Each country has their own rules for buying Real Estate and when you first buy in Mexico it can seem confusing! If you want to buy or sell a home in Mexico, especially in Cancun and the Riviera Maya, it is wise to find excellent local representation.

Many Americans and Canadians are heading south of the border seeking the sunshine, beaches, the rich Mexican culture and friendly Mexican people. Some are looking for a vacation home, others for an investment and many are relocating for retirement.

The purchase process for foreigners looking to buy real estate in Mexico is simple and straightforward. If you’ve done your due diligence, and you are represented by experienced real estate professionals and a well-recommended notary, you’ll have no problems.

Can foreigners really own property in Mexico?

Today, Mexican laws give foreigners the ability to own real estate in Mexico. There is, however, a Restricted Zone that extends 50 km inland from the coastline. Outside the Restricted Zone, a foreigner may acquire land and be direct owners of the property with all the rights of a Mexican national in compliance with Mexican Law. Inside the Restricted Zone, there are two alternatives for foreigners who wish to buy real estate. Since 1973, foreigners have been able to purchase coastal property through a Mexican bank trust, known as a Fideicomiso.

A Fideicomiso is established by the government and gives foreigners the same rights of ownership as Mexican citizens. The only difference is that they never receive the actual fee simple title. A bank holds it in trust for them. The Trust system of ownership is sanctioned by the Mexican government, provided for under the Mexican Constitution, and secured by the Central Bank of Mexico, all exclusively for the purpose and protection of enabling foreign ownership of coastal property in Mexico. Alternatively, you may own property by establishing a Mexican corporation. The corporation is the direct owner of the property and enjoys the right to conduct business in Mexico. (Consult your agent and attorney to find out which form is best in your situation). The Fideicomiso is the most common option chosen by foreigners buying property in Mexico.

A Fideicomiso is unique because it does not have an exact equivalent in English, so an exact translation is impossible, but is very similar to a “real estate trust.”

A Fideicomiso de Zona Restringida (Real Estate Trust of a Restricted Zone) is a legal document with which a Mexican bank will “lend” you their name so you can use and manage the property you purchase in Mexico.

Technically the property will be under the bank’s name, but the Fideicomiso deed explains how, by paying a yearly fee of around $500 USD, the bank will be responsible for the ownership of the land, but the Trustee (Purchaser) is 100% responsible for the use, administration, maintenance, civil responsibility, rental income, mortgage loans, and income from its sale and all belongs are exclusively that of the Trustee. The trust institution makes very clear that they have no responsibility to the property and Trustees are the sole responsible party for said property.

One of the best benefits to a Fideicomiso is that it works like a will. In the deed, you designate your beneficiaries who will inherit the trust upon your death, by simply presenting a death certificate and a short letter of request.

The initial bank fees of a Fideicomiso (initially includes the permit, one yearly fee in advance, and legal expenses) are between $2,000 and $2,500 USD, which you pay in addition to your Buyer closing costs (acquisition property tax, rights, certificates, notary and attorney fees, etc.). It takes approximately two to three months to formalize a Fideicomiso.

MEXICAN CORPORATIONS are usually only recommended for Buyers interested in starting a business in Mexico. A Mexican corporation can be formed in two weeks with at least two partners (they can both be foreigners; no Mexican citizen is needed), it costs around $1,500 USD and is used to acquire property as a Mexican national would. Everything you buy through a Mexican Corporation has to be done through a check and or wire transfer made from the corporate bank account. If you intend to open a business or even buy property for a non-residential reason, a corporation is the best route. It will save you some money on income tax, and most of all, it will allow you to create a legal source of income in the country.

Can I get financing for my real estate purchase in Mexico?

Unfortunately, at this time, there are no financing or mortgage options for foreign buyers in the area. This can change at any time and updates will be posted.

Can you recommend a good English-speaking attorney?

I have carefully curated a team of trusted professionals who I work with myself and recommend to my clients. Each has been chosen for their honesty, integrity, their tenacity and their knowledge of the intricacies of the real estate transaction for foreigners investing Mexico. My customers have full access to all of their services. I will arrange a meeting early on to insure that you are comfortable with the process and fully understand all of the documentation you are presented with. Just as I adhere to strict Code of Ethics, my attorneys also have a fiduciary responsibility to you the client. This is a responsibility I take very seriously to minimize any risk and protect you at all times.

What about the availability of title insurance?

Beginning in 1996, Stewart Title Mexico began underwriting title insurance for Mexican properties at an approximate cost of 1% of the insured amount. Other types of insurance, including property, liability, damage, and earthquake, are all readily available in Mexico, at low cost, and policies can be written to pay claims in U.S. dollars.

What can I expect to pay in property taxes?

Property taxes have historically been low in Mexico because they have never been considered a source of governmental revenue. Known as Predial, the tax is calculated as a percentage (currently .25% of the assessed value), determined at the time of sale. Generally speaking, you can expect to pay $100 usd per $100,000 usd of assessed value yearly.

Why should I consider buying property in Mexico?

The coastal real estate market in Mexico is booming. Mexico’s economy, the 9th largest in the world, values and encourages foreign investment dollars and especially tourism; Mexico is a top world-destination for both vacation and retirement among US and Canadian citizens.
The Riviera Maya, makes up the largest percentage of tourist dollars over all other areas of Mexico combined. The Riviera Maya is booming with the new Tulum International Airport as well as the Tren Maya, and the Yucatan has become an increasingly popular destination for tourism and foreign home ownership and it is not expected to slow down!

