REAL ESTATE & CLOSING SERVICES

Real Estate frauds, commonly known as "scams" refers to illegal activities aimed at misrepresenting information on real estate property, documents, or mortgage loans as well as any transfer of money with the purpose of defrauding victims wishing to invest in a residential or commercial property. 

Recently, many foreign individuals, have decided to invest in Mexico's Real Estate due to its appealing beaches and abundant coastal properties; however, investors should observe due care to prevent falling victims of these deceptive practices.

We have noticed a significant increase in these scams, mainly in tourist or industrial destinations, such as Cancun, Los Cabos, Puerto Vallarta, Tijuana , Mexicali, Ciudad Juárez, Mexico City, among others. When investing in the country, buyers need to keep in mind that Foreigner individuals may lease and own real estate and other properties in Mexico.

However, there are several guidelines that must be considered before buying real estate. Foreign individuals or companies and Mexican companies that are 100% owned by foreigners may buy real estate for residential purposes provided they comply with some requirements and permits; they can also purchase land within the Mexican "restricted zone" using a Mexican Trust or “Fideicomiso”. 

Often times, retired Americans are the main target of real estate frauds. Typically, they fall prey to carefully crafted schemes and without proper guidance, they might be subject to a series of elaborate deceptions.

In Mexico, the most common type of scams are

a) The title fraud, where an individual attempts to sell a property that does not exist or attempts to sell a property that does not belong to them. 

b) The repurchase of timeshares with an attractive profit margin for the time-share owner.

Real estate scammers in the country are a sophisticated group that operates in an organized manner and have their victims perfectly identified.

On many occasions, they breach real estate developers’ database, obtaining personal and/or sensitive information of the owner of the property or timeshare. By doing so, the initial contact seems legitimate.

These criminals work in various ways, but there are common practices among them that potential investors need to be aware of:

• When a victim is contacted by a scammer, they offer a property and payment scheme that is very attractive from an investment perspective. Scammers might use company names similar to other serious real estate companies, a situation that can lead to confusion.

• Victims are told that they require a Mexican tax ID and that the real estate company will take care of setting up the agreement and the entire sale process, including hiring a lawyer who will obtain the tax ID on their behalf. Victims are charged an upfront fee to cover the seller's expenses and the lawyer.

• The alleged lawyers are not registered in Mexico's Secretary of education national registry of professionals; thus, they are not certified to practice law in Mexico.

• Alleged lawyers send false official documents to the buyer that mimic real documents, these false documents are supposedly issued by the tax authorities, the Treasury, and other governmental entities. 

• Payments requested after the first contact vary in nature, such as taxes, expenses for parcels, Tax ID among others. The fraudulent scheme does not end when the victim wires funds to the scammers; these scams have become so elaborate that once victims have cut off communication with the scammers because the scams have been discovered and a reasonable amount of time has elapsed, scammers approach the victims again pretending to be the Mexican government.

In this phase of the scam, they announce to the victim that the government has created a department or office to compensate victims of real property scams as long as they provide sensitive personal information.

At this point, the procedure is very similar to the first scam, first requesting relatively little money for things such as hiring Mexican lawyers, paperwork and taxes, but after the first few deposits or wire transfers, scammers make up fees to keep getting money from the victim in ever-increasing amounts.

A real estate lawyer might help buyers navigate the Mexican real estate market and provide guidance as to the requirements needed to acquire property in the country, as well as to duly investigate in the Public Registry of Property that the land they wish to buy is free from liens, and belongs to the seller.