Real Estate FYI / Mexico Real Estate Horror Stories

Mexico Real Estate Horror Stories

Mexico Real Estate Horror Stories

29 May 2015 Real Estate FYI 164

Nearly every week, we see another article in the press about expatriates buying real estate in Mexico. When we first wrote this article, we had seen one from the Kansas City Star, reprinted from the Wall Street Journal. It was about retired and soon-to-be-retired baby boomers buying real estate in the Yucatan and on the Mayan Riviera.

Here are some excerpts:

A big cadre of American baby boomers looking to retire someplace sunny and cheap is fueling a land rush in the Riviera Maya, an idyllic slice of Mexico’s Yucatan Peninsula... But many land-seekers are encountering obstacles, including skyrocketing real estate prices, confusing laws and con artists... The land rush is occurring at the beginning of a demographic tidal wave. With more than 70 million American baby boomers expected to retire in the next two decades, many without adequate pensions or health plans, some experts predict a vast migration to warmer — and cheaper — climates. Often such buyers purchase a property 10 to 15 years before retirement, use it as a vacation home, and then eventually move there for most of the year. Developers increasingly are taking advantage of the trend, building gated communities, condominiums and golf courses...

Mexico, already thought to be home to as many as 1 million American citizens, or roughly a quarter of all U.S. expatriates, is set to get the lion’s share of new arrivals...

No place has boomed in recent years like the state of Quintana Roo in Mexico’s far southeast corner. Anchored by the high-rise resort destination of Cancun at one end and cosmopolitan Playa del Carmen an hour to the south, Quintana Roo is the country’s fastest-growing state, with over a million residents. An estimated 1,500 to 3,000 American citizens live there more than six months out of the year...

If you read the article in its entirety, you'll see a lot of references to "unscrupulous" deals, "problems", "obstacles", "confusing laws" and "con artists". There's the developer in Baja California who sold condos built on ejido land and afterwards all the tenants were evicted. There's a couple near Puerto Vallarta who lost their ocean view when local Mexican developers built a resort between their beach house and the water. There's a woman near Tulum who put a down payment on ejido land but then disappeared for three years and the seller assumed she was dead, so he reoccupied it. But she wanted it back. Then a dead body showed up on the property.

Lions and tigers and bears, oh my!

Not Kansas, Kanasin...

It's true that we are not in Kansas anymore, but like "The Wizard of Oz", all of the news stories we read seem to reuse the same actors in a rather familiar plot. Act I: Gringos are moving to Mexico in record numbers. Act II: Mexico is a lawless land where it is "not uncommon" for Gringos to be duped, or worse (insert the same two or three examples from above). Act III: Let these cautionary tales serve as a warning. Act IV: Here's what you need to know to avoid being "victimized" (i.e. "there's no place like home").

It never fails to amuse us how the Press relies on fear to sell papers, in this case portraying Mexico as such a dangerous, lawless and corrupt country. We have purchased five properties in Mexico. Four are here in the Yucatan Peninsula and one is in the state of Michoacan. We have many clients who are real estate agents, and through them we are personally aware of scores of real estate transactions among the hundreds conducted here each year. In over ten years of living here now, we have only heard of two or three "unscrupulous" deals out of a thousand.

Frustrating Process

That's not to say we haven't met several expatriates who were frustrated by the process of buying property in Mexico. Many of these are head-strong, impatient types who bring their own ideas of what the rules should be and don't take no for an answer, even though that is one word we share with Spanish. Mexico is a different culture that speaks a different language and has different laws arising from a different history. There is much to learn and we always recommend you don't go it alone. Even after living here for as long as we have, knowing the people we know and having our experience, we would never consider buying or selling a property in Mexico without the two most important ingredients: a Mexican accountant and a Mexican lawyer. And for most of the time, we would throw in that third almost-essential ingredient, a knowledgeable Mexico-based real estate agent.

Por Ejemplo...

For example, ejido land causes "problems" for those who don't understand it. The majority of Mexico's population is Native American or "indigenous". They were not killed or herded off to reservations like in the United States. During the Mexican Revolution, the government took land away from large haciendas that had acquired it illegally and placed it in trust to the indigenous inhabitants who had lost it. This land is technically owned by the Mexican Government but used by local indigenous communities. In recent years, laws have been enacted that allow the heirs of the original families to whom the land was entrusted to privatize and sell it, but the process can take years as each interested party is tracked down for their signature. If you deal directly with a member of an ejido, he or she has the right to take a down payment in return for a promesa, or agreement to sell you his share after it is privatized. He or she will undoubtedly offer you a great price. You may be tempted. But it is a highly speculative deal because the ejido may never be privatized, at least not in your lifetime. We suggest you do not even consider this kind of deal. But if the Mexican citizen in question has lived through the division of the ejido and has a clear title, then go for it. Some of the best property we know of has been purchased that way.

