Real Estate Purchase Guide

Introduction

Notice: This Guide is just a recommendation, only a simple and hypithetical example, the real transactions could include way more steps, especially using mortgages. Please use it with discretion. BMB will not take any responsibility for the misinterpretation of this guide.

Home Purchase Procedure in San Miguel de Allende

Embarking on the journey of purchasing a home in the beautiful city of San Miguel de Allende is both exciting and intricate. This guide has been meticulously crafted to walk you through each step of the home purchase process in this unique locale. From making your initial offer to the final transfer of ownership, we aim to provide a comprehensive overview, ensuring clarity and ease as you navigate through the various stages of your property transaction. Every purchase is a different world, this guide is not definitive, but could help to have a close picture of the process. BMB cannot take responsibility for changes or differences. The use of this guide is the total responsibility of the one who uses it or recommends it.

This guide does not include all the steps for all the transactions, and it does not include the real list of requirements. Please contact your Real Estate Firm to get a detailed list of these items.

I. Making an Offer

Initial Offer Submission

To initiate the purchase of your chosen property, we recommend submitting a formal offer. This should be presented as a signed document, demonstrating your commitment to proceeding with the potential purchase. Alongside this document, please include copies of your Mexican Migratory Form and Passport. These copies suffice for the purpose of validating your offer.

Nature of the Initial Offer

It’s important to note that this initial submission is not a binding agreement but rather the first step in expressing your serious interest in the property. During this phase, the property will continue to be listed on the market. This ensures that the seller retains the ability to consider other potential offers while your offer is being reviewed and negotiated.

II. Negotiating the Offer

Scope of Negotiation

Upon receipt of your initial offer, the next step involves negotiations, which could encompass various aspects of the sale. It’s essential to be aware that properties recently subjected to a price reduction might have limited room for further negotiation on price. However, other facets of the transaction, such as specific terms, timelines, and the selection of the notary, are open for discussion and can be tailored to better align with your requirements.

Understanding “Sold As Is”

A key aspect to consider during negotiations is the principle of “Sold As Is,” a common clause in Mexican and Guanajuato real estate law. This principle signifies that the sale is based on the property’s current condition, and aesthetic issues are generally not considered valid grounds for negotiation. This differs from practices in the USA, where cosmetic aspects, such as paint colors and minor repairs, often form part of the negotiation process. However, significant structural issues, like a damaged ceiling, remain as valid concerns that can be addressed during this phase.

III. Documents Collection and Notary Involvement

Gathering Necessary Documentation

A crucial part of progressing your real estate transaction involves the collection and submission of pertinent documents. Both the seller and the buyer are required to provide all necessary documentation to the appointed public notary. This step is fundamental to initiate the formal process of property transfer.

Role of the Public Notary

Determining Costs and Obligations: The public notary plays a pivotal role in this process. It is their responsibility to determine and outline the closing costs for the buyer, as well as any taxes and obligations applicable to the seller. This ensures that all financial aspects of the transaction are handled transparently and in accordance with local regulations.
Property Inspection Coordination: Additionally, the notary will coordinate with the seller to arrange for professional inspectors to assess the property. This inspection is intended to update official records regarding the property’s size and features, thereby ensuring that all data reflects its current state.
Closing Date and Fee Communication: The notary will also inform both parties of the scheduled closing date and provide a detailed breakdown of the associated fees. This is a critical step in ensuring that all parties are aligned and adequately prepared for the final stages of the transaction.

Realtor Assistance in Selecting a Notary

Our role as realtors includes offering guidance and suggestions on choosing the most suitable notary for your transaction. We will provide estimates from various notaries, allowing you to make an informed decision that aligns with your preferences and the specific requirements of your transaction.

IV. Signing the Purchase Agreement

Comprehensive Inclusions in the Agreement

The next pivotal step in your property acquisition is the signing of the Purchase Agreement. This document is a comprehensive contract that encapsulates all terms and conditions of the sale. Key components of this agreement include:

Deposit/Downpayment: The amount and terms regarding the initial deposit.
Property Inspections: Guidelines and provisions for conducting property inspections.
Exclusions: Any items or conditions explicitly excluded from the sale.
Notary Selection: The choice of a public notary to oversee the transaction.
Real Estate Fees: Clearly outlined fees associated with the real estate transaction.
Payment Methods and Instructions: Detailed information on how payments should be made.
Timelines and Important Dates: Critical deadlines and dates relevant to the transaction process.
Personal Details of Buyer and Seller: Essential for legal and record-keeping purposes.
Property Description: A detailed and accurate description of the property.
Legal References: Various calls to the applicable laws to ensure the agreement’s legality.

Effectiveness and Expiration of the Agreement

Initiation Upon Deposit: The Purchase Agreement becomes effective once the deposit is made, optionally through escrow services.
Bilingual Requirement: To ensure clarity and legal compliance, the agreement is drafted in both English and Spanish, irrespective of the language proficiency of the involved parties.
Market Status of the Property: Upon signing the agreement, the property is officially taken off the market.
Handling of Notary’s Fees and Taxes: Where applicable, the notary’s fees and taxes may be channeled through the escrow account for efficiency.
Closing Timeline: While the typical closing period is 30 days, in this instance, the seller has requested a 60-day period, which is accommodated as reasonable under the circumstances.
Realtor’s Fees Through Escrow: The escrow service, apart from handling the transaction’s main financial elements, can also facilitate the payment of realtor’s fees.

