how to buy in Mexico

Yes! You can own property in Mexico, and we are here to help make the process easy and understandable.

We will accompany you step-by-step and introduce you to all the people and resources you'll need to purchase your property with complete peace of mind.

Restricted Zone

In the interior of Mexico, you can buy property “fee simple” in your own name, just as you would in the United States or Canada. But Mexican law has special exceptions governing property within 31 miles of the coast and within 62 miles of the border, an area known as the Restricted Zone****. Most of the properties shown on this site are located within this zone.

Fideicomiso

After 1970, the Mexican government passed laws to permit foreigners, as private individuals, to buy property in the Restricted Zone through a bank trust or fideicomiso.

This trust initially established for a 50-year term and renewable for an additional 50, grants you, the beneficiary, every right of ownership. You may use, modify, rent or sell the property. In the event of your death, the property passes to the beneficiary you have named without the necessity for probate. The current cost of establishing a trust is about $3,500 USD, and the annual maintenance fee charged after the second year is currently about $500 USD. The initial charge of approx. $3,500 dollars covers the government fideicomiso permit fee, bank set-up fee, and one year's management fee.  Charges vary from bank to bank, and the annual maintenance fee depends on the value of the property.

Mexican Corporations and Visas

If you intend to use the property for business, it is easy to form a Mexican Corporation, and in most cases is not necessary to have a Mexican partner. The property may be purchased by the corporation and 100% owned. Costs of forming a corporation vary from $1,800 to $3,500 USD. The Mexican government currently requires monthly tax filings, so plan to pay a Mexican accountant about $50 to $100 USD a month. It is also important that the principal officers of the corporation apply for and obtain a working visa from the Department of Immigration. This process is not difficult but we can recommend legal assistance. NOTE: The Mexican government is in the process of doing away with the above requirements, but as yet, the laws are still in effect. Watch our blog for news of changes!

Financing

Traditionally in Mexico, properties have been paid for in cash. In the past year, however, banks and other lenders from the United States have begun offering to finance to Americans and in some cases to Canadians. These lenders use the house you buy in Mexico as collateral for the loan. If you think you may want to buy your house in the Yucatan using a mortgage, we suggest you obtain pre-approval before you go house-hunting. You may find you can afford a larger or more expensive home than you thought!  I recommend contacting Scotiabank's mortgage department in Merida as far in advance as possible before your visit here so you can start the pre-approval process. It remains very difficult to obtain financing in most areas. Many sellers also refuse to accept a transaction involving financing, both because of the delay and uncertainty involved and for tax reasons.

Inspections and Repairs

Here in Mexico, properties are sold "As is, where is". Sellers will generally not agree to make repairs.

We do our best to represent the properties accurately but rely on the information given to us by the seller.

We cannot be responsible for any discrepancies or representations on the part of the Seller, please consult an engineer, accountant, lawyer or competent professional to verify the information.

There are no inspection companies in Mexico as there are in the US, nor are there any required disclosures on the part of the Seller. In general, as our foundations sit on solid limestone and there are no earthquakes in this region, any defect with a property will be immediately apparent. Roofs are generally of cement, and again, leaks will be apparent. Old not remodeled houses will need rewiring and probably replumbing to bring them up to modern standards. You should know, too, that features of electrical and plumbing in houses advertised as remodeled may not be up to US standards, as there are few inspections performed by any authority, and the expertise of local electricians and plumbers will vary. We will be happy to provide list names of plumbers, electricians, etc. from which you can choose, but we are not responsible for their work!

Closing

In Mexico, normal practice is for your real estate attorney to prepare a contract (Promesa de Venta) which is signed by you and the seller, detailing the specifics of the transaction. This is done AFTER the title search, and after verifying that there are no existing liens or other title problems making the property unsaleable. At this stage, an agreed amount is paid directly to the seller to secure the sale. Should they default for any reason, they have to refund the money AND pay a penalty to you. Mexican law protects you under this legally binding agreement. If you will not be in Mexico and wish us to represent you in signing legal documents, both Promesa de Venta and or Closing, you should leave a limited special Power of Attorney allowing us to do this. The cost of having this prepared in Mexico is around $220, and it can save you a great deal of time and stress. we do not charge to represent you in this way. 

The final sales agreement will be executed by a Notario Publico, a respected attorney with special government recognition to act in real estate transactions. It is the Notario’s responsibility to review the deeds and title to the property, ensure that there are no existing liens, assist the bank in the creation of your Trust, and then to formalize the final contract of sale, draft the new deed, collect and pay appropriate taxes and record the transfer as required by law.

It is customary in Mexico for most of the closing costs to be paid by the Buyer. Costs will be based on the appraised value of the property which may be lower than the actual sales price. There is a 2% (3% in some areas) transfer tax plus attorney’s fees which will generally amount to 2-3% of the appraised value of the property. In addition, you must consider the cost of forming your Trust or Corporation.

Real estate commissions are generally paid by the Seller unless we have been retained as your Buyer’s Broker. In most cases, commissions are 5% to  6% of the sales price.

It can take as little as a week to form a corporation and close a transaction.

Formation of a fideicomiso usually takes around four weeks, as a permit must be obtained. If the property is already in an existing bank trust, this process can be expedited and costs a little less - around $2,500 to substitute your name on Bank documents against $3,500 to form a new trust. However, there can be exceptions, particularly in the case of historic (or older) properties, which can take much longer to close. When documents are very old and the title has not recently been transferred, there can be inconsistencies which have to be legally remedied before the bank can obtain a permit. Where inheritance is involved, the courts move very slowly and the system is cumbersome. In these rare cases, it is difficult to predict how long closing might take.

Ejido Land: We do not represent "ejido" property, except in rare cases where this is clearly stated. Mexican law does not permit the sale of this property to foreign buyers. In brief, ejido land is owned in common by villages and towns. While the law does now permit its sale, the conditions vary and the purchase even by a Mexican citizen should be handled by a capable attorney familiar with the process!