How to buy Real Estate in Mexico

You need your own team when buying Real Estate in Mexico.

If you are a foreigner buying in another country, how are you going to know what questions to ask if you don’t have any knowledge of foreign laws which govern your purchase?

There are no federal agencies which oversee real estate or the agents who sell within Mexico. Where would you begin your search to look for a reputable attorney and real estate agent to become members of your team?

The national association of AMPI in Mexico has an agreement with NAR in the US for education and membership status. AMPI agents are be a good choice to look for in the area where you want to investigate real estate.  You then want to interview the agent or agency and many people start this process over the internet.  You can obtain the resume of the agent and his company, and view their websites. You can talk to them in person on the phone, and continue a correspondence by email.

Anyone can set up a real estate company in Mexico, even a foreigner. There are no special requirements or brokerage licenses to obtain. We can’t have escrow accounts as real estate agents, whether we are foreigner or nationals.  Do not let us hold your money. 

A foreigner can set up a real estate business if he gets a permit from Immigration that he can work in a specific type of business. All real estate agencies should also be able to show their current business license. A foreigner acting as an agent should show you his permit to work in a foreign country in the field of real estate. A visa with permission to work in timeshare sales or promotion is not sufficient to practice real estate. The foreigner should have a FM2 or 3. If they are now a Mexican citizen, they should show you’re their registration card.

How do you find an attorney to represent you?  Why do you need one? You need one because you need your own advocate.  The notary, also an attorney, is appointed to transfer the title. He has a different role to assist you. The notary attorney’s job is to be neutral and not an advocate negotiating for either party when he is acting as the notary. Neither do you want to use the attorney who represents the seller.

You will want to work out a fee structure to pay your attorney to only represent you in the transaction and not anyone else. If you are not paying for your own advocate, and he is offered to you with no fee, you are probably paying in some other way and there can be a conflict in interest-against your interests.

Please do not make the mistake of hiring a US attorney not licensed to practice in Mexico. Your US attorney can give you a recommendation of a licensed Mexican counterpart.  In fact, the best choice for you is a firm who is bilingual and bicultural. You want to be sure that you determine the attorney you are interviewing has a professional cedula, or license before you pay him a retainer.  

I have seen some foreigners return to their homes elsewhere, and then become very confused about advice from an attorney unqualified to speak to Mexican law.  An attorney in another country may have no good reason to talk you out of a foreign purchase. There may be a hidden agenda to protect his interests. If the first thing out his mouth, is “Why would you want to do this?” instead of “Let me find you a good attorney”, you may want reconsider his advice on any subject.

Another way to find an attorney is to search for Mexican firms who have good websites describing their credentials. In addition to lawyers in Mexico, a firm may be in a state of the US or Canada, and have a division for Mexican law expertise. You will probably find attorneys in areas where a lot of foreigners buy or in states bordering Mexico. There will be other methods to find one, but these are suggestions or where to start.  If you start with a good professional real estate agent, they should be able to recommend some attorneys for you to check out. If they say you don’t need one, pass and find another agent.

You can make the wrong assumption about your understanding of the complexity of the transaction if you think real estate is done the same way, even though some of the terms sound similar. Some aspects are the same: there is the buyer and the seller and the real estate to transfer. There is a contract of sorts, a deed with stipulations in it, an exchange of funds.  There are; however, many aspects that are completely different. My advice is not to assume.

Because real estate transactions in Mexico are not carried out in the same manner as they are in the US or Canada, you need a professional real estate agent and attorney to assist you. You can not depend on the same infrastructure and safe guards in which you depend in your home country.

If you are buying within the interior of Mexico, you don’t need to establish a bank trust, but you will receive a deed or escritura. All of the above still applies, be careful and get your own team.

The Mexican Constitution prohibits direct ownership of real estate by foreigners in what has come to be known as the “restricted zone.” The restricted zone includes all land located within 100 kilometers of any Mexican border, and within 50 kilometers of any Mexican coastline.

The Mexican government created the fideicomiso, which is a type of real estate trust. A Mexican bank must be designated as the trustee and it has title to the property (you are the beneficiary of the trust), and is the owner of record. The government created the fideicomiso to give Mexico a way to attract foreign capital to develop the restricted zone, which is very desirable and valuable. This trust vehicle does not conflict with the Mexican Constitution limitation that foreigners may not own outright within the restricted zone. With the trust, foreigners, as beneficiaries may enjoy unrestricted use of the land in the restricted zone without violating the law.

The bank, is the trustee of the property for the foreigner, and has a fiduciary obligation to follow instructions given to them by the trust beneficiary. The trust beneficiary (you) retains and enjoys all the rights of ownership while the bank holds title to the property. The foreigner is entitled to use, enjoy, remodel, sell, or bequeath the property that is held in trust.

 Mexico requires all foreigners to apply for and obtain a permit from the Foreign Relations Secretariat (SRE) prior to contracting to acquire real estate in Mexico. 

*The Calvo Clause says the jurisdiction of the property is where it is located. In Mexico, a foreigner cannot use another legal jurisdiction except Mexico.

Beneficiaries of the trust (fideicomisarios) may be either Mexican corporations with foreign investment, foreign individuals or legal entities.

The SRE must grant any petition for a trust permit that complies with the necessary requirements within five working days following the date of its being presented to its central office in Mexico City. The trust must be granted in 30 days if the application is submitted to one of the SRE’s state offices.

The SRE must confirm the registration of any property acquired by foreign-owned Mexican corporations within 15 days following the filing of the petition.

If the maximum period passes for either the petition or the registration, with no action, the trust permit or registration is considered authorized.

There are safeguards in case the trust expires. The beneficiary of the trust does no lose all his rights and benefits of the property. The beneficiary has a contractual right under the trust agreement with the Mexican bank to all benefits that may result from the use or sale of that property, even though he does not hold title to the property. Currently, fideicomiso trusts are for 50 years, with a renewal for an additional 50 years.