Can I Buy Property in Mexico?

A little confused? A little afraid? While there are some differences in the process south of the border, rest easy. Vista Properties is experienced in this process. Here is some general information about what is involved in real estate transactions in Mexico. First of all, there is often the question: "Can foreigners really own property in Mexico?"

The answer is yes! The only caveat is that foreigners wishing to own property within 100 km of the national border, within 50 km of the coastline and all of Baja California Sur and Norte must use a “fideicomiso” (fee-day-e-co-me-so) in order to acquire rights to the land.

At first glance, many people assume that a fideicomiso is a lease, but it’s not even close. The fideicomiso is a bank trust, very similar to a trust or family trust. As a beneficiary of a fideicomiso, you have the legal right to sell, mortgage, lease, build and leave the property to your heirs without a probate as a substitute beneficiary. The bank is only the administrator and has no rights to your property other than collecting the yearly fees...between $500 - $600 US. The trust has a 50-year term and can be renewed for an additional 50 years. After that time a new trust must be established, but this doesn’t affect the rights of the beneficiaries of the trust.

Your trust (property) is not considered an asset of the bank. If you are concerned about the bank going bankrupt, the trust is automatically passed on to another banking institution that assumes the administrator duties. So is a fideicomiso a reliable document? With more than 100,000 bank trusts already in existence in Mexico, you can be assured this is indeed a trustworthy dependable way to purchase Mexican property. Go for it!

Who is involved in real estate transactions in Mexico?
Normally, there are three to four players involved in any real estate transaction in the restricted zone:

  • A real estate company
  • The closing agent* (usually an attorney)
  • A trustee bank (to set up Fidiecomiso)
  • A public notary

*It is important to note: A real estate transaction in Mexico is not considered adversarial. The parties, a willing buyer and a willing seller, agree on terms and then the closing agent is responsible for doing all the paperwork and pass it on to the notary. Some closing agents can also hold funds in escrow.

All four are helpful in their respective areas in assisting with real estate transactions. Because of the similarities of real estate transactions, in general, it is easy to assume that the basic terms and principles which are familiar in the U.S. and Canada also hold true in Mexico. Much of the paperwork is similar, but there are some aspects that are completely different. As a rule, a foreigner should assume nothing. Once again Vista Properties will be with you every step of the way.

Probably the biggest difference is the Public Notary. A Public Notary in Mexico is nothing like a Notary Public in U.S. or Canada. A Notary Public in U.S. or Canada is essentially a witness to verify the true identity of a person signing a document. In Mexico a Notary Public (notario publico) is a public official appointed by the State Governor. He has the capacity to attest and certify documents, business and legal transactions and to review authenticity. He also provides for strict security of original records and documents. The Notary plays an important role in real estate transactions in Mexico.

The following is a rough breakdown of the costs (in U.S. dollars) for the closing of a property purchase in Baja California Sur. The fees vary from bank to bank and these are an approximately example only. The other fees also vary based on which Notary and closing agent are used. Closing costs in Mexico are a bit higher than in the U.S. or Canada.

Government Authorization for setup of trust (fidiecomiso): $1900*
Execution of Fideicomiso: $464
Annual Fideicomiso fee: $464
Title search, appraisal, and certificate of freedom of liens: $480
Notary Public fees: $1200 (varies according to size and selling price of property)
Acquisition tax: 2% of purchase price
Registration fee: .5% of purchase price
Attorney fees for processing documents: $900+

*Assuming an existing fideicomiso from a foreign seller will save approximately $1150 of this fee.

No one likes surprises at closing, Vista Properties will keep you informed to avoid them!

If you're planning on selling, see our page on Selling Property in Mexico.