Buying and selling real estate in Mexico is similar to the closing process in Europe and South American countries: A notary (specialized attorney appointed for life) is empowered to transfer real estate. Using a notary for closing is different from US and Canadian transactions. The notary in most of the world is the highly trained and paid professional we use here in Mexico. Notary public in our experience is not by any means the same profession even though the names are the same.
The Notary’s Role in Property Transactions in Mexico
The notary is required to adequately identify the sellers and to be sure that the property taxes, bank trust and condominium fees (if applicable), and water bill are paid and current at closing.
The notary is not required to be sure the electric or other utilities (except water) are paid. These other utilities will not be mentioned if you don’t have the right representation, as chances are you will assume this will be no problem and can easily be handled later. To think this is to be very wrong.
Your real estate agent or attorney should explain to you the utility change procedure. No new buyer wants to pay or have to find the former seller to pay a large electric or phone bill before he can have the service put into his name. But this can happen, and it does.
Real Estate Transactions & Closings in Mexico
Two things not talked about enough when closing real estate transactions in Mexico:
- The utility bills should be paid through the day of closing by the seller. He should furnish you with a bill and receipt of payment for especially the electric and telephone. In some cases, the notary will keep original bills of the seller, so you may have to accept a copy of the last paid bill. Why do you need these last paid bills? To prove they are paid and to use later.
- It is far better to transfer the utility accounts (especially CFE electric and telephone), rather than open new ones, but it will not be possible to be made until after closing. HOWEVER, some buyers have decided to open new accounts, because for the time being CFE does not keep the same plateau for wattage use, so the new owner establishes his own usage and pricing level. To transfer, you will need the proof of the account as well as a letter signed by seller with his ID, requesting the utility company to transfer the account into your name. The best and sometimes only time to get this letter signed and the ID is at the closing table. After closing, when the bill comes due, you will pay it and begin the transfer.
This handling of utilities may seem like an obvious and easy task as part of closing, but most of the procedure will be unfamiliar to you. Lack of attention to paying and setting up transfer of the utilities can result in problems later and leave a bad taste in your mouth.
Be aware and make sure these two steps are handled at closing and you will be very glad afterwards. Many sellers and buyers are not going to be in Mexico when the utilities need to be transferred and whomever will be doing this for you cannot easily get the paid receipts, account number, or ID’s of the seller to take care of the transfer for you.
A note: CFE or the electric state-mandate monopoly requires a copy of the registered transaction from the public registry. The current time for you to pick up the recorded escritura (deed) back from the public registry is 6 months.
This article is based upon Flex MLS reporting, legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review. If you have any other questions, contact me through my website.Harriet Murray