How to buy property in Mexico as a Foreigner?

Buying property in Mexico is very simple and straightforward. However, as in every country, you must do your due-diligence and be advised by an attorney before signing a Contract as a foreigner, as it may be open to legal risks.

What restrictions do foreigners have to buy properties?

Article 27 of Mexico’s Constitution declares a Restricted Zone for foreigners to directly acquire properties within 100 kilometers of the border, and 50 kilometers of the coastline. However, the Ministry of Foreign Affairs allows foreigners to acquire properties within the restricted zone, as long they establish a “fideicomiso”, and they agree to sign on the Calvo Clause – which means to consider themselves as mexicans and renounce to invoke the protection of their government with respect to them, under the penalty of losing for the benefit of the Nation, the property they have acquired.

What is Fideicomiso?

A fideicomiso is in other words a Trust contract:

“(§381, LGTOC) By virtue of the trust, the settlor transfers to a fiduciary institution the property or ownership of one or more assets or rights, as the case may be, to be used for lawful and determined purposes, entrusting the realization of said purposes to the fiduciary institution itself.”

This allows a foreign buyer to hold property with all the rights of a citizen. With a single fideicomiso, you can hold many Mexican properties. Above all, owning the properties with continuance, and will the property to your heirs. Plus, you can transfer the trust to another foreign buyer if you want to sell.

A fideicomiso is good for 50 years and is renewable thereafter (by you or your heirs). It can be held by one or more individuals or by an entity (LLC, for example).

Buying Property in Mexico Through A Corporation.

Foreigners can also own land in restricted areas through a Mexican corporation. These can be 100% foreign owned. Only consider a corporation when buying real estate strickly for investment or business.

If you plan to subdivide and develop land, a Mexican corporation makes sense. Corporations come with more restrictions and reporting requirements than fideicomisos. You need to submit monthly tax reports (SAT) on income and expenses. After that, a certified accountant needs to complete it.

Buying Properties outside the Restricted Zone.

As of 2013, foreigners can purchase properties outside the restricted zone without the need for a fideicomiso or a corporation to do so. The only requirement as a foreigner is to acquire a “permit for the acquisition of real estate outside the restricted zone or concessions to foreigners to explore and exploit mines and waters in the national territory” by the Secretary of External Affairs, which is obtained by signing a Waiver agreement for the acquisition of real estate outside the restricted area; and any migration documents that proves your legal status inside the country.

How the purchase agreement process works?

Step 1. Legal status.

Before making an offer, you must have your migration documents in order and have legal status in Mexico. If you plan on buying a property for residential purposes within the restricted zone, you must form a fideicomiso (trust) with the bank of your choice; or, if it is for a business purpose then forming the right Mexican company is the ideal choice. Outside the restricted zone you must acquire the permit by the Secretary of External Affairs.

Step 2. Preliminary Phase.

The first step when buying property is to make a Promissory Agreement, to ensure no confusion on the terms and conditions. This will bind both buyer and seller into a timeframe to execute the Purchase Agreement.

The process to purchase property usually takes some time. This allows time for both parties to work out the details for the final purchase contract and make the due diligence on the legal status of the property: review of the title, right of transfer, certification of no tax liability, property appraisal, no pending mortgages or litigation. 

Step 3. Purchase Agreement.

To legally purchase a property, it is required by law to do it before a public notary. The documentation required is minimal:

From the Seller:

• Property Appraisal.
• Land demarcation.
• Certificate of the public registry of property and commerce.
• Property history.
• Value of the operation.

From the Buyer:

• Passport I.D.
• Migration Permit.
• Proof of address.
• In case of the property inside the restricted zone: Trust (fideicomiso).
• Outside the restricted zone: Permit by SRE.

Step 4. Closing and Title Transfer

Lastly, after verifying all the paperwork is correct, you will get a notice of a due date to sign the deed, making the agreed payment, and afterwards the title transfer on the public registry of property and commerce.

Keep in mind that your attorney can handle the entire purchase process. As a result, you do not need to be in the country for every step, but you do need to have your migration status in order. By granting your lawyer a power of attorney, they can assist you through each stage of the sale.