PUBLIC REGISTRY

The Public Registry is a government office where documents are filed regarding current ownership of land titles to see if any liens exist.

In Mexico, deeds are public instruments and can be researched at these offices which are open to the public.

The majority of cities and towns of Mexico have a Public Registry of Property. In a real estate transaction, the notary public conducts a search of the title encompassing a previous 10-year period to verify that there are no liens or encumbrances recorded against the property and also verifies that the seller has the capacity to transfer ownership.

Every property we sell has a lien clearance from the Public Registry to protect the buyer to ensure there are no liens on the property.

ESCROW

I adhere to the US processes of an escrow account, utilizing an impartial third party, namely an attorney and an escrow company. The third party is entrusted with the job of seeing that the transfer of ownership from the seller to the buyer takes place according to the terms of the written contract agreed upon by all parties involved.

The third-party lawyer and escrow agent hold any funds securely until the point when every one of the conditions has been realized as instructed by the agreement. They then disburse the funds to the designated parties at the assigned time as illustrated in the escrow agreement signed by both the buyer and seller.

CLOSING COSTS

It is customary that the buyer pays the transfer of acquisition tax and their own closing costs, including the Notary’s fees and expenses.

The seller pays his capital gains tax and the broker’s commission.

FEES RELATED TO BUYING IN MEXICO

Closing costs to buy property in Mexico are much higher than the USA or Canada. Once you own your property here you will find cost of property taxes, utilities, groceries, maids, labor, and living expenses in Mexico surprisingly low.

I will of course use my expertise to guide you through the relevant closing costs and assist to minimize these as far as possible. Expect 6% to 8% of recorded sales price.

• Catastral Appraisal Fee
• Escrow Fee
• Recording Fees
• Tax Status Research Fee
• Acquisition Tax
• Fideicomiso Fee
• Closing Coordination Fee
• Escrow Fee
• Notary Public Fee
• Attorney fee

Normally, you will receive your estimated closing costs 4 days after opening escrow. Then you wire your down payment to escrow. Next you receive your legal purchase contract to review and sign.

NOTARY DUTIES / NOTARIOS

During the real estate purchase, the Notario Publico will authenticate all the legal documents, transfer of title, calculate the capital gains tax and ratify all Real Estate transactions in Mexico. If a real estate transaction was not recorded in the Public Registry by a Notario it is not valid.

Although a Notario is a lawyer they will not function as your lawyer, their job in this situation is to be neutral, as the Notario is working for the buyer, the seller and the government, we recommend also using a lawyer to represent your interests.

Our lawyer will also ensure there is no human or legal error and that your property title is properly registered, verifying taxes and utilities.

PURCHASING PROCESS IN MEXICO

You found the right property! Now we make it a reality by preparing your Offer to Purchase and finishing with the close of your escrow. I will personally take care of everything with you. I start with submitting your Offer to Purchase.

THE OFFER TO PURCHASE

Together we will write up a fair Offer to Purchase including the price for the property and any possessions that you may want to acquire with the purchase, contingencies if applicable, the initial down payment and balance payment terms, and the closing date of your escrow.

REAL ESTATE INVESTIGATION (Due Diligence)

Once the terms are agreed upon, an investigation will be held in the public registry of property and commerce of the state of Quintana Roo, Mexico, to verify the property is clear of all liens and debts. Once the investigation has determined the legal status of your property to be clear a binding purchase agreement will be drafted by the Escrow company.

COMMITMENT AGREEMENT (Promissory Agreement)

Upon the proof your property holds a clear title, the Fully Executed by Buyer and Seller Offer to Purchase will be drafted on a Promissory Agreement binding the property purchase as a legal sale commitment.

TITLE APPLICATION: TRUST (FIDEICOMISO), ESCRITURA or MEXICAN CORPORATION

The next step, the Buyer Trust, Escritura or Mexican Corporation, will be coordinated and formalized through a Mexican bank, ensuring the property is properly titled to you and your beneficiaries.

TITLE (PUBLIC DEED)

In Mexico, the execution of the title always has to be done with a notary public. If you cannot be present at the time of closing escrow you will need to send an apostille from your state of residence prior to the close of your escrow. I will help you with this too, if applicable.

RECORDED TITLE

Finally, you will be provided with a certified copy of the Escritura Pública after its execution by all the Parties. Within 2 months of this execution date, the original Escritura Pública will be duly recorded in the public registry of property and commerce of the state of Quintana Roo, Mexico.

POSSESSION

I personally hand you the keys and we celebrate!

HOMES FOR SALE

I provide property owners with exclusive, unparalleled custom marketing plans to capture local, regional and international buyers. Together with my marketing background, I will create beautiful custom marketing for each listing, providing professional photography highlighting your property, and drive social media and internet traffic through the most effective channels available.

I strive to provide to potential buyers curated, intimate knowledge of your property features and attractive aesthetics, informing potential buyers about the advantages of making your landmark property their own.

If you’re in need of a home for sale agency in the Riviera Maya, I would be honored to be of assistance. I have been assisting real estate clients for over 25 years and I am proud that I’ve gained a well revered reputation representing my clientele.