The more we write about buying real estate in Mexico, the more readers want to know. Judging from the feedback to recent columns, some information needs to be expanded upon, in particular title insurance and the services of real estate agents.

Title Insurance

Stewart Title Guaranty Co., an upstanding U.S. firm, often sees its name used as a “confidence builder” in the marketing of Mexican real estate developments. In a November column, Stewart Title provided six principles to help buyers avoid risks. Of those, No. 5 was “Obtain a property ownership insurance policy to protect against recording errors, liens, encroachments, taxes, fraud, misrepresentations and other ownership issues.” In other words, obtain title insurance either through Stewart or one of the other two major U.S. title companies issuing such policies in Mexico (Fidelity National Financial and First American Title Insurance).

Mexican real estate developments, mostly those in which U.S. based companies are the investors and/or developers, recognize the marketing importance of telling potential buyers the development has title insurance coverage. The “foreign” developer in Mexico also recognizes the need to protect its own investment by acquiring title insurance when it buys the property for the development. This is done by obtaining a “Master Title Policy” that covers the entire site purchased.

After subdividing the site into lots, adding the improvements, community common areas and in some cases building model homes, the marketing begins, often highlighting the project’s title insurance. But buyers must understand: It is the developer that is protected by the insurance, not the individual lot or home buyer.

In the event the title company has to pay on a claim, it is up to the developer, not the title company, to make good to the buyers. But the insurance on the developer’s purchase is unlikely to cover the investment of individual buyers. So buyers should also secure their own title insurance.

Additionally, buyers on seeing a trusted U.S. title insurance company’s name may assume that all other things are OK. This may not be the case. There is still the notario, the recordings, the passing of title to the bank trust, the capital gains tax and other details.

Agents & Brokers

Buyers also need to be informed about dealing with Mexican real estate brokers or agents who are seemingly working for a U.S. real estate firm. Familiar names like Century 21, Coldwell Banker and Grubb & Ellis dot Mexican storefronts. These offices are usually not part of their namesakes’ corporate network. Rather, they are “independent franchise operations.” Other than in name and network referral cooperation, these businesses are not under the jurisdiction of the corresponding U.S. corporation or of any state licensing or regulating agency.

Further, there is no requirement for real estate sales agents to be licensed in Mexico. So beware the broker or agent who says he is licensed.

Expatriates from the United States living in Mexico sometimes try to pass themselves off as licensed brokers or agents in Mexico based on activity or affiliation with an office in the United States. The agent or broker may indeed have a license from the United States. If so, ask for a copy. Then ask if they are representing the U.S. office listed on the license. You will more often find a quick withdrawal of the representation.

So two things to remember. Title insurance is good for real estate development companies while a separate policy is a must for individual buyers. And in dealing with real estate agents in Mexico, remember they are not licensed, making it all the more important not to hand over any deposits or money to be used to purchase property. Check with the bank handling the trust to provide the escrow service — there are no regulated escrow companies in Mexico — since it has a fiduciary obligation and is regulated under Mexican law. Buyers who follow these steps will sleep well the night they do so and for many nights to come as they enjoy the Mexican home or vacation getaway of their dreams.

Patrick Osio Jr. can be reached at posiojr@sandiegometro.com. The veteran consultant also has issued The Mexican Perspective, an intensive primer on business culture and protocol. Copies are available at http://www.hispanicvista.com/sales/book_sale.htm.