Saturday, July 1, 2006

Buying Your Dream House in Patzcuaro

There are many things to consider once you've actually decided on a house or a property and are ready to take the plunge.

I am not an expert in real estate, but Mexperience has a great guide to buying and selling in Mexico that I highly recommend.

To hire a lawyer, or not to hire a lawyer, that is the question.
The reasons to hire a lawyer are many, as are the reasons not to. We felt strongly that as first time home owners, we wanted to do everything by the book. Here in Patzcuaro, I highly recommend Liliana of Mexatua as a local bi-lingual lawyer you can trust.

We actually bought our house from Mexatua, so we decided to hire outside counsel. We ended up paying about 10% of the value of our house to our Baker & McKenzie lawyers in Guadalajara.

Some folks find a "Notario" that they deal with most directly, but I found (and continue to find) Patzcuaro notarios to be easily influenced by under-the-table money, and I didn't feel comfortable with that.

Our lawyers did a lot of the work for us, which was great. And since they were completely bi-lingual, were able to keep us up to date, give us copies of all documents in English, and go to battle on our behalf when push came to shove. Here is a list from Mexperience on some of the common checks that should be done either by your lawyer and/or your notario.

The most important things that our lawyers did for us were:

1) They made sure the property actually belonged to the seller. Here in Michoacan, Ejido land is common, as are big families that collectively own property. Our lawyers did an extensive title search and found, thank goodness, that the sellers owned the property.

2) They made sure all taxes and utilities had been paid. Under Mexican law, the new owner is liable for all debts associated with the property (unpaid mortgages, utilities, taxes, etc). We found that the sellers owned a few thousand US dollars worth of bills and taxes and our lawyers made sure those were paid.

3) They made sure that the actual price we paid for the property was recorded. Max Guerrero wrote a small piece on this issue, but the gist of it is: tax evasion. The sellers may not want to pay capital gains tax and may try to convince you that by recording a lower value, you will save money. That may be true in the short-term, but not so when you sell. Plus, remember: it's tax evasion.