Sunday, January 13, 2008

How to Understand Mexican Real Estate


You looked at a gorgeous piece of oceanfront property in Mexico and you're hooked. Your dream of retiring by the beach is about to come true. But there are things you need to know when entering into a contract. Before signing the purchase/sell agreement, make sure you understand how you will hold title to your piece of Mexican paradise.


Difficulty: Moderate

Things You'll Need

  • A trustworty real estate agent, preferably from a well-known company.
  • A reputable escrow company
  • A good Notario Público (Notary Public)



Step One

If your property is located within 60 miles of the border or 30 miles from the coast, you will need a "Fideicomiso" or Mexican Bank Trust.
The Fideicomiso protects your investment by allowing the Mexican bank of your choice to act as the Trustee of the Trust and you as the Beneficiary. This means the Mexican bank or Trustee takes instructions from the Beneficiary only--you.

Step Two

The duration of the Fideicomiso is for a period of 50 years and is renewable for an additional period of 50 years.

Step Three

As the Beneficiary of the Trust, you have the right to occupy and possess the property, rent it out, build on it, add to it or make any improvements you deem necessary.

Step Four

Get a title search. Get an extensive chain of title, one that goes back more than 1 or 2 owners of record.

Step Five

Invest in title insurance. Title insurance is available by reputable U.S. title companies. Avoid unpleasant surprises.

Step Six

Use the services of an escrow company. They will hold your money in an insured escrow account until yout Trust is complete.

Step Seven

Make sure your deed of title or "escritura" has been duly recorded with the Mexican Property Tax Office (Catastro) and the Public Registry of Property and Commerce (Registro Público de la Propiedad y el Comercio).

Step Eight

Pay your property taxes each year. "Catastro" will not mail you a notice. Make sure you ask your real estate agent if you can set up an account for the purpose of paying your property taxes, as you cannot mail the payment or wire the funds from your bank in the U.S.

Tips & Warnings

  • Your property is not an asset of the Mexican Bank. The Fideicomiso is a trust agreement and is like an estate trust, giving you all the rights of ownership. The bank does charge an annual fee for its services.
  • You can name a U.S. corporation as the Beneficiary of the Trust.
  • Have the "escritura" translated by a reputable translator.
  • Until your receive your recorded "escritura" and all rights have been transferred to you, the legal owner of record is still the previous owner.
  • Do not let anyone sell you ejido land. You will never obtain a legal title for it. Ejido land is land set aside by the government of Mexico for its indigenous people. It cannot be sold to foreigners.
  • In Mexico, you cannot record transfers of title without going through a Notario Público.

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