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BUYING REAL ESTATE IN MEXICO

FOREIGN OWNERSHIP In 1989 the Mexican government amended the Foreign Investment Law to allow direct foreign ownership in real estate in all but restricted zones.

The restricted zone, referred to as Constitutional Article 27, encompasses all land within 62 miles of any Mexican border and 31 miles of any Mexican coastline. Foreign investors seeking to own property within a restricted zone may do so only, by forming a fideicomiso or real estate trust.

Foreign buyers purchasing property in their own name must obtain a document from the Ministry of Foreign Affairs which confirms that the buyer is not seeking diplomatic intervention or protection from the home country in matters pertaining to the property purchased and that he or she will agree to be subject to the Mexican legal system, as would any Mexican citizen in matters concerning the property.

HOW THE TRUST WORKS. The Trust is a 50 year renewable real estate trust or fideicomiso, provision created by the Mexican government to attract foreign investors to the restricted zones. It is essentially a contractual agreement that in most respects is similar to the type of trust commonly used in the United States . The arrangement enables the investor to enjoy unrestricted use of land as beneficiary of the trust. A simple title is placed in the name of the bank selected as trustee by the buyer. The buyer/beneficiary has full ownership rights to build on the property, tear down or modify the existing buildings, rent, lease, subdivide or sell at any time, and received the profit, conforming only to Mexican general laws.

PROPERTY REGISTRATION. Mexico has a form of title registration that protects the buyer from fraud and hidden claims. An attorney conducts a title search and declares that the property is free from liens and encumbrances. The final step toward ensuring correct registration is to obtain the property's escritura similar to a deed. A Mexican attorney should draw up the real estate contract and review all of its conditions and terms. A notary public is also a licensed attorney who is issued a special license to act as an extension of the government to ensure all real estate transactions are executed according to the law. A document signed by a notary is a legally binding, valid document. Real estate contracts must be written in Spanish in order to be legal, and may be drawn-up in foreign currency, but the buyer may pay the contract's equivalent in pesos at the current rate of exchange, based on the U.S. dollar. A Mexican corporation can be formed for the acquisition of non-residential property anywhere.

CLOSING COSTS. Closing costs and transfer taxes are determined by whichever is greater, the bank appraisal or the selling price. The buyer pays around 7% of the price as a closing cost and a standard transfer should be completed 45 to 60 days from the time all documents are consummated.

REAL ESTATE AGENTS. The only professional real estate organization is the Mexican Real Estate Professionals (AMPI), which is similar to NAR and CREA in the United States and Canada . Real Estate agents are not required to have licenses, although such legislation is currently under consideration. Individuals should seek professional assistance from a member of AMPI when purchasing real estate in Mexico.

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