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Guest PalapaGirl

Owner Financing in Mexico

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Guest PalapaGirl

Has anyone here sold property and held a mortgage on it? How is it done? What government red tape is involved? I assume you would pay tax on the interest that you earn. I'd like to hear from the legal types and also from anyone who has actually done this. What are the major pitfalls? What recourse do you have if someone defaults, and would that be a nightmare process?

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The main thing to watch out for with owner financing is for people who won't qualify for bank financing. You don't want to write a 3 or 5 year note and then have them faced with selling or not paying you. If you require a substantial down payment of 30% or more you will weed out the flakes unless you amortize the whole loan over a 3 or 5 year period. Also be sure to check their credit rating. Most people don't and that is an indicator if there will be problems.

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Guest PalapaGirl

The main thing to watch out for with owner financing is for people who won't qualify for bank financing. You don't want to write a 3 or 5 year note and then have them faced with selling or not paying you. If you require a substantial down payment of 30% or more you will weed out the flakes unless you amortize the whole loan over a 3 or 5 year period. Also be sure to check their credit rating. Most people don't and that is an indicator if there will be problems.

We would finance less than 50% of the loan with a credit check, but what kind of government regulations might we face? Of course, before we tackle this we would have a local attorney, but we're trying to get some idea of what is involved before we decide if it is even worth the hassle. We've been on both sides of owner financing in the U.S., but since it is so rarely done here, we were wondering if it's just so difficult that folks don't want to bother.

You're such a fount of wisdom on these issues, and I do appreciate your input.

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Checking credit and loaning 50% you should be ok. There are one or two local notarios, Jorge Luis and #2 who do the paperwork for private mortgages and both speak English. I'm learning more about the issue but also feel there are hidden issues that you can't foresee until you are in a mess. Time to foreclose is 1 to 2 years and you have to lay out money out off your pocket although you'll get it back in a court judgment.

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Guest PalapaGirl

Checking credit and loaning 50% you should be ok. There are one or two local notarios, Jorge Luis and #2 who do the paperwork for private mortgages and both speak English. I'm learning more about the issue but also feel there are hidden issues that you can't foresee until you are in a mess. Time to foreclose is 1 to 2 years and you have to lay out money out off your pocket although you'll get it back in a court judgment.

Seems like a long process. If your contract is with a Canadian or USAian, I wonder if you would have any recourse in their respective countries. Keep us posted on what you find out. Thanks!

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I'm assuming that you are talking about your property in Bucerias.

You may want to talk to Maria O'Connor who is legal counsel for Tropicasa Realty in PV. Her phone number is (322)222-6505 or

e-mail maria(at)tropicasa.com

We inquired about this process for our home in San Pancho. We decided that, in Mexico, it wasn't as cut and dried as in Canada or the U.S.

Decide for yourself but please talk to her.

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Guest PalapaGirl

I'm assuming that you are talking about your property in Bucerias.

You may want to talk to Maria O'Connor who is legal counsel for Tropicasa Realty in PV. Her phone number is (322)222-6505 or

e-mail maria(at)tropicasa.com

We inquired about this process for our home in San Pancho. We decided that, in Mexico, it wasn't as cut and dried as in Canada or the U.S.

Decide for yourself but please talk to her.

Thanks for the great info. I will indeed speak with her. Would you PM me with your name, so that I may say that you referred me? Did you decide to do owner financing on your property or not? I know that the Mexican laws usually favor the tenant in a rental situation, so I would assume they would favor the homeowner also . . . possession being 9/10s of the law and all that. Thanks again.

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Another option might be to take a mortgage against a buyer's property in the US or Canada if they own there. Easily done and safe if there's equity.

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Guest PalapaGirl

Another option might be to take a mortgage against a buyer's property in the US or Canada if they own there. Easily done and safe if there's equity.

Interesting option. Hadn't thought of that.

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Buceriasdee,

Check out this thread from last November

http://www.chapala.com/webboard/index.php?showtopic=13851&view=&hl=mortgage&fromsearch=1

We chose not to do it.

The laws and such are changing all the time here. What was pertinent last November may have changed. Best to check for yourself.

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