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Buying a property in Los Cabos differs significantly from purchasing one in the U.S. or Canada. The process involves different legal requirements, specific ownership structures, and a few extra steps that catch many first-time Cabo buyers by surprise. Some of these differences exist to regulate foreign ownership near the coastline while still allowing international buyers to invest and own property safely.
Los Cabos is a primary market for many. Still, it also serves as a second-home market for a substantial number of buyers. Most of these buyers already own property in other locations; yet, many are unfamiliar with the process of property ownership in Mexico. Closing on a property here is a safe and well-organized process when handled correctly. It simply requires a clear understanding of the steps involved and the associated costs.
For this guide, we spoke with Andres Navarro from La Costa Title & Escrow. His firm specializes in helping foreign buyers close securely and efficiently in Los Cabos. Throughout the guide, you will learn how the process works, what to expect at each stage, and how to avoid common mistakes that lead to delays or financial risk.
Step 1: Understand How Foreigners Can Own Property in Mexico
Foreigners in Mexico are not allowed to hold direct title to land within 50 kilometers of the coastline. This area is known as the restricted zone. Since Los Cabos sits within this zone, international buyers must use legal instruments to secure ownership rights.
The most common method is through a fideicomiso, which is a trust agreement with a Mexican bank. The bank holds the title, but the buyer controls the trust. This structure allows foreign buyers to enjoy full rights to use, lease, remodel, mortgage, or sell the property. The bank holds the legal title, but the buyer is the beneficiary with complete control over the property. It also provides inheritance options, making it easier to transfer ownership to heirs.
Another option is to purchase through a Mexican corporation, but this is typically used for commercial purposes. A corporation is suitable when the owner intends to use the property for business purposes, such as commercial or rental units, hotels, or development projects.
The experts recommend that most residential property buyers opt for a fideicomiso, as it simplifies the process of property ownership and inheritance, while also offering more favorable tax implications when selling the property.
Step 2: How to Budget Properly: The Real Cost of Buying
One of the most common mistakes buyers make is underestimating the total cost of their purchase. Closing costs in Los Cabos are higher than many expect, particularly for those accustomed to purchasing property in the U.S. or Canada.
A typical buyer should budget an additional five to seven percent of the purchase price for closing costs. These expenses include several key items:
- Acquisition tax, based on a percentage of the property’s value
- Notary fees, which cover the legal registration of the property.
- Fideicomiso setup fees, paid to the bank that manages the trust
- Legal fees for the attorney who handles due diligence and documentation
- Escrow fees for securing the transaction through a third-party account
- Permits and certificates, depending on the property’s legal status.
These costs vary depending on the location, property type, and price. Some developments include specific fees in the sale package, but many do not. Buyers should always request a full cost estimate early in the process. This avoids unpleasant surprises and ensures the total budget reflects the real cost of ownership.
Step 3: The Closing Process in Los Cabos: A Breakdown
The closing process in Los Cabos follows a clear structure when managed by experienced professionals. It typically takes between 30 and 90 days from the signing of the initial agreement to the registration of the title / fideicomiso.
The process is divided into three main phases:
Pre-Title Signing Phase:
This stage focuses on refining the transaction terms and conducting due diligence on the property. The legal team advises on the terms of purchase, verifies the property title and taxes, checks for any liens to rule out, discloses or resolves any legal issues, and prepares the necessary documents. If the buyer needs a fideicomiso or corporation, the setup process begins here. Buyers receive a comprehensive breakdown of closing costs and have the opportunity to review and understand every document before proceeding.
Title Signing Phase:
Once all documents are in order, the buyer and seller meet at the notary’s office to sign the deed/title. By this stage, all details should be clear and well-defined. Signing day is a formal yet positive step, marking the official transfer of rights. The notary is responsible for ensuring tax compliance and the legal registration of the deed/title.
Post-Signing Phase:
After signing, the legal team files the new ownership with the local and state authorities, pays taxes, and ensures the fideicomiso is recorded correctly. This stage completes the legal transfer and finalizes the buyer’s ownership rights.
Throughout the entire process, escrow plays a crucial role. Buyers place their funds in a secure third-party escrow account. This keeps the transaction safe by holding the payment until all legal requirements are fulfilled. Escrow protects both the buyer and the seller, reducing the risk of fraud.
Common Mistakes Buyers Make (and How to Avoid Them)
Even experienced property owners can encounter difficulties when purchasing in a new market. Most mistakes happen because buyers rush the process or skip key steps.
Some of the most common mistakes include:
Not budgeting properly for closing costs. Many buyers only account for the purchase price and overlook additional costs such as taxes, fees, and legal expenses. This can cause last-minute financial strain.
- Signing contracts without proper legal review.
Some buyers make early deposits or sign agreements based on verbal promises. This leaves them exposed if the property title has irregularities or if the terms are unfavorable. - Delaying legal involvement until after major decisions are made. The safest approach is to consult with a legal team before making offers or transferring funds.
- Overlooking documentation risks. Problems such as ejido land, unresolved titles, or incomplete permits can cause significant delays or even render a property impossible to transfer correctly.
- Rushing the timeline. Buyers sometimes feel pressured by agents or sellers to make a quick decision. This can lead to skipped steps in the due diligence process.
The simplest way to avoid these mistakes is to involve a qualified legal team and escrow service from the start. A careful review of contracts, title documents, and closing costs can prevent costly errors and provide buyers with peace of mind.
Final Tips from a Closing Expert
The team at La Costa Title & Escrow recommends a few key practices for anyone buying property in Los Cabos.
First, work with trusted professionals. Buyers should choose a legal team and escrow service with experience handling foreign transactions in Baja California Sur. This ensures proper oversight at every step.
Second, request clear explanations of every document. Buyers should feel confident in understanding the purchase agreement, fideicomiso terms, and all closing paperwork. A good legal team takes the time to answer questions and explain obligations.
Third, obtain a closing cost estimate as early as possible. Andres advises requesting a breakdown of costs as soon as a property is identified. This helps avoid financial surprises and facilitates effective planning.
Fourth, do not skip the due diligence phase. Buyers should always allow sufficient time for legal verification of the property, especially when purchasing in pre-construction or new developments.
Finally, be patient with the process. Closings in Los Cabos take longer than many buyers expect. Delays are often linked to government processing times or property documentation. With the right team, these delays are managed smoothly; however, it is essential to start early and plan accordingly.
Quick Reference: 5 Essential Facts About Closing in Los Cabos
- Foreigners are not permitted to hold direct title to land near the coast. Buyers use a fideicomiso (bank trust) to secure ownership rights in Los Cabos.
- Closing costs typically add 5 to 7 percent to the purchase price. These include taxes, legal fees, escrow, and setup costs for trusts.
- Escrow protects your payment. A certified escrow account holds your funds safely until all legal steps are completed.
- A thorough legal review should be conducted before any contracts are signed. Buyers avoid risk by involving their legal team from the start of the process.
- The whole closing process usually takes 30 to 90 days. Timeframes vary depending on the property type and documentation; however, proper planning keeps the process on track.