Overview

Foreign property ownership in Mexico is highly regulated by the Mexican Law and the Constitution. This applies particularly to the property ownership in the so-called Restricted Zone, which is described by the Mexican Constitution as land within 50 kilometers (31.07 miles) from the coastlines and 100 kilometers (62.14 miles) from the borders. In 1971, in the effort to increase foreign investment in Mexico, the Mexican Constitution has been amended to allow foreigners to purchase property in the Restricted Zone through a Bank Trust called Fideicomiso. Furthermore, with the establishment of the North American Free Trade Agreement (NAFTA) in the early 90s, the fideicomiso has become a very straight forward, trusted mechanism that millions of North Americans have utilized to their benefit over the last decades.

Fideicomiso – real estate trust

Fideicomiso is an equivalent to an American beneficial trust and it is the only legal mechanism that foreigners can use in Mexico to acquire land in the so-called Restricted Zone. Thereby, a foreign buyer requests from a Mexican bank of his/her choice to act as a trustee on his/her behalf. The bank obtains a permit from the Ministry of Foreign Affairs to acquire the chosen property in trust. The bank then holds the property in trust on behalf of the owner for the exclusive use of the buyer/beneficiary and is responsible to the buyer for full technical, legal, and administrative supervision of the trust. The buyer can nominate other beneficiaries of the trust as well as specify who will be a beneficiary of the trust after his/her death.

Initially, the trusts were created for 30 years with a possibility of renewal. From 1993, the Fideicomiso has been issued for 50 years with the right to be renewed indefinitely at a yearly fee. The beneficiary of the trust has total rights to the property and he/she can develop it, rent it, lease it, sell it, and deed it at any time during the ownership period.

General procedure of buying property in Mexico: 

1. Find a property you like
2. A sales agreement is prepared incl. detailed costs, inclusions and exclusions, deadlines as well as the buyer and the seller cancellation penalties if either party pulls out
3. If you are buying a property in the Restricted Zone, you will need to set up a real estate trust (fideicomiso)
4. You need to get a copy of the Land/Property Deeds from the seller so your Notary Public can run due checks on the property to be purchased
5. Your Notary Public will carry out an official appraisal of the property
6. Your Notary Public will request from you a presentation of official documents that include, but are not limited to your passport, birth certificate, marriage certificate and your visa
7. The seller will need to present to your Notary Public documents that include, but are not limited to the original property deed, up-to-date tax receipts for the property (shown as paid), public utilities bills & up-to-date details of land-services fees (shown as paid)
8. The seller will pay the Capital Gains Tax
9. You will make a property payment simultaneously when the deed is signed over to you, which is done in the office of your Notary Public
10. You will need to settle the Notary Public fees as well as other taxes associated with purchasing a property.