How to Finance your Dream Property in Mexico.
A Guaranty Trust is used in transactions involving seller financing (seller carry back) in Mexico. The guaranty trust is a formal document that includes the terms and conditions of the seller carry back and the parties involved in the transaction. It indicates the name of the seller and his/her beneficiaries, and indicates the name of the buyer. The seller will remain a party to the document as the lien holder. The Guaranty Trust and the Lien will be registered in the public registry.
When the buyer pays off the remaining balance of the loan, the seller and lien will be removed from the Guaranty Trust. The Guaranty Trust then becomes a regular trust.
In situations where the buyer defaults on the seller financing there are 2 options for the seller to consider when foreclosing on the property: 1) Auction, 2) Back to Seller.
Auction
1) In many parts of Mexico an auction process is used in seller financing transactions to remove buyer from property and make the seller whole.
The process for auction is as follows:
Seller obtains a notarized letter stating that buyer is in default.
Notario drafts letter, this letter is sent to the Bank Trust Administrator. The bank trust administrator is technically the owner of the property, as such they will initiate the auction process.
A notice of auction must be placed in a national and local paper, stating the date of the auction, lien amount, and names of parties involved.
Auction will take place in jurisdiction of property.
If auction results in an amount greater than the lien amount the difference will go to the buyer, seller will receive the amount remaining on the lien.
Banks in the State of Sonora do not conduct many auctions compared to other parts of Mexico.
Back to Seller
2) The second option available to a seller to remove a buyer who has defaulted on seller financed property is very simple.
Seller will provide a notification to Notario that buyer has defaulted on loan. The Notario will draft letter stating buyer has defaulted on loan, notarized letter will be sent to bank administrator. Bank administrator will make changes in to the Guarantee Trust that seller has taken possession on property.
The seller should also instruct the Notario to submit changes to the public registry.
Contact Kyle Wood at Realty Executives Rocky Point for more information on how to finance your dream property in Rocky Point, Mexico 480-297-8079 http://www.rockypointkyle.com
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