Foreign Ownership of Real Estate in Mexico
There is much confusion at times about how simple or complicated it is for foreigners buying property in Mexico. You may hear about retirees going there and having an effortless transaction, and before you know it they are enjoying their new home and life abroad. You may also have heard horror stories about difficulties in the process that potential buyers didn’t see coming. In this article we will explain the structuring of foreign ownership of real estate in Mexico.
Buying Mexico real estate safely and legally is not that difficult at all. Here is some basic info. Remember, you should always do your due diligence and work with an experienced agent and title company when buying property, but especially when buying abroad.
For foreigners buying property in Mexico in the interior of the country, such as in Mexico City or Guadalajara, you can buy property there fee simple. Where things become trickier is when you are buying property in Mexico in “Prohibited Zone” along the Mexico’s coasts and borders.
The Mexican Constitution established a restricted area which refers to any land located within 50 km (30 miles) of any coastline or 100 km (60 miles) from any of the three borders shared with other countries, namely the United States, Guatemala and Belize. Included in the Prohibited Zone is all of skinny Baja California. Yet foreigners are buying property in Mexico all the time in this area…so how are they doing it?
Buying Property in Mexico with a Mexican Bank Trust
This is the most secure and popular way to hold real estate in the “Prohibited Zone”.
In 1971, Mexican President Echeverria created the Mexican Bank Trust to promote tourist and retirement investments along popular coastlines, authorizingthe 30-year Bank Trust program. In 1989, President Salinas extended the 30 year Trust for an additional 30 years. Then in 1993, he extended the Trusts from the 30+30 year arrangement to the current 50+50 year time period. It should be noted that these Bank Trusts are perpetually renewable.
Your Bank Trust must be established at an authorized Mexican Bank in their Trust Department. The banks are used to doing these transactions for foreigners, and the process is fairly straightforward.
The property you hold within your Bank Trust is yours to improve upon, build, sell, leave in your estate, etc. Basically, you get all of the same rights as you would with U.S. fee simple real estate.
When it comes time to sell your home, here is how it goes: If another foreign person is the buyer, he can just purchase your Trust Rights from you. Your buyer will get together documents from you to instruct the Bank of the sale, and the name will be changed.
If you sell your Trust Rights to a Mexican, he has more options. He can take title in his name in the Trust, or could remove the property from the Trust and take title more traditionally in “Escritura” (Mexican National form of Ownership). Sometimes Mexicans will choose to pay the annual Trust fee and stay within the originalTrust, thinking that down the road he may sell to a foreigner. Once the property is taken out of the Master Trust, it is more expensive for the property to be placed into a new Trust.
The Mexican Corporation for Buying Property in Mexico
In the last several years, this form has become increasingly popular. With this, you form a Mexican corporation entity, which may be owned 100% by foreigners (you and your spouse, for example). Then the Mexican corporation will own the property 100%, in a fee simple deed, without the need of a Bank Trust. Fairly simple, just get the paperwork drawn up by an attorney you trust.
The Mexican Land Lease
You may hear talk of a 99 year land lease. A land lease for more than 10 years is not legal in Mexico, nor is the 10 + 10 + 10 year arrangement.
Caution: If you walk into a 10 + 10 + 10 agreement with a Mexican landowner, be on guard. If at the end of the first 10 years, he decides he does not feel like recognizing that second 10-year lease you thought you had, he doesn’t have to. You have no legal recourse, because you entered into an agreement which was designed to circumvent Mexican Law – giving you no legal status to use the Mexican Court System.
If you lease land, make it for 9 years and 11 months to stay within the lease land laws. It is possible and perfectly legal for the Mexican land owner to give you a new 9 year 11 month lease at the end of your first 9 year 11 months and so on – but you have no guarantees that the owner will do so. Make sure that worst case scenario, you are willing to walk away at the end of the first 9 years.
There you have it – 3 ways to buy property in Mexico. If you have any experiences in Mexican real estate that you would like to share, please contact us so we can all learn more about the process.
And if you are interested in buying property in Mexico please contact our main real estate agents in Mexico.
Also visit our Mexico Country Portal – for more information: