Buying Real Estate

Foreigners may obtain direct ownership of property in the interior of Mexico . But, under Mexican law, you can not acquire direct, ownership of residential property within the area 100 kilometers from the border and 50 kilometers from the coastline. This area is known as the restricted zone. It is possible, however, to acquire beneficial rights to use, improve, enjoy and sale the property in the restricted zone through a Bank Trust or Fideicomiso authorized by the Mexican Government under the Ministry of Foreign Affairs. The Fideicomiso is established for a 50 year renewable term and grants the beneficiary the right to use, rent, modify, or sell the property. There is a set up fee and an annual fee for it. Two advantages of the bank trust are avoidance of probate and transfer tax upon sale. Property acquired for commercial use by foreigners may be owned without the need for a bank trust, provided that the property is held in a Mexican corporation. Depending on the type of business, it is often possible for a foreigner to own 100% of the Mexican corporation.

In a typical transaction, a preliminary sales agreement follows the initial purchase offer. This is like a contract to agree and is subject to a formal sales agreement which will be executed at closing. The preliminary agreement should provide for a price and terms -- generally, cash as financing is available but complicated and time consuming ( many sellers will not wait for it)-- and a closing date conditioned on the issuance of the trust permit if necessary. It takes between 45 to 60 days for the set up of the Fideicomiso.

Escrow as it is known in the United States is not used in Mexico, it is available through Stewart titles for example. Real estate sales people are not licensed or regulated as they are in the United States. There does exist a local Acociation called AMPI ( Asociacion Mexicana de Profesionales Inmobiliarios) Real estate transactions in Mexico are "closed" by a Notario Publico, an official, highly respected government lawyer who acts as a neutral intermediary. Among other things, the notary is responsible for formalization of the final real estate contract, collection of transfer and capital gains and recordation of the transfer with the Public Registry. The notary is not your lawyer, however, and as with any investment, you may want to seek independent Mexican legal counsel before proceeding.