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 BUYING REAL ESTATE IN MEXICO
by Fabiola Thébaud-Kinder
ARE YOU CONSIDERING A RETIREMENT OR VACATION
HOME?
Mexico’s close proximity to the U.S. is a great benefit to the
vacationer or retiree. The lower cost of living, availability of
quality resort homes at lower prices compared with the U.S., and
topnotch medical facilities make living in Mexico more attractive.
There are many flights that can get you to destinations such as Cabo
and Puerto Vallarta in less than two hours. Destinations such as
Manzanillo are attracting more flights. One can also find beautiful
resort property within a two-hour drive from San Diego.
WHAT TYPES OF OWNERSHIP CAN A FOREIGNER HAVE IN
MEXICO, AND WHAT IS THE ACQUISITION PROCESS?
On the Mexican mainland, a foreigner can purchase property fee simple
(direct deed); except when the property is located in the restricted
zone: 50 kilometers (31 miles) from the shoreline or 100 kilometers
(62.5 miles) from the borders.
Residential properties located in all of the Baja Peninsula, and
coastal and border areas within the restricted zone, may only be
acquired through a Mexican Bank Trust called a
Fideicomiso.
The bank, for an annual service fee of $300-$400, serves as a trustee,
which holds the legal title to the property for up to 50 years. The
cost for the permit to establish a bank trust is less than $1,000 USD.
To purchase through a Fideicomiso, a foreigner must first register at
the Secretariat de Relationes Exteriores for a permit to establish the
trust. Upon receipt of the permit, the trustee bank sends instructions
to a Notario (a governor appointed attorney), who prepares the deed (Escritura)
to the beneficial rights. Applicable taxes are paid (2% of purchase
price), then the deed is recorded in the local municipality.
The foreigner, as a beneficiary of the Fideicomiso, has the right to
use, improve, lease,
sell,
mortgage, and will the property. Should you die, your estate becomes
the beneficiary. Also a second beneficiary to the trust can be named
on a Fideicomiso to avoid probate.
Upon expiration, a Fideicomiso may be extended indefinitely in 50-year
periods when one pays the renewal fee. After 100 years, the property
remains yours, but a new trust must be created.
Commercial or non-residential property in the restricted zone can be
purchased fee simple with 100% foreign capital as a Mexican
corporation, without the need for a Fideicomiso, but going through an
application process through the Secretariat de Relationes Exteriores.
Escrow arrangements in Mexico do not typically exist as in the US.
Some American-based real estate companies work with a hybrid type of
escrow, incorporating the closing customs of Mexico and California for
U.S.-based buyers. Fabiola Thébaud-Kinder has close working
relationships with the most professional, bilingual notarios to better
serve her clients.
WHERE CAN WE FIND FINANCING TO PURCHASE HOMES IN
MEXICO?
In Mexico most residential real estate is purchased on a cash basis.
Financing of homes in Mexico has been customarily done through a home
equity loan on a U.S. buyer’s primary residence.
Developers usually offer some type of financing and some will carry
back a portion of the note. Mexican banks and finance companies have
begun to offer loans to foreigners. U.S.-based mortgage companies are
offering long term, fixed rate financing with as little as 20-30%
down.
SHOULD WE BUY A TITLE INSURANCE POLICY?
Absolutely! Questions of title may be resolved through the title
company rather than through the Mexican Courts. In the US things may
go wrong with title, and in Mexico as well, so it is prudent to get a
title policy. The Title insurance policy issued for Mexico is 99%
similar to an ALTA policy. There are differences in the law and the
language, i.e. there is no Spanish equivalent of “marketability.”
Ejido rights and agricultural reform have a part in the Mexican
policy. In addition, in Mexico, mineral rights belong to the federal
government, not to the owner of the land.
First American Title Corporation, Stewart Title, and Fidelity National
Title are a few US-based companies offering title policies in Mexico.
*The above is provided as general
information. As laws are subject to change and not all details can
possibly be mentioned in this article, we recommend that you seek
legal and tax advice from a qualified professional.
Fabiola Thébaud-Kinder is a licensed
real estate agent in Laguna Beach, California. With over 18 years
management experience at several major international hotel companies,
her specialty is hospitality & resort real estate. If you are
interested in learning more about real estate in Mexico, please
contact Fabiola at (949) 246-2327, or email:
fabkinder@gmail.com. |
