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Some "Know How" on owning property in Mexico.
How Foreigners can own Mexican Real Estate
- Alternatives
- The Restricted Zone
- Fideicomiso or Bank Trust
- Process
- Notario Publico or Notary Public
- Cost of the Fideicomiso
Alternatives:
It is a common misconception that foreigners cannot own Real Estate in Mexico,or they can only get a 99 year lease on Mexican soil. The reality is that foreigners can own proprty in Mexico. However, there are restrictive zones, as described below.
Outside the Restricted Zone, a foreigner or foreign corporation can acquire any type of real estate just 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 Fidelicomiso.
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 try invoking 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 in aformentioned above.
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. Currently most Mexican Banks are owned by US banks such as CityBanks ownership in Banamex.
The bank 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 pre-appointed 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.
For practical purposes, even in unrestricted zones many foreigners and Mexican Nationals, for that matter, prefer to hold their property under a Fideicomiso.
Process
Most real estate transactions are "started" after a written purchase offer is accepted by the seller and when a purchase-sale agreement (promissory contract) is signed by both parties. In most cases, a deposit is required by the broker in order to transmit the offer to the seller. If the transaction is being conducted directly with the seller, it is highly recommended that a real estate broker or a lawyer (Notario Publico) be consulted before signing any papers or handing over any money.
In some areas it is common practice to deliver to the seller, as an advance payment, the equivalent to a 20-35% (including the initial deposit) of the total price upon signing the purchase-sale agreement which should contain a penalty clause applicable in case there is a breach of contract by any of the parties.
Normally, when signing the escritura or official deed, which needs to be certified by a Notario Publico or notary public, the balance is paid and the property is delivered. This should not take more than 45 days. In certain resort areas the custom of using "escrows" is being implemeted.
Notario Publico or Notary Public
The Notario Publico is a government appointed lawyer who processes and certifies all real estate transactions, including the drawing and review of all real estate closing documents, thus insuring their proper transfer.
Furthermore, all powers of attorney, the formation of corporations, wills, official witnessing, etc. are handled and duly registered through the office of the Notario Publico, who is also responsible to the government for the collection of all taxes involved.
In connection to real estate transactions, the Notario Publico, upon request, receives the following official documents, which, by law, are required for any transfer:
A nonlien certificate from the Public Property Registry based on a complete title search.
A statement from the Treasury or Municipality regarding property assessments, water bills, and other pertinent taxes that might be due.
An appraisal of the property for tax purposes.
Cost of the Fideicomiso
Based on a present tariff, the bank charges the person desiring the Fideicomiso an initial fee (approximately $500 US) for the drawing up of the agreement and establishment of the trust, plus a percentage according to the value of the property. In addition the bank charges an annual fee (depending on the value of the property) to cover its services as a trustee.
Disclaimer: This information is correct to the best of our knowledge. You may wish to speak to a Mexican Notario or look for more information on a website with mexican legal information to get the most up to date information, PMD Developments
| Company history : We have been bulding in Mexico since 2001. We started working with a Non- profit company called Familes Helping Families building homes for qualified people who desperately needed a new start. Our home office is located in Puerto Penasco,Sonora Mexico, and has expanded to several cities in Mexico, including San Carlos, San Felipe in Baja Mexico. We, as a company, look forward to serving you with all your needs Commercial or Residential. | Quality: Our products are always the best quality. All of our electric and plumbing fixtures are purchased directly from the U.S.A. We use high grade block, morter and stucco. We will help you request warranties, if needed, on any of the products from non-US based stores.
Reliability: We have a dedicated team ready to assist you in all your construction needs.
Warranties: Every new house will have small list of punch items. PMD 's policy is to work with our customers for up to one year from when occupancy of the home is taken. We will work during that year to guarantee your satisfaction.
Worker benefits: One of the most important things to consider while building in Mexico is the construction workers rights and benefits. Social Security is one of the benefits that all of our workers receive. This is an insurance paid for the workers, that if not covered, the house owner is liable to government fines, hospital payments or even death expense payments if one of the workers has an accident while working on the house. PMD has covered all of these benefits for our workers. Other benefits received by our workers are: Paid Vacations (by law), Christmas bonus (by law) and Savings Fund among others. Mexico has many laws in place as same as the United States.
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