Q: I AM NOT A MEXICAN CITIZEN. CAN I PURCHASE REAL ESTATE IN MEXICO?

A: Restricted Zone
For historical reasons, in 1917 the Mexican Congress considered it a matter of national security to limit foreigners from owning property in what is considered the restricted zone. The restricted zone is 50 km (31 miles) from the coast and 100 km (62 miles) from any border. But unfortunately most of the foreigners wanted to purchase in the coastal and border areas. Many foreigners were investing using "prestanombres" (Mexicans who would lend their name to be put in a deed. It was safe only if the foreign investor could be absolutely sure that the"prestanombres" was totally honest, that he could never be sued, get married or divorced, go bankrupt, get sick or die.

Considering the risk involved, the Foreign Investment Law was modified in 1971, allowing foreigners to now own property in the restricted zone with a bank trust or fideicomiso, therefore making the real estate purchase a much safer investment.

The Trust (Fideicomiso)

The bank, which is known as the trustee, holds the trust deed for purchaser of the property which is known as the beneficiary. This property is not part of the bank's assets and cannot be subject to any lien or attachment for any bank obligations. The owner (beneficiary) has all of the ownership rights to the property and may sell, rent, remodel or pass on to their heirs. Actually,
the Trust Agreement was established as a way of protecting foreigners purchasing property in Mexico. Also by making ownership pass through the trust process, there would be an automatic review of the transaction to ensure it was legal and unencumbered. The bank, as well as the notary, check the documents before allowing the closing, providing further protection to the foreign owner. In the past numerous foreigners have unknowingly purchased property illegally and with liens.

The normal trust period is for 50 years and is easily renewable with simple instructions to the bank. Upon sale of the property the trust can also be transferred to the new owner if desired, or they may set up a new trust. There is an initial fee for setting up the trust through the bank as well as an annual fee. These fees vary from bank to bank. Your real estate agent can help you with the details and to set up your trust.


Q: How much will my closing costs be?

A: Closing costs will usually run between 5-7% of the sales price of the property. They are determined before closing by the Notary. Notaries in Mexico are more than just clerks, but state government appointed lawyers who have the power and authorization to close real estate transactions in Mexico. The closing costs include their fees, transfer taxes and establishing the trust. Closing costs may increase if you include title insurance and financing fees. Your real estate agent will assist you with the closing process.  



Q: Do I need to hire an attorney?

A: Here in Mexico, real estate closings are handled by Notaries, which are government appointed officials and they have the authority to handle the complete closing transaction. Before closing, the Notary will revise all documents to make sure everything is in order. You may, however, contract an attorney to represent you as well, but is usually not necessary.  


Q: Do I need title insurance?

A: It is not required and is entirely your decision. With title insurance, even though an additional expense, your investment is guaranteed with the title insurance policy, which is issued once a complete historical search has been successfully completed.