V. Preliminary Closing Procedures

Seller’s Responsibilities

As the closing date approaches, typically about a week prior, the seller is expected to complete several key tasks:

Clearing Obligations: All outstanding services, debts, and taxes associated with the property should be fully paid and settled. This ensures that the property is free of any financial encumbrances that could impede the sale.
Property Preparation: The house must be thoroughly cleaned and prepared for handover. This includes removing all items that are excluded from the sale, as per the terms of the Purchase Agreement, ensuring the property is in the agreed-upon state for the new owner.

Buyer’s Financial Preparations

Balance Payment Arrangements: The buyer is responsible for arranging the payment of the remaining balance. This can be done either by transferring the funds to the designated escrow account or by ensuring that their bank is ready and able to disburse the funds at the appropriate moment during the closing.
Especial Purchase Authorization: During this period, the notary plays a crucial role in facilitating the legal process. This includes requesting the “Especial Purchase Authorization” from the Mexican Foreign Affairs Ministry (INM), a necessary step, especially for foreign buyers.

Understanding Costs and Taxes

Estimate of Taxes and Fees: To maintain transparency and ensure the buyer is fully informed, a detailed estimate of all applicable taxes and fees will be provided. This estimate helps in understanding how the notary’s fees are allocated and utilized.
Notary’s Role in Managing Taxes: The public notary will hold and manage the taxes on behalf of the buyer, further streamlining the final stages of the transaction.

VI. Closing and Balance Payment

Finalizing the Transaction

The closing of your real estate purchase is a pivotal moment in the transaction, marking the culmination of all previous steps.

Preparation of the New Deed: Upon completing thorough research and due diligence, the public notary prepares the new deed for the property. This document is the legal instrument that transfers ownership from the seller to the buyer.
Organizing the Signing Meeting: A meeting is arranged for both the seller and buyer to attend, providing an opportunity to review, discuss, and sign the new deed. This meeting is a significant event, as it officially seals the agreement and the transfer of property.

Handling the Balance Payment

Payment at Closing: The remaining balance of the property’s purchase price is due at this closing meeting. It’s essential for the buyer to be prepared to make this payment to complete the transaction.
Role of Escrow Services: If an escrow service is involved, they should have the balance amount ready at least 5 days before the scheduled closing. This ensures that there are no delays in the finalization of the sale.
Payment of Taxes and Fees: The notary plays a crucial role in managing and disbursing the funds appropriately. This includes paying all necessary taxes to the federal, state, and local governments on behalf of the buyer. The amounts for these taxes are based on the estimates and calculations provided in the preliminary stages of the closing process.

VII. Property Possession Delivery

The Final Step: Transfer of Ownership

The transfer of property ownership is a momentous and concluding phase of your real estate acquisition journey.

Occasion of the Deed Signing: The actual transfer of ownership occurs during the deed signing meeting. This pivotal event signifies the formal and legal handover of the property from the seller to the buyer. It is at this juncture that all the preparatory steps and agreements come to fruition.
Personal Property Inspection: In addition to the official deed signing, a personal visit to the property by the new owner is an integral part of the possession process. This visit allows you, as the new owner, to inspect the property, ensuring that everything is in accordance with the terms agreed upon in the Purchase Agreement.
Finalizing Ownership Transfer: The moment the deed is signed or when you visit the property, you officially assume ownership. It is a significant milestone where the responsibilities, benefits, and enjoyment of the property are now yours. From this point forward, you hold full ownership rights to the property.

VIII. Role of Realtors in the Transaction Process

Ensuring a Smooth and Efficient Transaction

As your realtors, our role extends far beyond just facilitating the sale or purchase of a property. We are committed to guiding and overseeing every step of the transaction process to ensure a smooth experience for all parties involved.

Comprehensive Guidance: Our responsibility includes providing detailed guidance throughout each phase of the transaction. From the initial offer to the final transfer of ownership, we are here to assist, advise, and ensure that every aspect of the deal is handled professionally and efficiently.
Supervision of Key Steps: We actively supervise and coordinate each point listed in the transaction process. This oversight includes ensuring that all necessary documents are collected, negotiations are conducted fairly, and the signing of the Purchase Agreement is completed accurately.
Liaising with the Notary: An important part of our role involves working closely with the public notary. We facilitate communication between the notary and both the buyer and seller, ensuring that all legal requirements are met and that the process runs smoothly.
Support During Closing: At the closing stage, we are present to support both the buyer and seller, ensuring that all parties are clear about the terms and that the finalization of the transaction is conducted without any complications.
Assistance with Property Possession Delivery: Our involvement continues right up to the delivery of property possession. We ensure that the transition of ownership is seamless, addressing any last-minute concerns that might arise.

Conclusion

Becoming an Expert in San Miguel Real Estate

By now, with this detailed guide in hand, you might feel ready to don the hat of a realtor yourself! While it’s said in jest, we hope this extensive walkthrough gives you a sense of confidence and preparedness as you step into the world of real estate in San Miguel de Allende. Remember, while this guide is thorough, the touch of a seasoned professional realtor is irreplaceable for a truly seamless experience.

Acknowledgement

This guide was brought to life with the assistance of OpenAI’s ChatGPT, an AI language model designed to provide information and support across a wide range of topics. ChatGPT’s role in compiling and presenting this information underscores the innovative ways in which technology can assist in real estate and beyond.