If you’re wondering exactly how to buy property in Mexico as a foreigner, we are here to help! Fortunately, the purchase process is simple and straightforward, especially when you have an experienced real estate investment advisor to help you every step of the way. Here’s a quick guide to show you how to buy property in Mexico, regardless of where you’re from.
Rules for Buying Real Estate in Mexico
In 1993, the Mexican government amended the Foreign Investment Law, allowing foreigners to buy real estate anywhere in the country, with some restrictions on land that is within 100 kilometers of an international border and/or within 50 kilometers of the coast. In these areas, foreign buyers must simply set up a fideicomiso, which is a trust agreement set up with a Mexican bank.
The fideicomiso permits a foreign buyer to hold property with all the rights and privileges of a Mexican citizen. You can hold multiple investment properties, own them as long as you wish and even will the real estate to your heirs. Owners who wish to sell can also easily transfer the trusts to foreign buyers. A fideicomiso is typically set up for 50 years at a time and is renewable. The trust can be held by one or more buyers, or by an entity like an LLC.
Here’s a quick rundown of the buying process:
- Offer and Acceptance: First, an “Offer to Purchase” contract is sent (in writing) that details the main terms of the sale, such as price, payment plans, earnest money deposit and deadline for the seller to accept or reject the offer. Upon acceptance of the offer, the earnest money deposit is made and it’s time to draw up the Promissory Agreement.
- Promissory Agreement: This binds both the buyer and the seller to a timeframe during which the purchase contract must be executed. It also locks in the basic terms of the offer and permits both parties to work out the details for the final purchase contract. Under Mexican law, both parties are equally bound by the terms of the Promissory Agreement, which means that if all the terms and conditions are met, neither party is permitted to back out of the sale.
- Trust Application and Verify Legal Status: After the Promissory Agreement has been signed, the seller will contact your back (where the fideicomiso will be set up) to initiate the trust application. Your attorney will order a trust permit from the Ministry of Foreign Affairs and will also verify the legal status of the property, including a review of the title, as well as the terms and conditions of the purchase contract. He or she will also request a variety of documentation from the seller, including a certificate of no encumbrances, a certificate of no tax liability and a property appraisal.
- Other Documentation: Your attorney will also confirm that the seller actually has the right to transfer the title. Documentation for buyers is minimal and includes a copy of your passport, driver’s license and a recent utility bill showing your name and home address, which are presented to a notary and filed at the public registry.
- Purchase and Sales Agreement: Both parties should now be able to execute the purchase / sales agreement, or compraventa, which initiates the closing process and transfer of the property title to your fideicomiso. Your attorney will start the drafts for the closing deed and work with a notary and a bank trust officer to review the final draft of the property deed.
- Closing and Title Transfer: After everything has been verified and the paperwork is ready, you will receive a closing date and the final closing costs will be due. At the closing, the final deeds will be signed, outstanding payments settled and the property title will be officially transferred to the bank trust.
- Delivery of Unit: Make sure you do a walk-through to make sure the property is in suitable condition. If satisfied, you will then sign a delivery statement, which details the property’s official delivery date.
Vacation Home, Full-Time Residence or Investment Property?
Finally, it’s essential to really put some thought into how the property will be used before buying real estate in Mexico. Property objectives could include owning an income producing vacation home, finding a full-time residence or investing in raw land for development. Regardless of what you intend to do with it, the planned end use for your property will influence many aspects of the purchase, including location and how the trust is set up. Also, your real estate investment advisor should help you through every step, including partnering with an English-speaking Mexican attorney who will be responsible for reviewing the property’s legal status, including a title search, reviewing and preparing contracts and setting up the fideicomiso.
Are you interested in buying property overseas? Let us know where in the comments!
To learn more about how to buy real estate in Mexico, click the link below and download our free guide!