Vacation Rentals - Short term Rentals - Long Term Rentals
Condos - Villas - Apartments - Houses
LA PAZ, Baja California Sur, MEXICO
LIVING IN A RENTAL HOME IN MEXICO...taking the big step by small measures!
by linda neil
Oftentimes it makes sense for newcomers to an area to rent a home prior to making a purchase. This provides an opportunity to explore, to learn the neighborhoods, and then begin to understand the personality of the city or town before making a leap to a purchase and a more permanent commitment.
Everyday more and more foreigners, people from the U.S., Canada, Asia and Europe, have found Mexico to be an ideal location for healthy retirement. Others have come to Mexico as a result of job transfers. Others still, taking advantage of electronic and wireless communications, seek out delightful areas in which to live and work from their in-home offices and studios.
La Paz and its surrounding areas is absolutely delightful for many people:
It enjoys an international community, many universities, art, music, dance and absolutely outstanding beauty with the Sea of Cortez at its front door. The winter weather is generally cloudless with some wind and temperatures of 52 to 74 degrees, Farenheit. Summer gets warmer with average temperatures of 95 degrees Farenheit, but does enjoy almost daily Coromuel breezes off the Pacific Ocean. Some people spend November through June in La Paz and the rest of the year on the high plateau of mainland Mexico.
To date, not many homes or apartments are available for rent in La Paz. Fewer still are fully furnished. It is not always the landlord's custom to maintain the property. It may require fixing up, a refrigerator, a stove, basic furniture and lots of paint. Nonetheless this can also be a fun experience for the couple who wants to learn about La Paz! Rental terms can be from a few days to indefinite, depending upon the owners.
Some of the questions to ask when looking for that special rental house or condominium are:
1. What is the length of time the property is available for rental? (Some owners wish to rent only part of the year)
2. What utilities are included in the rent? (Electricity, water, internet, cable?)
3. What type of air-conditioning system does the property have? (If electricity is NOT included in the rental price, ask to see receipts for the summer months.)
4. Is telephone service available? Is cable service available?
5. Is the water service reliable?
It is always a good idea to have a rental contract, in English, if you do not understand Spanish, which outlines the term of the agreement, the security deposit and conditions of its return, amount to be paid, extras, if any, and so forth. This contact should be prepared by a rental management company.
It makes sense to contact a rental agency to assist in the search and to assist you with the details. The professional agency will know the landlord and the time available for the rental, will be able to provide a history of repairs, and potential issues with the property. It will also be able to help you locate the RIGHT house to meet your requirements......
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Author Linda Neil is the founder of Linda Neil Properties and The Settlement Company, the first escrow company in Mexico, which is dedicated to processing the trusts and title transfers of Mexican real estate for foreign buyers and sellers for properties located ANYWHERE in Mexico. Ms. Neil is also licensed as a Real Estate Broker in California, is an Accredited Buyer Representative through NAR, and has over thirty five years of hands on experience in all aspects of Mexican real estate. She holds membership in AMPI, NAR and FIABCI and PROFECO Certificate 00063/96.
Her parent company is now affiliated with and has helped develop All Points South, a Property Management Company doing business in La Paz. For further information, contact: info@lindaneil.com, visit us and take a look at rentals: www.apsbaja.com
the settlement company ®
ESCROW IN MEXICO
The transfer of title in a Mexican real estate transaction can be confusing for foreign buyers, especially if their understanding of the Spanish language is less than perfect.Prior to the establishment of escrow companies in Mexico, buyers hired attorneys, did the work themselves or, in many cases, just didn’t worry about receiving a title!
The guidelines for the operation of an escrow company in Mexico are found in Articles 273 to 308 of the Mexican Commercial Code and provide for strict accounting of funds, strict compliance with buyer-seller instructions and full ethical responsibility by the parties handling the escrow.
As of this date there are no provisions for the licensing of escrow companies or their agents, however.It is therefore important that persons dealing with companies offering these services check out company references and inquire as to their standing with PROFECO, the Mexican consumer protection agency.
