The process of buying a house can be long and tiring, but doing so in Mexico is not that different from the process in the US.
Any foreigner can obtain direct ownership of a property in the interior of the country, they just need a permit from the Secretaría de Relaciones Exteriores (Foreign Affairs Office). However, under Mexican law foreigners cannot directly own property within the restricted zone.
The Restricted Zone (known in the past as the “Prohibited Zone”) is the land area within 100 kilometers of Mexico’s international land borders (US, Belize, and Guatemala) and the land area within 50 kilometers of Mexico’s coastline.
In the Restricted Zone, foreigners cannot own direct title to real estate. They can, however, hold the title through a long-term trust or a Mexican business corporation (depending on the use of the property).
In addition, homes might be subject to other procedures if they’re found on historic sites.
In the trust, the Mexican fiduciary bank holds the title in name of the foreigners and performs all acts considered real rights, according to the instructions of the beneficiary — the foreigner. This means that the beneficiary can exercise their personal rights regarding the trust and the property placed therein. In other words, you’ll have the right to lease it, rent it, or sell it as you please.
If you’re looking to initiate a fideicomiso, as they are called, you will be required to cover a starting fee of around US$2,800.
If the property held in the trust is unimproved land, and larger than 2,000 square meters (roughly ½ acre), the Secretariat of Foreign Affairs will require the beneficiaries to sign a letter promising to invest a certain amount of money in the land over a 24-month period. The amount will be determined by the location of the property and its size.
The duration of the trust is 50 years, extendable. The contract must be notarized and requires permission from the Ministry of Foreign Affairs and the Trustee making the arrangements. Once set up, the Trust is registered in the National Registry of Foreign Investment.
If the property is wanted for residential purposes, the fideicomiso is the only way to hold the title. However, if you were planning on using the property for commercial use, you may hold the title to the property in a trust or through a corporation, although limitations do apply. Either way, it is best to consult with a real estate agent, as well as a public notary.
These actors are usually part of Real Estate transactions in Mexico, along with the buyer’s lawyer, a mortgage company, and the bank or trust.
It is important to note that transactions outside of the restricted zone do not involve a bank or trustee since it is not necessary to establish a real estate trust. Otherwise, the transactions are pretty much the same.
Finally, it is worth mentioning that you’re not bound to hire a local attorney or real estate agent, though their knowledge of Mexican law might ease the legal procedures.
In Yucatán Magazine: Understand the risks before buying land on an ejido