Scams Victimizing Owners of Mexican Timeshare Properties

Feb. 14, 2014:

Lic. Spencer McMullin, a well respected Mexican attorney who serves expat community needs, has reported the following warning for owners of timeshare properties in Mexico:

Timeshare Real Estate Scams are Victimizing Owners of Mexican Timeshare Properties
“Multiple scams have been identified recently that have already cost people tens of thousands of dollars of their retirement savings. The scams, which seem to be copycats of each other, involve approaching people who own Mexican timeshare real estate by phone calls, mail or by email, and pretending to have ready buyers. The catch is that the prospective sellers are told they need to prepay some phony closing costs and other fees into a phony escrow account in the US, to be reimbursed at closing, which, of course, never occurs.  This occurs after they are sent a signed sales contract using the words “Guarantee” or “Guaranteed” to trick the seller into thinking that it is a sure thing.

The companies look almost legitimate on the internet—but not quite. They have clearly gone to some effort to build websites that look professional and have multiple references elsewhere. But the websites didn’t exist before last year. Their web sites show up on the internet as well as their company name but that only happens because they paid people to put their fake company name in directory listings on 50 internet sites in order to make their name come up in searches and give them legitimacy.  Also they list memberships in fake organizations on their web sites, groups that do not exist, they have even created scam law firms to later scam people a second time saying they can recover the lost funds for a fee of over $1,000 dollars!  These scam attorneys web sites even have fake testimonials.

They include phone numbers, but none of them are answered by real people unless their caller ID identifies them as one of the people being scammed. The phone numbers are VOIP numbers in the US or cell phones in Mexico City.

When questioned about the charges they provide an opinion letter from a supposed international CPA (Certified Public Accountant) for the US, Canada, and Mexico, but no such people actually exist. Their addresses, when searched on the internet, are phony, too, showing up as address “examples” in other contexts. They don’t give their phone numbers or their cédula numbers (official licenses), which could be verified on the internet. The phony letter also has a fake address and lists no phone number.

The documents look almost legitimate, too—but not quite. They use the real SAT (Mexican tax office) forms, but place false information and false payment codes and fee descriptions that do not exist or are grossly inflated by over 1,000%.  They use such nonsense titles and terms as “Guaranteed Purchase/Sale/Escrow Contract.” No such thing exists. And the list of expenses to be paid is filled with phony codes and line items, too, like IVA taxes, which are never part of timeshare transactions. And Foreign Investor Registration fees, which should never be expressed as a percentage of the selling price. Here are some line items that are phony or grossly inflated:

  • Maintenance Fee to date and Renovation Fee to date to be reimbursed at closing
  • Closing and Administration Fees paid by Seller to be reimbursed at closing
  • 11% Foreign Investor Registration paid by Seller to be reimbursed at closing
  • 16% Value Added Tax (IVA) paid by Seller to be reimbursed at closing
  • Removals of Liens to be paid by Seller to be reimbursed at closing
  • Free and Clear Certificate to be paid by Seller to be reimbursed at closing
  • 5% Commission from Buyer to be paid to Seller at closing
  • Erasure of Records to be paid by Seller to be reimbursed at closing
  • Termination of Fideicomiso to be paid by Seller to be reimbursed at closing

In addition, the Mexican buyers’ names and signatures don’t look right because there’s just a first name and a last name, which is not how Mexican’s legal names look (first name, middle name, father’s last name, and mother’s last maiden name).

And, the seller is never given a set of regulations governing the escrow account, detailing how and under what circumstances the funds will be disbursed. The seller is just told to send the money to a particular account. In a normal escrow transaction the escrow company is licensed, maintains a separate trust account and requires specific authorization in order to disburse funds from the trust account.  The scammers have people send money directly to third parties and do not have licensing nor their own escrow trust account for managing or disbursing funds.

The only two escrow companies I have used for Mexican transactions have been Stuart Title and First American Title, both large companies with trust accounts and large staff in the US.

Scams involving the elderly are, of course, always despicable. In this case, the scams take advantage of expats’ likely confusion about how real estate transactions are handled internationally. And, they assume that elderly expats would probably jump at the chance to unload their timeshares for a profit in this shaky economy.

