Mexico’s Fideicomiso and Bank Has Chris Shaking

So we had said yes to buying the condo in the sun of Puerto Vallarta, but at double the budget my wife and I had agreed upon. I had half the amount in our “Go Mad” account, but where would the rest come from? I was not going to cash in our retirement savings and stocks.

I had not been smart enough to join the civil service as a young man and so like most Canadians had no pension. However I expected to receive a small amount from a still very healthy aunt (98) who remembered that I had played nicely with her cat when I was a small boy.

There might also be some money from a business investment or two that could put us over the top, but there was no way I could avoid calling Jim, our advisor at the CIBC bank and getting a short-term mortgage to see us through the actual sale of our dream home, which was pending.

I was not really worried about Jim; after all, he was always pressing us to buy a second home in the south as an investment and had offered his assistance before. What a breeze this would be.

“Well, Chris, where did you buy? Florida, Hawaii, Spain?” was his cheerful return when I told him Michelle and I were ready to take the plunge.

“Mexico.”

Pause…..

“Hey, Chris, you almost got me there for a minute. I thought you said something about Mexico, that undemocratic, flea-bitten country, ha ha ha. No, really, pal, where did you buy?”

I repeated somewhat more quietly, “Mexico.”.

A different Jim started speaking, as if he was reading the riot act in a town square.

“Mr. Dalton, the Canadian Imperial Bank of Commerce will not now or ever have anything to do with extending the privilege of a mortgage for a home in Mexico, is that clear?”

What happened to my nice guy Jimmy from the bank?

In the end all he could do was offer a line of credit based on our real estate, but it was enough so I knew we could close. However Jim’s and my relationship was never to be quite the same again, for as he as he put it to a friend of ours: “I don’t like being around people who have gone off their heads.” And of course a line of credit has a higher rate of interest than a mortgage, which I was not happy about.

Eddy the Realtor sent me all the paperwork from Mexico in Spanish along with the translation. I phoned our lawyer Stan to have a phone conference with Eddy to formalize the sale. Then I sent 10 per cent of the agreed amount to Eddy to pass onto Sergio, our beloved developer.

We did the phone meeting, with Stan saying very little, just taking voluminous notes with a worried look on his usually smiling face. After Eddy got off, Stan went nuts.

“Chris, do you realize that you and Michelle will not own your condo, because under Mexican law (Fideicomiso) any home closer than 50 kilometres from the ocean must be jointly held by you and a local bank in trust. You own nothing if the bank says you don’t. They could sell it to a corrupt politician or a police chief and cut you out.

“You might as well have bought a time-share property, because all you own is air. Our firm and I want nothing more to do with this. You could sue us for letting you sign this contract.”

Our dear Stan sent us his and his firm’s resignation that afternoon.

So let us sum up the situation Michelle and I found ourselves in as of late June:

We had bought a condo at double our budget.

We had a line of credit under duress from our once happy banker.

Our family lawyer had just quit.

We had to form a trust with a bank we did not know.

For the first time in my life, one of my hands started shaking involuntarily. I shouted at it to stop, but that just frightened it more and so it trembled harder. I was a wreck. I wished I had never heard of Mexico.

That is when I began to love our ex-Canadian-now-Mexican realtor, Eddy, because he immediately offered us his lawyer in Puerto Vallarta and his trust account to store the money we sent down. Plus he would get in touch with his contractor, who would come up with a few ideas on the finishing part of things.

Hooray. We were moving forward and we were promised we could be moved in by Nov. 1 if not before, so Christmas with the family in the tropics was on.

Only one small storm on the horizon. Eddy said Sergio the developer was now angry with me because we had got such a good deal at his expense. Apparently he was kicking out the end of the bed at night in frustration. So he had decided that if we wanted anything done we would have to pay extra for it because we had paid a song for the place in his mind. All the things like glass doors for the showers, mirrors, a door for the upstairs bathroom, fans, etc. that we expected to be included in the price were off the table.

I did not think I had pulled off a great deal. After all, I was at twice my budget, but I could not help but smile at the thought that Sergio imagined that I was a savvy businessman . Anyway I put it all out of my mind as Eddy and I agreed that I should return to PV to meet the contractor, Juan, in early July, which was less than two weeks away.

 

Next column: Water dripping?

Copyright: Christopher Dalton 2014

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