Questions - and answers - about buying property in Mexico
Q: Are foreigners permitted to own land in Mexico?
A: The Mexican Constitution forbids direct ownership by foreigners within 31 miles of the coast or 62.5 miles from the borders. However, non-citizens are permitted to buy on a trust basis. In this type of purchase, a bank is the trustee of the real estate, and the beneficiary (the buyer) has all the rights to use, enjoy and sell the property, and is considered the owner of record. The trust is established for 50 years and can be renewed for additional 50 year periods.
Q: How does the purchase process work for foreigners?
A: After you make the decision to buy, a first-class public notary of your choice should take charge. (Notaries in Mexico have a much broader role than they do in the US.) It is customary for the buyer to select the notary. Then a promise of sale valid for a period of 45 days is drawn up between the buyer and seller. During this time, a bank trust is opened and the Public Registry of Property is checked to make sure that the property has NO liens or encumbrances and that the title is in good legal standing.. The notary does all this and also presents the application to the Ministry of Foreign relations when the buyer is a foreigner. If everything is clear, the sale takes effect.
Q: What happens if a foreign owner (beneficiary) decides to sell?
A: He may do so at any time, and he may profit by the increasing value of the property over that period.
Q: Can the foreigner rent or sublet his property under the terms of these trusts?
A: Yes, he may rent to anyone he desires, keeping the rent for periods not exceeding ten years at one time.
Q: What happens if the beneficiary dies?
A: At the time the trust is set up, a substitute beneficiary is named. This person has the same rights as the first beneficiary in case of his own death. No Will needs to be probated in this case.
Q: How much does it cost to buy property through a trust?
A: There are expenses for the authorization from the Ministry of Foreign Affairs, the registration in the Registry of Foreign Investments, and the fees of the public notary. The bank charges one percent of the amount of the transaction for the preliminary studies and the drawing up of the agreement. The total expenses for the transaction usually run between $5,000US and $8,000US. In addition, there is a yearly flat fee of $500USD charged by the bank for its services as trustee over the property, and nominal local property taxes.
Q: What are the responsibilities of the beneficiary?
A: He must pay the annual trust fees punctually. Also, he must pay property taxes, water, and other utility bills when due.
Q: Can foreign investors come to Mexico and buy an established industry?
A: Yes!!! As long as they acquire forty-nine percent or less (49%) of that corporation, there is no permit needed.
Q: What activities are reserved to Mexican citizens?
A: The new law dictates that in radio and television, urban and inter-urban transportation, gas distribution, and forestry, only Mexican individuals, or Mexican corporations with a clause that forbids any foreigners to own shares, can participate.
Q: Which are the activities where capital is welcome?
A: In almost everything else.
Q: Are the percentages to be owned by foreigners inflexible?
A: No. In those fields where foreign investment is permitted the National Commission on Foreign Investment might decide to increase the percentage if it is in the national interest.
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