Cabo Foreclosures

Get all the answers to the most frequently asked questions (FAQs) regarding bank owned homes throughout Los Cabos, and much, much more...

In the exclusive Los Cabos real estate market, bank owned properties are a rare find, as most transactions are conducted in cash. However, through our diligent efforts, we have established a privileged relationship with the bank, allowing us to obtain insider information on these unique homes and showcase them to our clients.

To secure these properties, a minimum deposit of 30% is required, and all offers must be in cash and sold “as is” – with the house delivered in its current condition at the time of sale. Unless the home is vacant, access to the interior of the house is not possible and may be limited to exterior photos only. The final price includes all fees, commissions, attorney expenses, and past due amounts. Price does not include taxes and fideicomiso. Please note that gaining possession of the house may take up to one year. It is important to mention that despite defaulting on mortgage payments for ten (10) years or more, in most cases, the homeowner is still residing in the house. These bank owned homes are not displayed or featured on the Multiple Listing Service (MLS), making them a truly unique opportunity.

General questions

The Fideicomiso, more commonly known in Mexico as simply a Trust, applies to foreigners who are interested in purchasing property within the Mexican “Restricted Zone”. This zone, approximately 100 kilometers from the border of Mexico and about half that distance from the Mexican coast, requires that foreign real estate buyers purchasing a property in the Zone obtain the renewable, eligible-for-50-years Fideicomiso trust to inhabit, purchase, sell, or even rent their real estate. The Fideicomiso trust designates foreign property buyers as the formal beneficiary of the Fideicomiso, which means buyers still have the authority to exercise their ownership responsibilities, such as leasing property to tenants, selling property on a capital market, or willing the property over to family members.

Once you locate the property you want to purchase and send in your official Offer to Purchase document, the closing process that finalizes your purchase begins. The entire purchase process includes several closing steps which have different durations depending on the number of parties involved in your purchase. If the original home owner is still living in the house, the process could take a few months.  If the house is vacant, the process to finalize the Bank Owned Property purchase takes anywhere from sixty (60) days up to about three months’ time. Cabo Foreclosures uses U.S. escrow companies operating in Los Cabos, as well as local closing notaries, attorneys, and closing coordinates, to provide clients with a smooth and efficient legal closing of their purchase processes.

Foreigners must pay capital gains tax to Mexico’s official federal tax collector entity, the Servicio de Administracion Tributaria — more commonly known as simply the Hacienda. On real property that the Hacienda deems legally taxable, foreigners must pay either a 25% tax or 35% of their total net profit on their property sale after applicable tax deductions are met. To do this, foreigners must divide the sum of their capital gains by the total number of years they’ve occupied the property they want to sell.

Los Cabos property taxes, known in Spanish as the predial, are assessed annually at only 0.1% of the value of the property at the time of its purchase. That’s well below the rate for all 50 U.S. states. Hawaii, for example, is the U.S. state with the lowest annual property tax rate at 0.27%. Colorado, California and Texas occupy the proverbial middle ground at 0.57%, 0.79% and 1.86%, respectively; while Illinois and New Jersey, at 2.32% and 2.40%, have the highest annual U.S. property tax rates.

Short answer – NO.  All Bank Owned homes throughout Los Cabos are sold as is without financing.

Although financing can be a major hurdle for buyers interested in purchasing bank-owned properties in Los Cabos, many buyers may need assistance with obtaining financing or navigating the loan process, especially if they have less-than-perfect credit or are first-time homebuyers. There are some financing and loan assistance services available in Los Cabos.  However the approval process is difficult and the interest rates might be less than favorable. This can include providing information on specialized loan programs or connecting buyers with lenders who specialize in financing bank-owned properties.

Contact us if you have any questions about financing.

Evaluating and Mitigating Risks Associated with Bank-Owned Properties can come with inherent risks that buyers and investors should be aware of and mitigate. The various risks associated with bank-owned properties and strategies for mitigating them may include risks such as property condition issues, title and lien issues, legal and regulatory risks, and potential liabilities. Cabo Foreclosures will provide guidance on how to conduct thorough property inspections, perform title searches, review property history and disclosures, and work with experienced professionals, such as our real estate attorneys and inspectors, to minimize risks associated with bank-owned properties. Cabo Foreclosures will also discuss the importance of understanding local laws and regulations related to bank-owned properties, such as eviction procedures, code violations, and other legal requirements.

YES – In most of Mexico, Americans, or any other foreigners, can own land outright with what’s called fee simple title, the same kind we have in the United States. Only in the restricted zone—50 km. (31.05 miles) from the ocean and 100 km. (62.1 miles) from the
borders. The entire Baja Peninsula is considered a “Restricted Zone”.

It used to be that for a partnership or corporation, foreigners had to have Mexican partners who owned at least 51% interest. This is no longer the case. Under the new Foreign Investment Law of 1993, a Mexican corporation—like ours—can be owned 100% by foreigners, and the corporation can buy and own any property with fee simple title, as long as its use is non-residential.

NO – The bank trust is established by the government and gives foreigners the same
rights of ownership as Mexican citizens. The only difference is that they never receive the actual fee simple title. It is held in trust for them by a bank. When first established, the term of a bank trust was for thirty (30) years only. In 1989 it was made renewable for another thirty (30) years, and in 1993 the
term was extended to fifty (50) years, renewable for another fifty (50) years.

Despite the impact that COVID-19 has had on property values and sales numbers worldwide, the real estate market in Los Cabos remains vibrant with a diverse range of property listings and prices. The Los Cabos real estate market offers options that range from small, secluded resort homes to massive, elaborate oceanfront estates. What’s more is that the market for real estate in Los Cabos shows no signs of slowing down on listing new properties such as resorts and real estate developments that attract both tourists and new residents alike.