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Buying Real Estate in Mexico

With the advent of the North American Free Trade Agreement (NAFTA), the Mexican government recognized that it was crucial to make foreign investment in Mexico safer and easier for non-Mexican citizens. Because the Mexican Constitution prohibits foreigners from purchasing or owning real estate within 60 miles of the U.S. international border, or within 30 miles of the Mexican coast, an innovative and secure method of holding title was created. This method allows foreign ownership through a Mexican property trust called a Fideicomiso. This is a trust agreement, much like an estate trust in the U.S., which gives the Purchaser all of the rights of ownership.

In order to obtain the rights of ownership through a Fideicomiso, the Department of Foreign Affairs in Mexico City issues a permit to the Mexican bank of the Purchaser’s choice, allowing the bank to act as Purchaser of the property. Essentially, the bank acts as the “Trustee” for the trust and the Purchaser is the “Beneficiary” of the trust. The trust is not an asset of the bank; the banks simply act as the Trustee to hold the trust.

Much like living wills or estate trusts in the U.S., with a Fideicomiso the Mexican bank, or Trustee, takes instruction only from the Beneficiary of the trust (the Purchaser). The Beneficiary has the right to use, occupy, lease and possess the property, including the right to build on it or otherwise improve it. The Beneficiary may also sell the property by instructing the Trustee to trans fer the rights to another qualified Purchaser, or bequeath the property to an Inheritor. The initial term of the trust is 50 years, however the trust can be renewed for additional periods of 50 years indenitely, providing for long-term control of the asset through the Fideicomiso.

The Purchaser holds the same rights as a property owner in the U.S. or Canada, including the right to enjoy, sell, rent, improve the property, etc.

This is not to be confused with a land lease. The property purchased is placed in a trust with the Purchaser named as the Beneficiary of the trust — the Purchaser is not a lessee. If the property purchased is already held in a trust, the Purchaser has the option of assuming that trust, or having the property vested in a new trust.

You are not alone! The Los Cabos market is exploding with Americans, Canadians, and other “Foreigners” that have visited and been biten by the Baja bug. You are on vacation experiencing the best time you can remember and you think “I could live here..” It has happened to all of us!

Owning real estate in Mexico is an incredible opportunity. However, there are some important statutes in place that foreign citizens must be aware of before they can own their own home here. Today, foreign citizens “own” property in Mexico’s restricted regions through a trust called a “Fideicomiso” which functions much like trusts in other countries. These regions are for any property within 60 miles from the border or within 30 miles of any coastline-which includes Los Cabos. It is highly recommended that each foreign citizen consult with a professional real estate agent or an attorney that has experience in foreign ownership of Mexican property within the restricted zones. I am here to help guide you through the process!

We partner with notaries for our closings in order to secure your trust. A Notario Publico in Mexico is much different than a Notary Public in the U.S. In Mexico, Notaries are specialized attorneys who act on behalf of the state and federal government in relation to any transaction; they are comparable to a U.S. Clerk of Courts. In most cases, REmexico Real Estate can obtain your trust within 60-90 days. In some cases title has been transferred in as little as two to three weeks. We oversee the entire process and make certain you understand each and every step involved.
When you purchase real estate in Mexico, we recommend you consider Title Insurance for your property purchase. We insure our cars, homes and our health — it is just as important to insure one of your largest investments: your property. Title Insurance is available for properties in Mexico purchased by U.S. and Mexican citizens through numerous different vendors and insurers.
Closing Costs are similar in many ways to that of the United States and Canada with a few important differences. The acquisition tax, or transfer tax, is generally paid by the Purchaser. It is currently 2% of the declared value of the transaction. Settlement fees are for services provided and include: supervision and coordination of permits, tax payments and the myriad of other details necessary to obtain full legal title. These fees are based upon the purchase price in the transaction. Since most transactions are all cash, appraisals are rarely done except for tax purposes. Give me a proposed purchase price and I can will send you a Closing Cost estimate.. no problem.

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