||Foreigners may buy property in Mexico. If the property is not in the restricted zone (within 50 kilometers of the coast or 100 kilometers of the border) foreigners may hold title outright. If the property is within a restricted zone, the buyer must hold the property by way of a bank trust, called a Fideicomiso, or as a foreign-owned Mexican corporation.
Fideicomisos and Corporations
A fideicomiso is a real estate trust in which the trustee is a Mexican bank and the beneficiary of the trust is the purchaser of the real estate. Foreigners holding property as the beneficiary of such a trust have unrestricted use of the property and may buy, sell, lease and devise (dispose of by will) the property. Currently, the duration of such trusts is for a period of 50 years and the trust may be renewed for another 50 year period thereafter. There is no limit to the number of times the trust can be renewed. The annual fee for a fideicomiso is approximately $700 US. There is a limit to the size of the property which may be held in a fideicomiso. It must be 2000 square meters or less. If it is larger than 2000 square meters, you may have to take the property in the name of a Mexican corporation, (although the Mexican government may grant exceptions to the 2000 square meter rule).
The bank actually takes title to the property for the benefit of the foreign buyer and is obligated to follow the instructions of the foreign buyer regarding the disposition of the property. The buyer must get a permit from the Ministry of Foreign affairs before setting up the fideicomiso, but this can be done through the bank setting up the trust or a reputable notary or real estate attorney. (In Mexico, notaries are different than in the US. They are appointed by the governor, must be attorneys, have three years experience in a notary's office and have passed a test among other requirements. Many real estate transactions in Mexico are handled by notaries.)
Let the Buyer Beware
Real estate transactions are not carried out in the same manner in Mexico as they are in the United States or Canada. There is no governing body to license or regulate realtors and almost anyone can hold themselves out as a realtor. Therefore, a foreign buyer cannot assume that the normal safeguards which would be in place in a transaction in the United States or Canada will apply to a real estate transaction in Mexico. The old saying "let the buyer beware" is especially applicable in Mexico. That is not to say that real estate transactions in Mexico are inherently fraudulent, just different, and the buyer should take care to contact reputable professionals to help him document and close the deal. As anywhere, it is always advisable for the buyer to have his own notary or attorney rather than relying on the seller's attorney. If the buyer does not speak Spanish, he may wish to contact a local translator to work with him on the purchase.
One problem with purchasing property in Mexico is the almost complete lack of financing for buyers. There have been some changes in recent years, but it is still somewhat difficult to get a real estate loan. Some sellers will owner-finance with a substantial down payment and good credit references.
At this writing, we are not aware of any title companies doing business in the Yucatan. Stewart Title Company has opened offices in Mexico City, but is not yet writing policies in the Yucatan Peninsula. Since many buyers from the US and Canada are used to closing their sale through a title company, they may find it is a little different in Mexico where most real estate deals are closed through notaries who will check to make sure the title is good and that there are no outstanding liens or taxes or any other problems with the title. It is strongly advised never to write a check for earnest money to the seller, but instead only to a bank with an earnest money account.
Another important note regarding buying real estate in Mexico is to make sure the property is not "ejido" land. Ejido land is communal agricultural land, the distribution and use of which is goverened by local ejido councils. That land cannot be sold with clear title until the title has been regularized, that is, an escritura or official title has been issued by the Mexican government. In the past, much confusion and concern has been expressed about stories of people buying property in Mexico only to have it taken away from them at a later date after it was developed. In most, if not all of these cases, the property was ejido property, to which the buyer never acquired good title. A reputable notary or real estate attorney can help make sure the title to the property you are buying is clear.
Foreigners buy property in Mexico every day without incident and many are happily living throughout the country. As with any major purchase, it is always advisable to seek reliable professional advice and to move cautiously before putting any money down. By following a few simple, common sense rules, you too can own property in Mexico.