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Tips for Buying Real Estate in Mexico as a Foreigner

Are you a foreigner from the United States, Canada or Europe thinking of buying real estate in Mexico? Then you have come to the right place to find the top tips for buying real estate in Mexico as a foreigner.

First off the bat, please note that buying a house in Mexico will not be the same experience as buying a house in the United States or Canada. This is because you are buying a house in a different country, and the procedures for gaining ownership of a property depend on which zone you plan to purchase the property. Just keep in mind that the buying experience will be different—not necessarily a bad or great alternative—just not one you are used to.

Get Familiar with the Mexican Bank Trust System

If you are going to be interested in owning real estate in Mexico, then you probably need to be familiar with the Mexican bank trust system (also known as the Mexican “fideicomiso”) and the definition of the “restricted zone,” which refers to the geographical zones covering 62 miles from the nation’s border and the space within 31 miles of the coastline.

What’s the story with the fideicomiso in Mexico?

Well, here’s a little history behind the zone restrictions for foreigners owning Mexican real estate. The Mexican Constitution of 1917 banned the acquisition of “fee simple” property title for foreigners in locations found within 62 miles of any Mexican border or 31 miles of the coastline. In the 1970s, Mexican businesses with foreign capital were allowed by the Foreign Investments Law to own property titles for buildings used for business affairs. However, there was still no provisions made for the ownership of non-commercial properties until 1994. It was during that time that national reforms revised the real estate restrictions and granted Mexican businesses with foreign capital access to owning “fee simple” titles to real estate found in the restricted zones.

Since the provision was given to Mexican businesses with foreign capital to hold commercial properties in 1994, the Mexican bank trust system has been revised and has now established a law that will allow foreigners (individuals and Mexican business entities with foreign investors) to buy and hold titles for real estate properties within the “restricted zone” for non-commercial (or residential) purposes. As long as the use of the property remains in accordance with the law’s allowances, the ownership is perfectly legal.

Is the fideicomiso safe?

Usage of a Mexican bank trust (or a Mexican fideicomiso) gives people who are not native Mexicans the permission to purchase real estate in the “restricted zone” if the buyer lets the real estate property be held in a Mexican bank trust. This establishes the bank as a Trustee or Fiduciary of the property, which means the Mexican bank is the actual property title holder and not the foreign entity. Making the Mexican bank the fiduciario (or trustee) upholds the provisions made in the Mexican Constitution.

The agreement provided by the bank identifies the bank as title holder, but it also allows you to act as the beneficiary of the property. This means you have permission to enjoy the property as you see fit—meaning you can rent, renovate, or sell the property if you desire. So, whoever actually buys the property will have rights of the beneficiary in the trust agreement. The Mexican Bank gets a fee for the trust contract and gets paid a trust maintenance fee annually by you. The trustee does not have provisions in either the trust agreement or Mexican law to give beneficiary rights to someone else or transfer its role as trustee to someone else without your written permission.

So, you can see, that buying real estate in Mexico as a foreigner is not quite a scary as you might think!