To avoid these kinds of scams, prospective sellers should:

  • Always be wary when approached in an unsolicited manner by anyone claiming that a “guaranteed” buyer is waiting.
  • Always be wary if they’re asked to pay any upfront closing costs whatsoever. Only buyers pay closing costs in Mexico as well as much of the world, sellers only pay capital gains tax and if that is paid, it is collected at the end from the payment made by the buyer and deducted from the seller’s proceeds.   Don’t fall for being promised a reimbursement at closing.
  • Always hire their own real estate lawyers to review real estate transactions. Never hire lawyers recommended by third parties as sellers need an independent advocate who is not partial and who can review the transaction and documents provided. “

*     *     *     *
Feel free to copy while giving proper attribution: YucaLandia/Surviving Yucatan.
© Steven M. Fry

Read-on MacDuff . . .

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20 Responses to Scams Victimizing Owners of Mexican Timeshare Properties

  1. Peter says:

    Reads like Bernie Madoff is busy in his “confined to quarters” status.
    Many Americans and Canadians still don’t realize real estate is not regulated very much in Mexico. Sad, but true.

  2. norm says:

    The third point is the best one-use your own attorney.

  3. There are good timeshare properties out there. However, most of them have a waiting list of qualified buyers to purchase when the owners decide to sell…..If it’s being heavily promoted, pushed or tarted up to look good, assume its trash and don’t waste your time. If you want a good time share, you will still have to pay for it but go through legitimate channels..

  4. Arnold says:

    Your article describes our situation exactly. To resell our Cancun timeshare we fell for a scam. The paper work looked legal, so we wire transferred over $9,600 USD to a fake Banamex account to cover so-called transfer fees and maintenance arrears. They even gave us a closing date of Feb. 11th. Guess what: now they want another 25%, $12,600 USD, for some fake Mexican taxes. The light finally came on! We refused, and they probably put on their running shoes. But I am not done with them. We live in Canada, are older, but very angry, mostly at my own stupidity. I am tempted to fly to St. Louis (the “broker”) and then to Denver (the “closing” agent), to “do” something about them. Don’t quote me on this, but somebody has to get a bit more active in regards to these crooks.

    • yucalandia says:

      Excellent update .

      THANKS!
      steve

    • Robin says:

      I am so hurt, My husband and I also got this same thing just done, I sent them 3,800 I’m in Canada as well, I checked names codes everything , The money was to be put into our account today, I phoned they said not received from Banamex escrow yet our agent there was Roxana Ciau. .All the paper work was so good even my bank thought it was ok. Lol . The company was NWEquity in Chicago, The Buyer was Grupo Barcel. So pissed my husband had a major stroke we can’t travel anymore, checked this out and felt good. It breaks me to lose that much money

      • Arnold says:

        Sorry to hear about your hurt, Robin. We are going to fight those basta.. so, if you are interested, there may be a possibility of pursuing this through the US Attorney Generals office, the FTC, FBI, BBB, the Canadian fraud agencies and other legal channels. I will check in later on this web site with some details, and let you know what we are doing about this. Don’t give up, don’t quit, this has to be stopped, At least we will report them everywhere, and cause them at least as much pain as they have caused us. We Canadians are fighters too, so, keep you chin up and your fists ready.
        Arnold

    • CAZ says:

      We have an offer to purchase our timeshare also. We had to get an RFC, told we would be reimbursed at end. Then told we had to pay capital gains. Now told we owe state tax before proceeds can be disbursed from a trust account being held in a Banamex account all being held by an escrow agent. It all looks and sounds professional. Is it? Don’t want to be another victim

    • Ernie says:

      Same happen to us.After sending our so called transfer fee we were told closing date would be June 15th. We paid and now they want another 12% commission. We will not pay anther cent. we too feel like to New York ( the broker) and then to New Hampshire to the Title Company.We lost $ 30,000

  5. Lori says:

    Is there a such thing as Notario legal fees to sell a timeshare in Mexico? We were told by a US Title Company that we would need to pay $3,058 for the legal fees up front and would get reimbursed at closing. They said this is the Mexican equivalent of a title company and we wouldn’t be able to sell our Mexican timeshare without going through a Notario.

    • yucalandia says:

      Sure… all real estate property transfers/sales are required to be processed by a Notario.

      Some timeshare companies say they do not need to because it is the rights from a contract … not real property … that are being transferred. I think this question is best answered by a GOOD Notario or abogado.

      steve

    • Ernie says:

      We were Scamed by a Company called ARROW LLC and NH TITLE Co. We are out 30,000.00
      which we had to send for a transfer fee. We are retirees and live in Canada.I would like to do something about those Scum bags.I feel very stupid for trusting and feeling that here are honest People out there.I am so mad I have to do something. !!!

