Mexican Standoff: Yet Another Reason to Use a Title Company to Escrow Purchase Funds
The following story in a Canadian newspaper should be an eye opener for buyers. Although the scary story has a "happy ending," it cost the author a month of angst and frustration and the lesson was simple:
Always use a title company to manage the funds involved in a Mexico purchase! Mexican standoff
Learn the ropes before buying property
By Alan Caplan
BUCERIAS, Mexico -- Last February, by accident, we discovered what will be our retirement home.
It was certainly bigger than we dreamed, but the price was right, below market, and the couple who sold it wanted out in a hurry. We wrote the deposit cheque.
In the heat and excitement of the moment, it's easy to assume everything will go well. It's all part of the learning experience, they say. And we learned.
We hired a lawyer to protect us and a notary to complete the paperwork, as required here. We were to close the deal barely a month later. The sellers wanted the funds in U.S. dollars (they're the only ones lately) in their Mexican U.S. dollar account.
We flew in expecting to close the next day. We had no place to stay; our other house had tenants. The sellers arranged a place for us for a couple of days.
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We had wired the cash balance, the notary's fees and closing costs a week beforehand to the notary's American bank, as instructed. When we presented ourselves to close the deal as arranged, the caca hit the Ventilador.
It was the first of the two weeks of Easter. The first week, "Semana de Santos" (All Saints week) begins Palm Sunday. The next is "Pascua" beginning on Easter Sunday. Mexico virtually shuts down for the entire fortnight.
Our trustees, a Mexican Bank, were required to review and approve the deal before closing. However, the folks who do that were preparing to take to the beach. Anything "new" was put to the bottom of the pile until after Easter. Although the lawyer and notary pulled some strings (everywhere, it's who you know), the closing still couldn't take place until the following Tuesday.
NO MONEY IN ACCOUNT
Finally, all our paperwork was in place and we signed. But the notary advised the sellers not to because there was no money in the notary's U.S. account. "But," I protested "Your bank received it", producing a copy of my receipt.
The bank did receive the money, but his account wasn't actually a 'trust account' to facilitate real estate deals, it was his personal bank account. He didn't have it.
The U.S., like Canada, has money-laundering rules for large sums transferred from one foreign national to another foreign national via an American bank. His bank closed the account and sent him a cheque, including my funds, by ordinary mail. At that point he hadn't received it. So that day, despite my protestations, there was no deal.
There we sat, our money in limbo, a preplanned time-frame shortening daily. We assumed we had time to assess, repaint, renovate and move in before we returned home. But time trickled away like grains of sand through an hourglass. And we measured each and every cascading grain. The notary received the money three weeks later.
The sellers though, were generous to us. We could bring in painters and other contractors, but do no serious renovating. They lived in our mess, moving from room to room to accommodate. No amount of threatening the notary made a difference. Then the money finally came.
The next day, the notary flew to the U.S., deposited the cheque into his 'other' account (the notary business in Mexico must be a fabulous gig) and transferred the funds to the sellers' U.S. account in Mexico. It was more than a month after we signed.
TITLE INSURANCE FIRM
The lesson: When purchasing a home in Mexico, always use a title insurance company to engineer it for you. They have 'real' trust accounts. They verify that the title is secure and clean and that the transaction takes place in a timely and effective manner. But I knew that.
The original article can be found HERE.