Question 1

Can I own property in Mexico if I am not Mexican? What are my rights?

Accepted Answer

Yes, non-Mexican citizens may obtain direct ownership of property in the interior of Mexico. Here in Baja, it’s a little different. By Mexican law, properties within 50 km of any ocean front and 100 km of any border cannot be sold directly to foreigners, and are acquired via a bank trust, called a fideicomiso. Since most Baja property falls within that zone, you will most likely need a fideicomiso to purchase your property. With a fideicomiso, you still own the property, but the title is held in a trust by the bank. As the beneficiary of the trust, you have all the rights of ownership of the property, including the right to build on and improve your property, or sell it at any time. You will also provide secondary beneficiaries who will inherit the property without requiring a will or probate. You can also buy a property outright (and avoid the use of a trust) through the establishment of a Mexican corporation, however, there are multiple legal steps required in order to use this approach, and it’s best to consult a local attorney for guidance if you choose to go this route. In all transactions regarding the purchase and sale of real property, your real estate broker is obliged to ensure that they are carried out in accordance with the provisions of the Federal Consumer Protection Law (LFPC), and therefore acknowledges that consumers have the following rights:Read the Consumer Rights Letter here.

Question 2

Can the Mexican government confiscate my land?

Accepted Answer

No, the Mexican government cannot legally seize your property. Under the North American Free Trade Agreement (NAFTA), Mexico may not expropriate property, except for a public purpose. This is the same as “Eminent Domain” in the U.S. When it is necessary to expropriate land, swift and fair market compensation must be paid, together with accrued interest. When purchasing any property, a good closing attorney will perform a thorough title search to assure the property is free of any liens or other claims.

Question 3

Is financing available?

Accepted Answer

In most cases, buying a property in Mexico is a cash transaction. There are few mortgage options, and the ones that are available typically carry higher interest rates and additional origination fees. There are some scenarios where the seller may be willing to offer financing. If cash is an issue, the most popular financing option we see is to secure a home equity line of credit (HELOC) on your home outside of Mexico to help pay for the new home. Call us for available financing options.

Question 4

What are the typical closing costs?

Accepted Answer

Closing costs range from 3-4% to over 10% of the purchase price, depending on the cost and type of property. Regardless of the price of the property, you will need to pay to initiate or transfer the fideicomiso, or bank trust, to your name, and pay both an attorney and a notary for their time and work. These fees typically add up to approx. $4,000 USD. Additionally, you will need to pay acquisition taxes of 2.5% of the property’s value. Lastly, you will also have some smaller expenses associated with escrow services, surveys, legal certificates and appraisal, usually less than $1,000 USD. For more details on costs related to selling a property, see our Seller’s Guide here.

Question 5

How long will it take to close on a new purchase?

Accepted Answer

The exact time to close a transaction will depend on the buyer’s/seller’s preparedness to provide the necessary documents, which bank holds the trust, and whether it is eligible to transfer ownership. The process usually takes 2 to 3 months, but can be longer if there are special circumstances that need to be dealt with during the transfer.

Question 6

If I decide to sell my property, can anyone buy it?

Accepted Answer

Yes, you may sell your property to anyone who wishes to buy it. If the buyer is a Mexican citizen, you will need to cancel the fideicomiso (bank trust), since they do not need it. If the buyer is not Mexican, the bank will typically transfer the fideicomiso, or bank trust, to the new owner.

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