Guide to Buying Property in Mexico
Don't Have to Live in Mexico to Own a Home in Mexico
It doesn't matter what country you currently call
home - Mexico is a great place to own real estate.
Beautiful weather, waterfront locales and amenity-rich
developments all at prices 20%-50% of what you'd
pay for comparable property in the U.S. make it
the ideal place to own a second home.
Whether your interest lies in having a vacation
home or an affordable place to retire, Mexico deserves
Best of all, you don't need be a resident of Mexico
to own property there; no immigration requirements
need to be met.
History of Property Ownership in Mexico
While foreigners were always allowed to own property
in Mexico, there were restrictions. Previously,
constitution banned foreigners from owning property
within 62 miles of any Mexican land border and 31
miles of any coastline. These areas are known as
the "restricted zone." Yet most vacation
properties were built on prime land that fell into
these restricted zones.
Since these restrictions were written into the Mexican
constitution, and could not be changed, the Mexican
government created a way to work around the system
called "fideicomiso" (pronounced: FEE-DAY-E-CO-ME-SO).
Roughly translated, the word means "real estate
trust." By placing property in this trust,
foreigners are allowed to own property within the
In essence, the trust holds the deed to the property
while the buyer, and others whom the buyer specifies,
are beneficiaries of the trust (and, of course,
the property). The beneficiary has full control
over the property and can rent, sell, improve and
even give the property away if they so choose.
How a Mexican Trust Works
A trust is created with a Mexican bank and the title
is submitted into the trust. The bank acts as a
trustee in this case and the trust is formalized
after receiving a permit from Mexico's Ministry
of Foreign Affairs. The buyer is named as the beneficiary
of the trust, and the beneficiary's rights are recorded
by a notary public.
Banks charge around $500 USD to set up the initial
trust - which involves establishing the trust and
writing the trust agreement. Then, a percentage
of the value of the property is added on. As well,
a small annual fee is charged by the bank to covers
its services as trustee.
Within the trust deed, the current owner of the
Mexican property acts as the settlor and conveys
the title of the property to the trustee who will
then hold the title for the life of the trust -
50 years, renewable in an indefinite amount of 50-year
The trust may be transferred or sold like any interest
in real estate. If the property in Mexico is sold
to another foreigner, the Secretary Foreign Relations
in Mexico must, by law, issue a new trust permit
to the buyer. If the property in Mexico is sold
to a Mexican national, the trust can be dissolved.
Buying Property in Mexico
Buying real estate in Mexico is very similar to
how one would buy property in the U.S. Lawyers,
real estate agents, notary publics and banks all
play a part in the buying process.
Required documents include a certificate indicating
a title free and clear of any liens, statements
from the local Mexican municipality outlining property
assessments, water bills and other tax information,
and finally a property appraisal to determine the
property's value for tax purposes.
It's common for the buyer of property in Mexico
to pay all closing costs, including the transfer
of acquisition tax. As in the U.S., the seller pays
capital gains tax and real estate brokers' fees.
The transfer tax is typically between 1% and 4%
of the property's appraised value - which is quite
often less than the sale price. Closing costs (not
including transfer tax) range from 3% to 5% of the
appraised tax value. These percentages are applied
to whichever is greatest:
Title Insurance Is Worth Every Peso
insurance for property is the responsibility of
the buyer and is highly recommended, just to be
safe. The title insurance company in Mexico will
research the title and make certain that it is free
and clear. If the title is ever disputed in the
future, the insurance company will defend, and advocate
for, the buyer in court if necessary.
typically costs between $5 and $7 per $1,000 of
coverage depending on the insurance company and
the value of the property.
Financing Options for Real Estate in Mexico
a foreigner purchasing property in Mexico, financing
is readily available though Mexican lending institutions
and banks. Many developers in Mexico work with specific
companies and even offer incentives to buyers for
working with preferred lenders.
lending institutions are starting to work their
way into the Mexican real estate market, which should
make it even easier for foreigners to get financing.
Finding a Lawyer
attorney based in Mexico should be hired to write
contracts and review all of the conditions and terms
regarding the sale of property in Mexico. Also,
the attorney is capable of doing a title search
and point out any issues or areas of possible concern.
protect their own best interests, buyers should
have their own attorney and should be dissuaded
from using the attorney of the seller simply because
that lawyer's services were offered for free as
attorneys licensed in Mexico should be able to produce
a "cédula profesional" - a document
signifying a registered license to practice law
in the document includes a photo of the attorney
and his signature.
ensure an attorney is licensed to practice in Mexico,
a foreign buyer should request to see the attorney's
license, and have the attorney's license number
added into any retainer agreement before employing
Living Year-round in Mexico - Legally
you've decided to purchase real estate and live
in Mexico for more than six months at a time (or
permanently) you must apply for your FM3 immigration
The FM3 is very easy to obtain, and you can complete
most of the paperwork on your own.
FM3 grants you non-immigrant status. You apply for
it through the local immigration office. The FM3
must be renewed on a regular basis.
you've held your FM3 for a minimum of five years,
you are eligible to apply for your FM2. The FM2
grants you immigrant status and is applied for via
the Mexico City immigration office.
Need More Information?
you have more questions about purchasing property
in Mexico, don't hesitate to contact us. We have
the knowledge, the contacts and the integrity to
answer all your questions and handle your real estate