Buying Property in Mexico
Majahual Beach: Costa Maya
Can foreigners own property in Mexico?
The simple answer is, yes. The Mexican Constitution as written prohibits a non-Mexican from owning property in the Restricted Zone. It states that land within 50km of the salt water coast and within 100km of the borders can not be owned by a foreigner. The Constitution has been amended twice over the years, specifically to increase foreign cash flow into the country by creating legal avenues to offer ownership rights within the Restricted Zones. The foreigner must use a Mexican vehicle to purchase property in the Restricted Zone.
Chichen Itza: Pyramid of Kukulkan
What is a Fideicomiso Trust?
The first amendment to the Constitution that allowed foreign purchase in the Restricted Zone was the establishment of the Fideicomiso Trust Act in 1970. This Act allows a foreigner to purchase property in the coastal zone by using a Mexican Bank as a partner in the transaction. The Mexican Bank holds the title in Mexico and becomes the administrator of the Trust account for the foreigner. This partnership gives the foreigner all the rights as owner and beneficiary of the property, with the Bank acting as the Trustee of the account. A service fee is incurred annually by the owner for the service provided by the Bank.
Punta Cancun
What is a Mexican Corporation?
The second amendment to the Constitution that allowed foreign purchase in the Restricted Zone was the establishment of the Corporation Act in 1994. This Act allows a foreigner to purchase property in the coastal zone by creating a Mexican Corporation as a partner in the transaction. At closing, the title (or escritura) for the property is transferred from the Seller to the Buyer's Corporation. The Corporation (similar to an LLC in the United States) is the Mexican entity that satisfies the Constitution and allows the foreigner full ownership rights without Mexican involvement. The property is actually sold to the Corporation, since an individual is still prohibited from owning beachfront property.
Is Financing Available in Mexico?
See Financing.
Is Title available in Mexico?
Absolutely! And, this is one issue in the buying process that should be investigated very thoroughly. There is clean title, cloudy title, bad title, title with liens and no title. Obviously, the Buyer should run, not walk, away from no title. This is probably indicative of Ejido land. Ejido is similar to a welfare program in the States. Each State in Mexico has a certain amount of land available to the poverty level citizens of Mexico. Indigent Mexicans can apply for land grant use of Ejido land and are allowed to use the land to support themselves for as long as they satisfy the criteria of indigence. The land is NOT titled and is NOT for sale. Buyer beware!
What about homeowner's insurance?
As in the States, homeowner's insurance is available, but not mandated. If you own your property, you certainly have the right not to insure it. If you finance the purchase, homeowner's insurance is mandatory. There are a variety of Mexican insurance companies and they offer complete coverage. Probably, the most asked question is about hurricane insurance. Yes, it is available and it is a good idea. Complete coverage for a $500,000.00 USD structure is approximately $1,200.00 USD annually.
What about title insurance?
Title insurance is not mandated in any situation. Is it a good idea and does it offer another level of comfort? Absolutely! Stewart Title Company and First American Title Company are the two most popular. If you are concerned about some overlooked issue arising before close, at close or anytime after close, then Title insurance offers real peace of mind.
What about attendance at close?
As long as you are willing to grant specific power of attorney to your realtor, broker or Mexican attorney, there is no need to return to Mexico for any of the closing process. The majority of closings are done "in absentia" and any reputable broker should assist you through the entire buying process. With the advent of internet technology, buying property in Mexico can be as simple as buying in your own country.
Are real estate attorneys available?
Yes and an absolute must to answer Questions 1-8. Any reputable broker will have attorney(s) to recommend. The attorney will work closely with the broker, the Notario Publico and you. If you are not satisfied with the recommended attorney, move on. Do not waste your time and/or money on an attorney ignorant of the closing process. Do not delay the closing process with an attorney who says he knows real estate, but doesn't.
What about health insurance?
In some cases and on a limited basis, American health insurance companies will offer a rider on a domestic policy that will cover you for a limited time in a foreign country. For the part time or full time resident of Mexico, international health insurance is available. It is as thorough as a domestic policy and generally about equally priced. Many policies also offer Med Flight options for the patient with a more serious condition who prefers to be airlifted back home. Med Flight is available from all the international airports in Mexico.
What about automobile insurance?
If you are vacationing in Mexico, most American insurance companies offer short term coverage for an additional fee. If you plan on staying in the country for a long term or certainly if you plan on keeping a car in Mexico, an American insurance company will not cover your vehicle. Automobile insurance is mandatory and is available through many reputable Mexican insurance companies. As in the States, many factors affect the cost of insurance, but in general you can probably expect to pay the same premium you are currently paying for similar coverage.
What about communication?
Land line telephones are available in most areas, but the most popular phone in Mexico is the cellular telephone. Cell service is usually pretty reliable, except in the more remote areas, such as the Costa Maya. The most efficient means of international communication is the internet. DSL is available everywhere that TelMex (Mexican telephone) or CableMas (Mexican cable TV) is available. As with cell service, DSL service is quite reliable and constantly improves with new technology.
To have your specific questions answered, please Contact Us.