Furniture and your Real Estate Purchase
By: Cheryl MIller, Broker, Baja Realty and investment
Here in Baja California Sur, in Los Cabos and La Paz, the inclusion of furniture in your residential real estate purchase is fairly common.
This is not the usual practice in most of Mexico, any more than it is in your home city in the United States or Canada. If you were to buy a home in Guadalajara or Veracruz or Monterrey, your real estate would probably come exactly like you would expect in California, Winnipeg, Nebraska or Calgary - vacant except for anything affixed to the walls and ceilings.
In fact, AMPI, NAR and MLS BCS practices actually state that anything that is not specifically excluded the listing agreement that is affixed to walls and ceilings, are considered part of the property and cannot be removed without the permission of the Buyer after an offer is accepted by both parties. Regarding such affixed items, the law is the same in Mexico, but it is very common in most parts of Mexico to receive a home, stripped. But, here in the tourist market, you must specifically exclude items in your sales listing and offer documents, otherwise they are assumed part of the real estate. The reason is simple, to avoid the stripping of the real estate before the date of transfer. Imagine buying a condo for $200,000 USD receiving the keys on the day of signing, and in the last hours after your final walk through and the signatures, having the Seller come in and take all of the light fixtures, air conditioning units, the towel and curtain rods, the door knobs and cabinets! What a surprise you would have when you walk in the door to your new home! It would be devastating. This is not permitted by law, but can become an issue in non-tourist zones. In fact, it is quite common in non-tourist areas.
In Los Cabos and parts of La Paz, Cancun, Playa del Carmen-Tulem, Puerto Vallarta, Zihuatanejo, Manzanillo Chapala and San Miguel de Allende, essentially wherever a tourist real estate market exists in Mexico, it is a common practice to include the furniture, mainly for the reason that most foreign sellers do not want to be bothered with the packing and expense of shipping their Mexican furnishings back to the United States or Canada.
For most sellers, it is for their convenience more than anything that precipitates in the “gift” of the furnishings to the Buyer. However, let me be clear, it is the Seller’s prerogative to offer the property furnished, unfurnished or partially furnished, as well as, to make up their own inventory list, including or excluding whatever they choose. A Seller is not obligated to sell a property with its contents. If the Buyer really wants an item(s), it is customary and required that he or she make an offer including that item on their offer to purchase or to make an offer for the item separately as a private sale of goods, not real estate. And it is the Seller’s right to accept, reject or counter any offer regarding items not included in the sale of the property.
In fact, particularly in the high end market, some Sellers offer the furnishings separately, as a furniture package, for a specific dollar amount. This generally occurs at the higher price point real estate where expensive furniture, antiques and real art pieces are at stake.
And this brings us to a crucial point, if the furniture is included in the sales price, the recorded value of the sale is as though it is the real estate only. The “deed” or fideicomiso does not mention or record any value for the furnishings, it is purely real estate. If you want a separate bill of sale for the furnishings, you may ask for it, but be aware that it may affect the sales price recorded in your deed, having the furnishing costs deducted from the property price recorded. If you do a bill of lading, the law states you must pay the 16% IVA as well and allows you to pass the property to then next buyer as a commodity.
For expensive furniture, furniture packages and art pieces, this is a MUST DO for both the Buyer and the Seller. Getting a separate bill of sale for those items protects both parties and establishes the rightful ownership of the pieces for the purposes of insuring the contents of your home, specific pieces of art and in case of theft.
So, if the furnishing offered to you in the “real estate” transaction are really a “gift”, try not to get too emotional about the exclusion of any one piece. If the Seller has excluded pieces of personal importance to him, or asks you to exclude an item they forgot in their original listing, try to understand, that inclusion of furniture is not the norm in Mexico. But, after an agreement has been reached, and I highly suggest an itemized inventory list be signed by both buyer and seller within 5 business days of acceptance of an offer, I caution both Buyer and Seller to honor this agreement! It is VERY important to do a very detailed inventory list. I also suggest a photo-inventory list so as to avoid “changes” and substitutions. I have seen tempers run high and nearly cause the demise of a transaction over simple things, as small and insignificant as an ashtray! Honor your agreements! Don’t try to “sneak” an item out. Don’t try to strong arm the seller over pillow cases or a lawn chair. Once there is agreement, honor it. In the end, the transaction and your new home will feel so much more “homey” when you open the door for the first time on the day of your closing!
By Cheryl Miller, Broker, Baja Realty and Investment, 624-122-2690, www.forsaleinbaja.com, firstname.lastname@example.org.