Foreigners may obtain direct ownership of property in the interior of Mexico. But, under Mexican law, foreigners cannot 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, and enjoy 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 indefinately renewable terms lasting 50 years each. The trust grants the beneficiary (you) the right to use, rent, modify, or sell the property. Two advantages of the bank trust are avoidance of probate and transfer tax upon sale and a built in beneficiary mechanism. 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.
In a typical transaction, a preliminary sales agreement or offer letter will be used. This is like an agreement 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 and a closing date conditioned on the issuance of the trust permit if necessary.
Real estate transactions in Mexico are "closed" by a Notary Public, 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 recorded 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. Elimar Properties will be happy to refer you to a trusted legal representative.
A closing specialist like Sekura Law offers legal counsel, escrow services, funds dispersement, power of attorney services and will accompany you at the notary closing to review official documents for your signature. A foreigner interested in acquiring real estate in Mexico should take care to follow all of the formalities under Mexican law. We will inform you to what these are. We will recommend competent legal, tax, and other professional advice as you need it.
If you still need a few questions answered about how it works, please contact us. We will be happy to go over it personally.
Yes! You can own real estate in Mexico!
Here are the basic principles on how:
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A foreigner may acquire rights over real estate in Mexican coastal and border zones through a trust, called Fideicomiso, which is a legal instrument similar to those in the United States.
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Through this trust, real estate is administered by a qualified and licensed bank on behalf of the beneficiary of the trust (the owner). The legal effect of the trust allows the beneficiary to act as the owner of the real estate, and thus, the trust complies with Mexican laws.
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The beneficiary has the right to the full use, enjoyment and profit from the real estate. The beneficiary can rent the property, borrow against the property, and sell the property.
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Mexican law provides that the original trust term of 50 years may be renewed for additional 50-year periods upon written request by the beneficiary of the trust.
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When the beneficiary desires, the property may be sold outright or sold subject to an assumption of the existing trust. All proceeds belong to the beneficiary of the trust subject to paying all appropriate taxes.
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