Obtain the Basics

We have heard of several cases where expatriates without a clue try to deal directly and end up stymied or frustrated. In general, they are over-confident and trying to find a "better" deal and avoid paying a commission. For most of us, this is not a good idea. Find a good real estate agent who has references. He or she will hook you up with a good Mexican lawyer (called a notario), and if you need one, an accountant (called a contador). They will help you learn what to expect and how to follow the rules. Then, follow the rules. In many places in Yucatan (and throughout Mexico), you will have to purchase your land through a bank trust (called a fideicomiso). We suggest you might consider a fideicomiso even if you are in the zone where you don't have to. It will ensure you a clear title and it offers some tax advantages, too. Within 50 kilometers of the coast, it is required by law. There are some rumblings in Mexico City that they may be doing away with the fideicomiso requirement, but as of late 2015, that has not happened.

Booming From Coast to Coast

What the Kansas City Star says about the real estate boom in Playa del Carmen, Tulum and Cancun is definitely being seen here in Merida as well. You cannot drive down a street in Merida for more than three blocks in the centro historico of Merida without seeing at least one major colonial renovation going on. And of course, most of the people paying for those renovations are coming from the United States, Canada or elsewhere, because most local Yucatecos with money wouldn't dream of living in el centro. Just like in the United States 30 years ago, they are moving out to the suburbs, either in gringo-like, ranch-style homes or in gated communities like La Ceiba, the Yucatan Golf Club or Xcanatun residential communities, or even those high-rise Yucatan Country Towers in the Alta Brisa neighborhood.

Meridanos are selling the homes of their tias (aunts) and abuelas (grandmothers) to the incoming expatriates, who are salivating at the beauty and potential of these old colonial homes. In the USA of course, you can't find these stone-walled, tile-floored homes with high, beamed ceilings and arch-lined corridors for love or money, let alone for the price of a down payment on a tract home in California.

Despite the somewhat negative tone of most news articles, they often do tell a "rare" success story. The Kansas City Star story talks about the abandoned mansion of the famous and now deceased drug lord Pablo Escobar, that was turned into the Amansala Hotel and EcoResort by a resourceful gringa. That was a few years ago now, and that was just the beginning. The beach in Tulum is now rimmed with a plethora of successful small hotels with restaurants, sushi bars and yoga studios, Playa del Carmen and other beach communities are still growing like crazy and even Merida is becoming hip and popular (see link below).

So hundreds of Americans, Canadians and people from around the world, maybe thousands, are buying homes annually in Merida or on the nearby beaches of the Yucatan Gulf Coast for retirement, vacation rental income and investment. And more and more of those are moving down here every year. We have heard recently that over 7,000 expatriates live in Merida, a surprising number if you believe the 1,500-3,000 on the Mayan Riviera. Frankly, we did not think those numbers were accurate when that article was written (too low) and they have risen steadily since then.

We Working Gringos are just the visible tip of the Yucatecan expatriate iceberg, so to speak. An iceberg that has grown exponentially since this article was written and shows no signs of melting, even in this tropical heat!

****
Looking to buy real estate in Merida or Yucatan? Try our Real Estate in Yucatan section or the For Sale in Yucatan pages.

Looking to rent? Try our Vacation Rental Listings!

Want to know what it is like to LIVE in Yucatan? Try our Yucatan Survivor section!

Helpful Links & Resources

Comments

  • DIANNE CALIVA 18 years ago

    ENJOY READING YOUR INFORMATIVE ARTICLES. HAVE FOUND A FURNISHED HOME SELLING FOR $80,000. MY QUESTIONS ARE: DO YOU NEED TO SET UP YOUR FIDEICOMISO AND FM3 BEFORE YOU CAN OFFER TO PURCHASE A HOME? IS THERE WIGGLE ROOM ON THE PRICES OF SUCH HOUSES? HOW LONG DOES THIS PROCESS TAKE TO ESTABISH YOUR FIDEICOMISO?
    THANKS.

  • Khaki 18 years ago

    I found a set of maps that are invaluable to long distance real estate searchers - they are pdf files, so can be saved to your computer for later use. The main index is here: http://www.paguito.com/portal/hemeroteca/index200408020800.html

    I didn't go through all of the maps - but did load the first one on Merida. ...zoomed in and it was perfect - every "subdivision" (for newbies) name is right there - along with the names of major streets. This is such a help when reading online real estate ads - or the ads in el Diario.

  • Khaki 18 years ago

    What I would like to see is a map with all of the names of the different "subdivisions" in Merida on it. I saw one somewhere - but can't find it again. That would make the search for a place to live so much easier!

