Affordable title insurance is a relatively new product in Mexico and worth buying at any time; either during property purchase or years after the fact. In the past ten years, both foreign and Mexican home owners in Rosarito and Ensenada were forced to re – purchase property they had already paid for as a result of title disputes. A majority of these properties were in bank trusts.
A bank trust (sp. Fideicomiso) does not provide title guarantees. It is merely a legal instrument for foreigners to acquire all the benefits of ownership in Mexican coastal property. In the interior of Mexico, foreigners can hold title without the necessity of a trust In a property trust, title is transferred from the Mexican land owner-seller to a living trust in which the bank acts as the fiduciary in providing ownership rights to the foreigner.
U.S. Title companies insure foregners in Mexico
The same title insurance coverage you purchased on your home in the U.S. is available in Mexico. First American and Stewart Title Insurance companies, are two of the largest title insurance underwriters in the world and they welcome your business in Mexico.
According to Robert Calamari, President of Global Title and issuing agent for First American in Mexico : “We have determined that our risk, as underwriters on Mexican property, is not much greater than insuring property in the United States. Assuming the same due diligence standards in researching the property are met”.
In assuring safe transfer of title in Mexico, the same protocol followed by U.S. escrow officers is adhered too. Verification that the seller and title holder are one and the same, certification that the property is free of: creditor liens, mechanical liens, tax liens, and utility department liens. Most important, a 50 year study of the property’s history to assure that each transfer of title was done in accordance with federal and state laws.
To buy coastal property, as a foreigner, for personal use (the entire Baja peninsula is considered coastal property), you must do so in a living trust. If you are buying for commercial purposes, a 100% foreign owned Mexican corporation can allow fee simple transfer of property title to foreign owned corporations.. Either method provides the benefits of ownership: Resale, succession of rights to heirs in perpetuity, or commercial use.
Title insurance in Mexico is affordable
Title insurance is a wise “value added decision”. Given the horror stories about Mexican real estate in the U.S. press; a future buyer will value the fact that the property is insurable against any future title problems. The added value, is greater than the cost to be insured. The cost is $8.00 for every one thousand of property value. On a property worth $200,000.00 you will pay $1,600.00 to be insured.
Title insurance in Mexico is reliable
Title policy conditions, and payment for loss, are the same as those protecting U.S. properties. If it is a U.S. company providing the insurance, the title policy is a private contract entered into by two parties in the United States. Therefore, any disputes are subject to U.S. courts to resolve.
In an insurance industry article, Robert Calamari, wrote: “Responding to customer requests, title companies active in the commercial field have all moved forward on the international front. Some have sought to actually expand operations and establish a local presence in certain foreign jurisdictions. Others have developed an ALTA – like product that can be used in any foreign jurisdiction that meets the company’s qualifications. This type of product, as used by our companies, keeps the policy solely in the U.S.. A contract of insurance between the insured and insurer. Despite the foreign territory, all litigation regarding coverage is determined in the U.S.. In courts that are familiar with title insurance law”.
About risk, Calamari explains: “Although legal systems and real estate records may be extremely stable and accurate in a given country, it is – for the most part – an unknown landscape for investors. From an entirely different perspective, we have seen lenders venture to jurisdictions they have previously not considered as “safe harbors” once they are aware that a lender’s policy is available. In addition, we have seen the borrowing rate lowered by 7 to 10 basis points when title insurance is used, as opposed to a non-insured loan”.
Steps to secure title insurance in Baja, Mexico
- Fill the title insurance application form and submit all the information required, click submit.
- A competent agent will contact you with more information.
- An certified attorney has to do a 50 year back study on the property, take photos of the property and get documentation from gouvernamental entities. This step is covered by $2,000 USD needed to pay the fees for services of the Attorney authorized by First American, getting history of the property from the public record, certificates, traveling and shipping and expenses.
- Upon completion of the study and submittal preparation, First American will provide a commitment letter. At this time payment is made for the policy at $8.00 per one thousand of value (see above).
- Once the property title has been transferred to your bank trust or Mexican corporation, First American will mail you your title policy.