While the escrow concept is understood and is a common practice in the western United States, many easterners and Canadians are not familiar with this process.Following are questions frequently asked, and their answers, which provides an overview for the uninitiated.
1. What, really, is an “escrow”?
When used in the context of transfer of title, the escrow generally involves three parties - the buyer, the seller and a neutral third party.It often involves the deposit of monies from the buyer and documents from the seller, to be exchanged and delivered upon the execution of the instructions.The neutral third party is often called “the stakeholder”.
The Buyer/Seller instructions are prepared by the escrow company in compliance with the terms of the purchase/sale contract.They are then signed by the buyer and the seller and authorize the neutral third party to handle the details of the transfer.The escrow company must comply with Articles 273 to 308 of the Mexican Commercial Code in its dealings with its clients.
2. Why can’t these things be taken care of directly between buyer and seller?
They can be and, sometimes, are.When strangers are doing business, however, they often feel more comfortable doing business through a neutral third party.This is especially true when the completion of a transaction involves a lapse of time from beginning to end; such as when taxes and/or liens are to be paid from proceeds, title is to be searched and permits are to be obtained.
3. What is meant by “neutral third party”?
The company holding the funds, the documents, executing the instructions, does not have a financial interest in the property involved in the transaction.It is not directly affected by the potential profits or losses or consequences of the purchase/sale and therefore can be more objective, more impartial, and follow more strictly the buyer-seller instructions.
4. What are the buyer/seller instructions?( also known as the settlement contract)
It is a contract for the performance of services.What services and how and when they are performed are drawn from the terms established by the buyer and seller in their purchase/sale negotiations.It is a contract in which each party authorizes the release of funds and/or documents upon the occurrence of certain events or the completion of certain duties and tasks.It outlines the general conditions under which these instructions will be carried out.
5. What kind of duties are performed by an escrow company?
Some of the more common duties include, the ordering of a title search, requesting issuance of a policy of title insurance, certifying that taxes are paid, preparation of promissory notes and mortgage documents, if required, application for trust permits, if required, holding funds in a neutral depository account, issuing payments to others as instructed, supervision of the registration of deeds and providing a full and final accounting of all funds to the parties to the transaction.
6. Who are the parties to a transaction?
The Buyer, the Seller, and the neutral third party.Sometimes a mortgage lender is involved.These are the principals, the main parties to the transaction and are the only persons who may amend the Instructions.If real estate agents represent the parties they may obtain copies of documents to the transaction, but all matters are treated as highly confidential with respect to outsiders seeking information.
7. What if the buyer wants the sale handled through a neutral third party but the seller does not?
Then the Instructions prepared will be “uni-lateral”, one sided and the escrow agent will be ethically bound to protect, first and foremost, the interests of the client, buyer or seller, who has contracted the escrow services.
8. Can the escrow procedure be handled by long-distance or is it necessary that the parties be present?
With the advent of fax, E-Mail and efficient courier services each party may be in a different town, or even in a different country!Because the procedures and customs for transfer title, whether fee simple title, or in a bank trust, are very similar through the entire country of Mexico, the neutral third party may be located anywhere in Mexico and the buyer and seller do not usually need to appear before a Notary Public unless the transfer is in fee simple.In the event signatures are required by buyer and/or seller, it can generally be arranged for each to do so at his/her convenience.
9. Why can’t a real estate company act as the escrow agent?
It can and often has done so in the past.Many details, such as paying taxes, requesting loan information, reviewing documents, preparing financial statements, however, are time consuming and take time away from the main purpose of most real estate companies; that of marketing and selling property.
Generally, however, the real estate company represents the buyer, the seller, or both.It has a financial interest in collecting a sales commission and even the most professional agents recognize they can sometimes be less objective than an escrow company.Sophisticated buyers and sellers also realize this and often feel more comfortable having the neutral third party act as “stakeholder”.
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In response to the tremendous need for a neutral and independent third party who could process these transfers efficiently and economically, Mexico’s first escrow company, the settlement company was established in 1991.It has established policies and procedures as guidelines, and follows the same professional practices and ethical procedures established by escrow companies in the United States.
