Closing the Deal in Paradise: A 5-Step Purchase Guide

Buying property in paradise is an exciting venture, but the process in Mexico has specific legal nuances that differ from the US or Canada. Since Cabo San Lucas is within the "Restricted Zone" (within 50 km of the coast), here is your essential 5-point guide to navigating the market.

1. Establishing the Fideicomiso (Bank Trust)

Since you are buying in a coastal area, non-Mexican citizens must hold the property title through a Fideicomiso.

• How it works: A Mexican bank acts as the trustee, holding the legal title, while you are the beneficiary.

• Rights: You have full rights to sell, lease, improve, or pass the property to your heirs.

• Duration: These trusts are typically granted for 50-year terms and are perpetually renewable.

2. Making the Offer and the Promise Contract

Once you find the right villa or condo, the process begins with a formal Offer to Purchase.

• The Agreement: If accepted, this moves into a "Promissory Agreement" (Contract of Sale). This document outlines the price, payment terms, and deadlines.

• Earnest Money: You will typically be required to deposit 5-10% of the purchase price to take the property off the market.

3. The Escrow Account (Cuenta Custodia)

To protect both parties, never send deposit funds directly to the seller’s personal account.

• Third-Party Security: Use a US-based or reputable Mexican Escrow Company.

• Disbursement: The funds are held securely and are only released to the seller once all closing conditions are met and the deed is ready to be signed before the Notary.

4. Due Diligence: Legal Review and Home Inspection

This is the most critical phase to ensure your investment is "clutter-free."

• Legal Review: Your lawyer or the closing agent must verify the Lien Certificate (Certificado de Libertad de Gravamen) to ensure there are no debts, and check that all property taxes and utility bills are paid in full.

• Home Inspection: Just like back home, hire a professional inspector to check for structural integrity, electrical systems, and "Cabo-specific" issues like AC efficiency and water pressure/storage.

5. Closing Before a Public Notary (Notario Público)

In Mexico, the Notario Público is a government-appointed lawyer who has the ultimate responsibility for the legality of the transaction.

• The Signature: Both parties (or their Power of Attorney) meet at the Notary's office to sign the Escritura (the official deed).

• Final Duties: The Notary calculates and collects the closing costs (taxes, fees, and permits) and records the sale with the Public Registry.

*Closing costs in Los Cabos generally range between 4% and 6% of the purchase price, covering the Notary fees, transfer taxes, and trust setup.