How to Buy Real Estate in Mexico

With hous­ing val­ues falling all over Amer­ica, many savvy investors have turned their atten­tion to real estate south of the bor­der. There are already approx­i­mately one mil­lion Amer­i­cans liv­ing abroad in Mex­ico who have tapped into the poten­tial for appre­ci­a­tion in this young mar­ket. Many trends sug­gest con­tin­ued growth in the mar­ket, includ­ing 70+ mil­lion retir­ing baby boomers, an attrac­tive cli­mate and a grow­ing econ­omy. Before you jump head-first into Mex­ico real estate, there are some impor­tant things you need to know. This arti­cle will go over some of the required steps you will need to take to safely pur­chase prop­erty in Mexico.

Try Before You Buy

If you plan to make the prop­erty your first or sec­ond res­i­dence, you should spend time expe­ri­enc­ing life in that area. You may deter­mine that the com­mu­nity, loca­tion and infra­struc­ture lack what you need to live com­fort­ably. If it is an older prop­erty, have a third-party inspec­tor exam­ine it for issues that could jeop­ar­dize your investment.

Set up a Fideicomiso

The Mex­i­can con­sti­tu­tion restricts for­eign­ers from own­ing land 50 km from the coast or 100 km from inter­na­tional bor­ders. How­ever the gov­ern­ment recently amended the con­sti­tu­tion to encour­age for­eign invest­ment by allow­ing for­eign­ers to own restricted land through a 50-year bank trust called a fide­icomiso. Sev­eral major Mex­i­can banks can set up a fide­icomiso for you for a rel­a­tively low set-up and annual main­te­nance fee. A fide­icomiso will legally grant you the same own­er­ship rights of a Mex­i­can cit­i­zen, except that the bank tech­ni­cally holds the title. This means you are free to inhabit, sell, lease, ren­o­vate or bequeath the property.

Use a Third Party Escrow

Never give earnest money to an agent or seller, unless you don’t expect to get it back. Instead hire a major U.S. title com­pany that pro­vides escrow ser­vices to hold your money and trans­fer it to the seller only when they have met their obligations.

Buy Title Insurance

A title search will be per­formed by the notario pub­lico, a gov­ern­ment lawyer who is required to review doc­u­men­ta­tion of a real estate trans­ac­tion. How­ever, this pro­vides no guar­an­tee that the seller can legally sell the prop­erty to you. Title insur­ance com­pa­nies can pro­vide you insur­ance in the form of a con­tract of indem­nity, mean­ing the title com­pany will take on the lia­bil­ity if the title turns out to be invalid or if there are legal claims on the prop­erty by creditors.

Hire an Inde­pen­dent Attor­ney to Rep­re­sent You

It is highly rec­om­mended to hire an English-speaking Mex­i­can attor­ney who will work with the seller’s agent to draft the legal doc­u­men­ta­tion to include the agree­ment of sale. Real estate agents in Mex­ico are not required to be licensed to sell real estate and because con­tracts are drafted in Span­ish you may unknow­ingly sign some­thing you don’t under­stand. It would be wise to have an attor­ney to rep­re­sent your inter­ests and guide you through the proper legal processes.