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Closing Costs and Procedures in Mexico: What to Expect

Baja Real Estate Closing Costs and Procedures Summarized effective Jan 1, 2007

(This article is available for download as an attachment to this post) 

We are often asked about the costs of closing a real estate transaction in Baja, and unfortunately have to give a somewhat vague answer. We will try to explain why in this summary of the typical procedure we have experienced in most transactions.

Closing costs in a real estate transaction in Baja California are generally higher than many foreign buyers would expect to pay back home. Generally speaking, they will vary in the 5%-7% of the transaction value. A specific quote cannot be given for any transaction as some costs are fixed and others will vary with the value of the transaction as well as the value of the tax assessor’s appraisal, and of course, attorney fees can vary widely as well. It often pays to shop around.

Once the buyer and seller have come to an agreement on the price, and other terms of the transaction, in most cases the majority, if not the entire closing costs, are the buyer’s responsibility, with the exception of any capital gains tax the seller may be responsible for.

Immediately upon agreement, the buyer will in most cases retain a closing service company or attorney to guide him through the transaction, and make all arrangements with all parties involved, (including Banks, Federal Government, Notarios, Surveyors and appraisers), order the necessary documents, and compile a package for presentation to the Notario Publico in preparation for closing the sale and transferring the property rights.

NOTE: The first thing the buyer should request is that the closing service or attorney immediately (within 3-5 days) create a formal Promise to Purchase Contract

(in Spanish) for both buyer and seller to sign as a binding agreement, including all terms agreed upon in the offer/acceptance to replace the offer/acceptance.

An English language version translation may also be ordered, at extra cost. (typically $25 - $40 per page.

Required Costs the buyer can expect are as follows:

1. Closing attorney fees in the range of $1,500 – up ( typically $2,000 - $3,000)

2. New survey (deslinde) $250-up (typically $300)

3. New tax appraisal (avaluo) $250-up (typically $300)

4. Municipal certificate of no liens (Gravamenes) under $100

5. State certificate of no liens (Gravamenes) under $100

6. Apply for Foreign Affairs Permit to Establish a New Bank Trust (approx. $1,200)

(Note: not necessary if property is in an existing trust to be transferred)

7. Bank fee to establish or transfer trust (typically $500-$600)

8. First 2 years of trust administration (typically $1,000 - $1,200)

(Both of the above depend on which bank is chosen)


9. Acquisition tax of 2% of the property value

( Note: this may be the actual purchase price or it may be the tax assessor’s valuation, which is often much lower than market value. Please be sure to ask your closing attorney about this, as it can be a significant cost difference, and current as well as future capital gains exposure will also have to be considered, often by both buyer and seller)

10. Notario Publico’s Fee: a published, and rarely negotiable scaled fee structure, approx 1% for the first $100,000 and .75% for any additional amount of transaction. Varies by Notario and case.

(see above comment on Acquisition tax)

11. Registration in Foreign Investments Registry $450 - $800, depending on bank

12. Registration of trust with Public Registrar: 1.25%

Also required: Annual Residency Visa (FM3)

Although the Notario can close your transaction with only a $20 six Month tourist Visa (FMT), you are will ultimately need an FM3, or annual non-immigrant residency visa.

Plan on a cost of $150- $275 per person for a first time FM3. (see expanded explanation below)

Additional Optional costs a buyer may incur

Attorney fees for more extensive title insurance search if desired $800 - $1,200

Title insurance policy premium Approx .5% - 1.25% of insured value, typically .75% on most

Costs of Mortgage, if financing (Please consult your mortgage broker, as these can vary widely)

Note: None of the above is meant to be a definitive summary, but merely a summary that holds true to our many past experiences with closing transactions in Baja California.

Also required: Annual Residency Visa Expanded explanation

Although the Notario can close your transaction with only a $20 six Month tourist Visa (FMT), you are will ultimately need an FM3, or annual non-immigrant residency visa. This will also be required when the time to sell comes for capital gains exemption status.

In Mexico, the FM3 is annually renewable for the first five years, at which time one moves to an FM2, or Immigrant status residency visa for an additional five years. After ten years, one can apply for permanent "Immigrado" status, foregoing the annual renewals.

An FM3 can be applied for at any Mexican consulate abroad, and the procedures and requirements vary with the consulate location. The quickest and easiest is the San Diego consulate on India Street, downtown. It is generally an overnight procedure and costs about $150, depending on Peso exchange rate. Most applicants will simply hire an immigration specialist to handle this for them at an additional cost of about $125 for their fees. The service then also handles the annual renewals for a fee of about $40-$80. The time savings for most is well worth the fee.

Many immigration specialists also offer property management services, including paying your utility bills and property taxes on time for a very reasonable fee, to avoid interruptions in service, or penalties due to late payment.


Isela Kalgaard said:

I like what you did here.  Very explicit. No complicated lawyerese jargon.  Why not do the same for SENTRI RULES etc.?

# July 25, 2007 12:30 PM

Herb Kinsey said:

Thanks for your comment Isela.  You make a good suggestion and it's currently in the works.  The feedback and suggestions are extremely useful in helping us to know what our visitors need.

# July 26, 2007 9:50 AM

jim dawson said:

thank you ! i found this information very useful!    thanks again jim

# October 1, 2007 5:18 AM
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