      • Lori says:

        We contacted the colorado bbb for Complete capitol and business solutions and the atlanta, ga bbb for s&r title. Colorado bbb told us to call local FBI, which we did. Probably cont get out money back but wanted to put the word out with as many agencies as we can.

  6. Sharona says:

    We were scamed by a company called Reserve Equity Ventures.. All are retirement funds gone. My husband and I have to go back to work(Seniors)

  7. Roberta says:

    We have been approached to sell our timeshare in Cabo by a man who claims to be from and buying on behalf of Decolor.com. We have stressed with him that we won’t send him one penny, or give out any personal or banking information, and that we want to have the a cashier’s check before signing off on the timeshare’s paperwork. They want to give us a figure that I feel is greatly inflated, but he says that décor.com is a travel site (I’ve checked into this and they are affiliated with Expedia.com) and the company will use that timeshare to rent out for the next 26 years (the timeshare has an expiration date). Any thoughts

    • sdibaja says:

      You are being smart. Stay that way.

      • Roberta says:

        Following up. This took place over about 4 weeks. We were approached through an unsolicited phone call by a man who claimed to be from and buying on behalf of the travel company “Decolor.com”. He offered to buy our Pueblo Bonito (PB) time share in Cabo for more than four times what we paid for it. As I wrote in the post above, we stressed that we would not send him any money or give him any identification information such as active bank account, social security numbers, etc. He put us in touch with an attorney who has offices in Mexico and Texas. She told us she set up an escrow account on our behalf, and Decolor deposited the money. Our attorney confirmed that such a person existed and was an attorney in good standing in Texas. But we could not confirm independently that either of these people were who they said they were.
        At this point, they still had not asked us for any money, so I set up a separate checking account in a local bank (didn’t cost anything) so we could receive the funds.
        My husband was told to ask PB to approve the sale and called them on a number provided by the Decolor agent (unbeknownst to me). Within a few days, he received an email claiming to be from PB that said they would NOT approve the sale as it was to a travel company and therefore a “conflict of interest” for them. We also received a call from a number that our phone identified as PB confirming this. But both were not actually from PB. They told us to contact “PROFECO” to appeal the decision. The Procuraduría Federal del Consumidor, or Office of the Federal Prosecutor for the Consumer (PROFECO, for short) is described in Wikipedia as: an organization of the Mexican government, depending on the Attorney General, established to protect consumers against abuses or fraud by companies operating in Mexico, including Timeshare fraud. Interestingly, Wikipedia notes that their article cites no sources (so should not be taken at face value). Remember, anyone can post to Wikipedia.

        We were not able to independently contact PROFECO through their website, as it was mostly in Spanish and the 800 number posted there did not work, so we used the number sent to us by the fake PB email. “PROFECO” took on our case and within a few days sent us (through the Decolor Agent) an official looking document stating: “…our agency has the power to overwrite the un-granted approval of the resort and we decided based on the results of the investigation to approve the sale.” It also said that the funds had been deposited in the attorney’s escrow account. At this point we didn’t realize that the PB communications had been faked and all seemed well.

        The next day came the deal breaker – PROFECO sent us another email stating we would have to wire them 10% of the sale price and they would issue “… a certificate of release.” “This document will allow us to over-right the denial of sale from the resort.” (Note the misspelling.) The Decolor agent had several reasons why THEY could not pay the 10% fee even though he claimed to have put that money into the escrow account as well as the full purchase price. Obviously, we didn’t send them any money. When I contacted Pueblo Bonito’s customer service they had not heard of our request to sell, but had heard of this scam. They assured us they would not turn over our timeshare to anyone and that these scammers were only after that 10% fee (a couple of thousand dollars).

        So, even though we contacted our own attorney and spoke at length with a banker on how best to protect our money, we could still have easily fell victim to this scheme. All we needed to be was a little more greedy and a little less skeptical. Though they used the name of a real company and a real attorney, we could not independently verify if the people we spoke to were genuine. Even though PROFECO seems to exist, we’re still not sure if it does. We also don’t know how they got our name and phone number or knew we had a timeshare with Pueblo Bonito. Maybe an unscrupulous employee set us up to begin with, or maybe there’s a public record somewhere.

        My best advice is just to hang up like you do with any other unwanted sales call. And don’t trust your spouse. Mine told me he called Pueblo Bonito but didn’t tell me he got the phone number from the fake Decolor agent. A week later, the same agent called to see if we would be interested in selling our timeshare. This was after I had chewed him out and called him a con artist. I told him, “You have no idea who I am, do you?”

      • yucalandia says:

        Thanks for the good report!

        Good job at doing your due diligence.
        steve

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