keys to a successful closing are communication, organization and professional help.

Upon engaging a closing firm to handle the process, the client should receive an overall explanation of the process and timeframe expectations, since they could be significantly longer than in the United States and Canada. Timeframes can also vary according to the purchaser’s and seller’s ability to provide necessary documentation for the property transaction. All these requirements should be established during the initial interview process, since they vary depending on the specific circumstances.

Whether the transfer of the property will be carried out through a purchase or a trust agreement (Fideicomiso), each stage of closing process involves sorting through a wide array of documents, ranging from a simple copy of a party’s identification to a technical document such as a catastral appraisal of the property In case of a trust, once the federal permit is granted, a Mexican banking institution must also be engaged to serve as a trustee.

Got all you need?

The client should provide all contacts that may assist with necessary information or documentation, such as the seller, real estate agent and developer. Likewise the purchaser must obtain a deed (”escritura pública”) from the seller whereby the rights are derived. This deed must bear the seal of the public registry of property and commerce, as required under Mexican law.

In addition, the seller must have completely paid off the municipal property taxes (”predial taxes”) and, in some jurisdictions, even water bills in order to transfer property rights. He should also demonstrate that there are no liens on the property. These requirements are verified through a certificate of no liens (”Certificado de Libertad de Gravámenes”) and a certificate of no tax indebtedness (”Certificado de No Adeudo Predial”).

Finally, a certified appraiser from the local land use office must submit and record an appraisal of the property, which is determine the capital gains to be retained by the notary upon closing of the transaction.

lf a trust is being formalized in order to allow a foreign purchaser to acquire possessory rights on property in the restricted zone, a federal permit from Ministry of Foreign Affairs must be obtained.

The final step

The last phase of the process involves drafting and review of the trust or purchase agreement in coordination with the notary public, who must formalize all real estate transactions under Mexican law. In trust agreements, the banking institution serving as a trustee must also be involved.

Since the closing process requires understanding of real estate, civil, corporate and foreign investment laws, our team of in-house attorneys carefully review the public deed.

Coordinating the closing process involves organizing each file according to the required documentation for the transaction. It is vital that the closing team communicate regularly with the client to inform them of the current status of their transaction. By combining a highly efficient administrative and legal team, STEWART Title ensures professional, well organized service to convey property rights in Mexico.

Courtesy of STEWART Title in Mexico. We are an authorized representative of STEWART Title for title insurance.

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