How to Buy Real Estate in Mexico
The warm climate, the relaxed lifestyle, the natural beauty and the friendly people of Mexico attract millions of visitors each year. And each year, more visitors make the transition to full or part time resident. The country’s real estate laws have never been more welcoming to foreigners. If you are considering the purchase of property in Mexico, it’s important to understand how foreign ownership works and what the buying process involves.
CAN FOREIGNERS OWN PROPERTY IN MEXICO?
Yes, a foreigner may obtain direct ownership of property in the interior of Mexico. However, Article 27 of the Mexican Constitution states that foreigners cannot own property within 100 kilometers of the border and 50 kilometers of the coastline, an area sometimes referred to as the “restricted zone”. This was a protectionist measure, put in place after foreign invasions repeatedly threatened the nations sovereignty. However, with the passage of time, the Mexican government began to realize the benefits of opening these attractive areas to foreign investment. To permit foreign investment, the Mexican government modified this constitutional restriction. Since 1994, foreigners have been able to purchase coastal and border properties if done through a Mexican bank trust, known as a Fideicomiso. This enables foreigners, as beneficiaries of the trusts, to enjoy unrestricted use of land in the restricted zone without violating the law.
WHAT IS A FIDEICOMISO OR BANK TRUST? WHAT WILL IT COST?
A Fideicomiso is a Trust agreement created for the benefit of a foreign buyer, executed between a Mexican bank and the seller of property in the restricted zone. Essentially, this type of Trust is similar to a Trust in the United States. The bank acts on behalf of the foreign Trust beneficiary, taking title to real property. The Trust beneficiary holds all rights and privileges of ownership, including exclusive use and enjoyment of the property. The Trust beneficiary is entitled to use, enjoy, occupy or rent the property, and direct the Trustee in all matters regarding the property. The property may be sold at its market value, at any time, with the Trust beneficiary capturing the proceeds and any appreciation. The property may be sold to a person legally authorized to own property in Mexico, or to another foreigner via a Trust. This process is designed to protect the rights of foreigners as property owners, secure their investments and ensure that the transactions are legal.
These Trusts (Fideicomisos) have an initial term of 50 years and are renewable for additional 50 year periods. There are registration fees, bank fees, notary fees and legal fees involved to establish a Fideicomiso. As a foreign buyer, you can expect these fees to cost between 5% and 9% of the purchase price of the property, and are usually paid for by the buyer. There is an annual fee for maintaining the Trust, averaging less than $500 per year.
WHO’S INVOLVED IN REAL ESTATE TRANSACTIONS IN MEXICO?
A real estate agent – always deal with a reputable realtor.
A Mexican bank
A public notary
Much of the land in Sayulita was or still is Ejido land. Ejido land can only be possessed by a Mexican National. This area is currently going through the process of regularization or privatization, where the land is converted from Ejido property to real property. Once the land becomes real property, a foreigner may hold title to it via a bank trust. Foreigners wishing to acquire Ejido property must do so through a Mexican National.
Avalos Sayulita Realty
Ave. Revolucion # 46 Sayulita, Nayarit, Mexico.
Phone from U.S. and Canada: 011-52-329-291 3527