Buying Real Estate in Mexico

Can Foreigners Own Property in Mexico?

This is a question that immediately comes to mind to many people when they are thinking about moving to Mexico. Can a foreigner really own property in Mexico? Are there are any risks involved in buying property? What do I need to know to protect my investment?

Even a tourist  may buy real estate in Mexico. Real estate property may be owned through a Mexican bank trust (fideicomisco) or by Direct Deed (escritura) in your own name. It is simple to transfer title upon sale through a Mexican notary public. 

Under Mexican law if you purchase property within a 50km radius in the coastal zones, you must hold title in a Bank Trust. Otherwise, any property purchased in the interior, may be owned in a Direct Deed.

Should you decide to own property in you own name, the Direct Deed must be prepared by a Mexican notary public. Buyer Beneficiaries may be named right on the deed as long as they are direct line descendants or spouses. Any other person must be named in a will. A Notary Public can prepare a will for you for you at very reasonable rates.

There are great differences between a United States or Canadian  notary public and  a Mexican notary public.  In Mexico, the notary public (notario público) is a public official appointed by the State Governor. A Notary Public must first be an Attorney and then pass a stringent course in the transfer of real estate before he can be considered for appointment by the Governor in the state where he works and resides. He has the capacity to attest and certify documents and business and legal transactions that require authenticity. He also provides for strict security of original records and documents.

In Mexico, every legal document dealing with the purchase or sale of a property, such as deeds, wills, powers of attorney, constitution of corporations, establishment of trusts and other legal transactions must be made before a notary public in order to be valid. If the document is not notarized by a Mexican notary public it is not legal! It must also be registered.

For real estate transactions, the notary public is completely capable and legally authorized to carry out the transaction.

In order to finalize the transaction, the Notary Public will need the following documents from both the vendor and purchaser:

The Notary Public will need from the following documents from the vendor: 

1. Deed

2. Up-to-date tax receipts, water bills, subdivision (fraccionamiento) fees,

3. Vendor needs 6 months of the most recent utility bills not receipt of payment.  These receipts are used as proof of residency and must have your name and address of the property that you are selling.

4. A finiquito (severance) from each household employee, or severance pay form, signed by all parties.

The notary public will determine capital gains taxes through an official appraisal (Avaluo).

The capital gains tax, if any, is paid by the seller. However, through mutual agreement, it may be paid by the buyer. Make sure you know how much this will be--the notary will inform you of the cost before the transaction, almost to the cent. Cash or money changes hands the minute the seller signs over the deed, usually in the notary public's office. The buyer ordinarily pays notary fees incurred, which also must be paid when the title is signed over. The seller should be out of the property at closing unless there is a written agreement stating otherwise.

Once the transaction is finalized,  the Notary Public must register the escritura in the Registro Público de la Propiedad (Public Registry of Properties).

Want to sell your home quickly and at the best price? Read on...

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