foraigners copyWhat is needed for a Foreigner to buy a Real Estate property in Mexico?

Passport, Visa- With Readable Stamp on the Back, 10% of Purchase offer Price for Down Payment, A Notary to do the “Closing”, Foreign Affairs Ministry Permit

Are there Mortgage Companies in Mexico?

Yes, information available upon request.

Buying through a Deed

This clause which is part of the Constitution is very important for foreign real estate owners. The clause states that the real estate owners agree to be bound by the laws of Mexico and not by the laws in their home countries. Foreigners must sign a agreement to obtain permission for real estate ownership from Mexico’s Secretary of Foreign Affairs. This clause is usually inserted into the property deeds.

Can we get Title Insurance as in the US or Canada to protect us?stewart

Yes, it’s available.

Deposits and Escrow

A deposit of earnest money is expected to accompany the offer to the seller. A deposit of ten percent (10%) is customary. The practice of escrow in Mexico is in an early stage, there are established companies, such as Stewart Title Co. among others that offer escrow services.

Do they have Deeds in Mexico?

Yes, the only difference in your deed here than the US or Canada, is that the legal deed is in Spanish and sometimes a courtesy translation in English.

Trust Deed or Fideicomiso?

What It is a common misconception that foreigners cannot own Real Estate in Mexico, but reality is that they can. However, there is a restrictive zone, as described below, and we have to consider the following alternatives:

Outside the Restricted Zone, a foreigner or foreign corporation can acquire any type of real estate as any Mexican National, holding the property as a direct owner complying with Mexican law.

Within the Restricted Zone, a foreigner or foreign corporation may obtain all the rights of ownership but it must be in a bank trust, known as Fideicomiso.

Another alternative is to purchase non-residential property through a Mexican corporation which can be, under certain conditions, 100% foreign-owned, with a provision in its by-laws that the foreigners accept to be subject to Mexican laws and agree not to invoke the laws of their own country.

Also, that the real estate acquired be registered with the Foreign Affairs Ministry and is used for non-residential activities. In other words, under said conditions, foreigners can acquire, directly, properties destined for tourist, commercial and industrial use.

The Restricted Zone

The Mexican Constitution regulates the ownership of the land and establishes that “ . . . in a zone of 100 kilometers along the border or 50 kilometers along the coast, a foreigner cannot acquire the direct ownership of the land”. These areas are known as the “Restricted or Prohibited Zones”. Nevertheless, the latest Mexican Foreign Investment Law, which became law on December 28, 1993, makes the allowances mentioned above.

images (4)Fideicomiso Or Bank Trust

Any foreigner or Mexican National can constitute a Fideicomiso (the equivalent to an American beneficial trust) through a Mexican bank in order to purchase real estate anywhere in Mexico, including the Restricted Zone. To do so, the buyer requests a Mexican bank of his/her choice to act as a trustee on his/her behalf.

The bank, as a matter of normal course, obtains the permit from the Ministry of Foreign Affairs to acquire the chosen property in trust. The Fideicomiso can be established for a maximum term of 50 years and can be automatically renewed for another 50 year period. During these periods you have the right to transfer the title to any other party, including a member of your family.

The bank becomes the legal owner of the property for the exclusive use of the buyer/beneficiary who has all the benefits of a direct owner, including the possibility of leasing or transferring his/her rights to the property to a third party or to a reappointed heir. During this period, the foreigner is considered as a Mexican National.

The trustee is responsible to the buyer beneficiary to ensure precise fulfillment of the trust, according to Mexican Law, assuming full technical, legal and administrative supervision in order to protect the interests of the buyer/beneficiary. Fideicomisos are not held by the trustee as an asset of the bank.

For practical purposes, even in unrestricted zones many foreigners and Mexican Nationals, for that matter, prefer to hold their property under a Fideicomiso.

If You Should Be Responsible For Paying Capital Gains, How Is It Figured?

When you purchase your property, a new Appraisal or Avalúo (Tax Evaluation) is done on the property, and when you sell the property, another Appraisal is made. The difference between the two appraisals (avaluos)  is considered taxable for Capital Gains tax. It does not matter what you paid for the property, nor what you sold it for. If you make major improvements, like room additions, added a carport, etc, these can be deducted. The Capital Gains can be as much as 25% of the avaluo difference.

What is necessary to do to close a property with a Notary?

Signed Contract, General Information Sheet from the Buyer, Immigration documents, Passport, Power of Attorney (if you are not going to be here for Closing),  Fill up the information sheet to request the permit from the Mexican Foreigners Affair  ministry.  Closings will  take approximately from 30 to 45 working days.

CONTRATO-PROPSteps in the Transaction?

For foreigners, the process of finding and purchasing a property in Mexico follows the same general sequence and principles as in the USA, Canada, and Europe. Purchasing real estate involves:

After to find the property, you must submit an formal Offer to Purchase, which will surely enter in to negotiations, once it get accepted for both parties, will be request from the chosen Notary a closing cost estimate.  The Notary will ask for 50% of the closing cost budget in order to begin the process and obtain the necessary documentation. The deposit should be pay at the beginning of this closing process and the total payment will be done at the signed of the deed the closing day.

Within the transaction’s sequence of events, there are differences in procedures, documents, and people involved in the transaction. “Buying south of the border, however, is not like buying property in the United States or Canada, and purchasers must always remember that the process is different than purchasing another house in their neighborhood. Even if you believe you are a savvy real estate person, take off your domestic blinders and prepare to look through a different set of glasses. That is not to say that real estate transactions (operations) in Mexico are totally different or more complicated, but more awareness, street sense, and patience usually are needed.