  • Kaye 18 years ago

    Ditto...Alvaro Jr. was great. I was so happy to find out when you recommended him to me that he was, in fact, who my real estate agent was using. He was very professional and helpful. He was thorough and also provided me with a list of documents I would need for my FM3 as well as a very reasonable price to take care of all the details. I will be returning to my house in March and will most certainly be returning to his office. By the way, my real estate agent was Jorge Mazun with Tiera Yucatan. He was the best!!!I was so impressed with how he was constantly looking out for my best interest, communicating with and reassuring me throughout the entire process. He even researched and found an old utility bill that was still owing on the property and required it be satisfied before closing so I did not have to pay it! Not only was he my realtor, but he & his wife have become dear friends who have invited me into their home in Merida & have continued to help me in NUMEROUS ways to this day...way past the commission. How often these days do you find someone like that??? If you want a kind, compassionate & truly dedicated agent, pick him. You won't be sorry. He has a US phone which is 661-310-7916.

  • Working Gringos 18 years ago

    We have had numerous successful transactions with the lawfirm of Baqueiro, Puerto Y Asociados. Both Enna and her brother Alvaro (junior) speak English. Their father, Alvaro (senior) is a brilliant lawyer and watches over everything. Their phone number is 999-926-6668 or you can reach Enna at ennabaqueiro@meridanotaria55.com

    The receptionist does not speak English, but if you just say the name of Enna or Alvaro, she will get you there.

    This firm is used by a lot of the local expats and the only complaint we've ever heard is that they are very busy. We have never heard any complaints about their honesty or integrity, and our experience with them has been wonderful.

    Buena suerte!

  • Cynthia 18 years ago

    HELP.....have tried numerous notaries and local lawyers. grateful for name of reputable lawyer to pursue 'trust' registration on our behalf.

  • Working Gringos 18 years ago

    Not that we know of, Jerry, but we think its a great idea! Let us know what you find out or what you do in this area... and we'll do the same.

  • Jerry 18 years ago

    Dear WGs:

    I appreciate your suggestions. I will continue to explore this region and when I make plans to visit I will be sure to contact you. By the way, is there any particular art, youth or community organization that specializes in public art, community festivals, youth and artists collaborations between gringos and Mexican people?

  • Working Gringos 18 years ago

    Jerry, we applaud your initiative to build bridges between our two cultures. Much more useful than walls.

    Merida is a big city with many real estate options. While some of the historical properties in the centro have appreciated considerably in the past few years, there are still many homes and buildings that can be purchased for much less than in other large cities in North America.

    Merida also has a vibrant and eclectic cultural life, modern infrastructure and a government that is supportive of both development and the protection of Mayan and Yucateco heritage. It also has one of the lowest crime rates of any city its size. Cholul and Izamal are two smaller towns to the east of Merida with a growing creative life as well.

    We will continue to add to the articles on this site in hopes of answering more of your questions in detail. Thanks for reading!

    WGs

  • Jerry 18 years ago

    I am interested in hearing more feedback about how to buy, what neighborhood to look at, and more importantly why move to Merida?

    For the past ten years I have been dreaming about establishing an art center in Latin America. I am an artist and director of a community-based alternative museum that focuses on participatory public art, arts education and urban renewal. Since I love Mexico, have friends from there, and an interest in Mayan culture, I thought Merida might be an ideal location or you may suggest other Yucatan cities worth investigating.

    My hope is to establish a satellite space that would create bridges between American and Latin American culture emphasizing how collaboration and creativity can contribute to the well being of the community.

    From the sounds of it, it may be too late in buying something large and affordable like a hotel or hacienda but thought this may be a good place to get information.

    I am grateful to get your feedback as I begin to explore Merida and or the greater Yucatan communities.

  • Working Gringos 18 years ago

    Here's what we say. Get a lawyer. Chances are, you are already talking to a lawyer who is doing the work of transferring the fideicomiso. Does this lawyer speak English? If not, find another one you can talk to.

    We can highly recommend the law offices of Baqueiro, Puerto y Asociados. Alvaro Jr. speaks good English. You can call them at +52-999-926-6668. The best hours to call are 10 am to 1 pm and 5 pm to 8 pm. This law firm is used by many gringos here in Merida and they can be trusted to tell you the truth and charge fairly. They have saved us from some bad deals, and seen us (and others) through many successful house purchases. They are not the only reputable firm here, but one we can heartily recommend.

    When you call, the receptionist does not speak English, but don't let that discourage you. Just say "Quiero hablar con Alvaro, por favor". The next question will be "Quien habla?" or "Who is speaking?". Say your name and she should transfer you or tell you to call back. For some reason, leaving a message doesn't work well here. They are very busy, so don't be put off by the brusqueness of the receptionist. She is often juggling four phone calls at a time.

    A lawyer will know what you are talking about and should be familiar enough with the area to know whether or not you need the 'Encroachment Protection'. We have heard of the encroachment issue before, and know this has been a problem in other areas of Mexico. We have not heard of anyone having this sort of problem in the Yucatan.

    But we don't want to be the last word on this. It's your investment and you should safeguard it. Spending a few dollars for a good lawyer's advice is well worth the peace of mind.

    That's what we say!

« Back (140 to 151 comments)Next »

Yucatan Living Newsletter

* indicates required
Yucatan Living All Rights Reserved © 2024 | Founded 2005 - About us - Advertise on Yucatan Living