Title insurance is a special type of insurance that protects the expatriate community in Mexico from loss on a specific piece of property. A Title Insurance Policy provides security against the loss of land as a result of a title problem. Title Insurance can be purchased with or without limitations and exclusions. When purchasing property in the United States, most Banks and Mortgage companies require Title Insurance prior to granting a loan.
It is important when purchasing real estate in Mexico to understand a Fidiecomiso (Living Trust) DOES NOT take the place of or exclude the need for Title Insurance. A Fidiecomiso can be dissolved in the event of Fraud, Errors and Omissions and certain government and Ejido claims.) When purchasing Title Insurance in Mexico, be sure to read the master policy thoroughly and check for limitations and exclusions.
Some title insurance companies insure only the Fideicomiso (Living Trust) and exclude fraud, government and Ejido claims, even certain developer liens. This should not be acceptable. When purchasing title insurance in Mexico make sure that the policy is on the land not just the Fideicomiso.
Buying a home anywhere is one of the most important decisions anyone makes and now that title insurance is available in Mexico, people can have a lot more confidence in purchasing a home or a condominium.
What additional benefits does a title policy provide?
Since title policies are fully negotiable contracts of indemnity, a title company can consider and insure a variety of title matters for the benefit of the proposed insured. For example a title insurance policy has the ability to provide affirmative coverage and endorsements that protect purchasers against risks that may be discovered in the title search process. How can any one individual, even a notario publico, give these types of assurances that have real dollars standing behind the assurance and that ultimately will protect a buyer in the event of a loss?
Never forget one thing, no matter who tells you that title insurance isn't necessary, just remember that it is the ONLY monetary indemnification that you will receive protecting your ownership rights.
Along with title insurance comes U.S. Escrow. Both Stewart Title and First American are offering that service even if you don’t have a title insurance policy yet.
Why risk your deposit when the Escrow Company will supervise the release of it to the developer?
This is not to be confused with a real estate company escrow account in the U.S. Your escrow is not covered by the same laws it would be if the property was in California so the real estate agent is free to keep any portion of the deposit.
Some of the Baja real estate companies are now offering Title Insurance as a way of protecting their customers and a few like Baja Relocation, won’t sell property without Title Insurance. If your realtor doesn’t, ask for it as part of your offer to the buyer.
Developers have also begun to get title insurance on the land before selling and the buyer can obtain an individual policy at settlement. If you are considering purchasing a home or condo that does not offer a title insurance policy on the land but tells you that you can get one when the development is finished, consider how you will do that if there are liens or title disputes on the land. And if your agent is willing to sell you this kind of property, be aware that the agent will get paid when you make your deposit to the developer so they have nothing to loose if there are problems. You can be sure they will not stick around to help you if they have already been paid. If there is not a clear title you will also not be able to get a bank trust and for foreigners it is impossible to own land in this part of Mexico without a bank trust. Not a Master Trust, but an individual bank trust.
If all of this seems confusing , just remember , Title Insurance and Title Company Escrow are the only safeguards you have in a market where real estate agents have no licenses. Look for Developments that have both of these safeguards.