For further information and references, please contact The Settlement Company at their headquarters in Los Cabos, Baja California Sur, Mexico.
Tel: 011.52.612.123.5056, Fax: 011.52.624.142.2016
E-Mail: info@settlement-co.com Website: http://www.settlement-co.com .
PROPERTY MANAGEMENT 101
A guide for the foreigner owning real estate in Mexico.By Amber Neil
Whether you live in an established tourism destination such as Los Cabos, Baja California Sur, or a smaller up and coming place like La Paz, Baja California Sur, the following outlines important points you will want to have in mind when looking for a property management company.
There are two main types of property management in Mexico:
1-Finders fee agencies: this kind of business operates on a finder’s fee basis; the main goal of these companies is to find a renter for your property. They offer minimal services to you, the home owner, and to the potential renter. This kind of agency typically does not handle funds and or does it check to ensure the renter has credit or a deposit for your rental. This kind of service could be ideal for a homeowner who lives on-site and or nearby to attend to his or her clients during arrival, stay and departure. Financial exchange would also be handled by homeowner. The going rate for this kind of finder fee agency is typically equivalent to a one month rental income. This can be quite pricey on higher end properties compared to normal advertising costs and service fees.
2-Full Service Property Management agencies: are available in many popular tourism sectors of Mexico and have evolved quite a bit in the past few years, offering more of an International standard to both landlord and tenant clients.
The basics of operation for these agencies:
a) Cost: a monthly service fee and a percentage of rental income typical percentages for this are 10% for long term rentals and 20-35% of vacation rentals.
b) What to expect of this type of service: a full service property management company will handle initial reservations and capture an initial payment to secure the reservation. Before the renting client arrives for his or her vacation the agency will ensure the unit or home being rented is cleaned and meets the criteria put in place to ensure the tenants are satisfied and happy! Upon client arrival the property manager checks them in. It also takes a deposit for rental, has a contract signed to protect the homeowner, provides keys and directions to the rental property. A full service property management company will also be available to the rental clients during their stay in case of any emergencies, questions or for additional services required. Upon departure your agency will check the clients out, ensure unit is left in the condition it was delivered in and nothing is missing or broken. If there are missing or broken items, these will be billed to the client or applied to their security deposit taken at time of entry. Property manager will coordinate to have your unit or home cleaned and ready for its next renter.
c) Bonus Services: some property management companies will provide or offer third party escrow and financial accounting on a monthly basis. This is an excellent feature to ensure your money is protected and you know the expenses and income on a monthly basis. Another recent service in our industry is a tax program that guides the homeowner through the process and legalities to be in compliance and good standing with the local “Hacienda” tax authority. Paying rental income tax is mandatory and not doing so could result in major penalties for you, the homeowner.
d) Specialty Services: some full service property management companies offer additional services for you and your renter to benefit from. Some examples of this are: airport transfer, chef services, massage/spa services, activity planning, rental car arrangements, pantry stocking for you or your guests, daily maid service.
Tourism destinations can be excellent investments for rental property. If you are buying, looking to buy or already own a home in Mexico contact your local property management company to learn what kind of services they offer in your area. Also ask for a rental income assessment so you can have a clear idea of the potential income and expenses you may benefit from. Not only is the income from rentals attractive for the bank balance, it can also help maintain the property in first rate condition while you use it occasionally and enjoy the appreciation in a high demand tourist area in Mexico. ###
About the author:
Amber Neil was born and raised in Uruapan, Michoacan, Mexico. She is 100% bilingual and bicultural in Spanish and English. She has homes in La Paz, BCS, Uruapan, Michoacan, Mexico and in California where she is also an active real estate agent. She is a partner in Linda Neil Properties, in The Settlement Company, and in All Points South, a full service property management company in La Paz, Baja California Sur. She can be reached at: nobordersrealty@gmail.com for further information.
Copyright 2010. Consultores Phoenix, S.C. Reproduction prohibited without permission.
