F.A.QsHere is a collection of frequently asked questions that I have put together to help you in buying or selling a home. If you have any other questions, not listed here, feel free to call or send an e-mail.
By clicking on any of the questions below, you may view the answer.
Yes! Foreigners can obtain property rights in the Restricted Zone i.e. Mexican coastal and border areas through the Fideicomiso (Real Estate Bank Trust).
As a Foreigner, you can acquire irrevocable and absolute ownership rights to property in Mexico's Restricted Zone through a 50 year perpetually renewable and transferable Real Estate Bank Trust called a “Fideicomiso.” This trust is the legal equivalent for deeded ownership (commonly referred to in the U.S. as fee simple) and is provided specifically for non-Mexicans to have property in the border and coastal areas of Mexico. The bank trust system is the ONLY legal way for Foreigners to own residential property in the Restricted Zone that is sanctioned by the Mexican government, and provided for under the Mexican Constitution, thereby offering protection for your interests.
The Mexican Government issues an SRE permit to the Mexican bank we choose to work with. Clear, lien-free title to the property is then delivered to that Mexican bank, authorized to act as the trustee designating you as the beneficiary of the trust. The bank acts like an employee of the beneficiary (you) in all transactions involving the property. The beneficiary (you) retains the use and control of the property and makes all decisions concerning the property. You have the same “bundle of rights” as owning property with fee simple title. You have the right to use, enjoy, lease, improve, mortgage, sell, inherit and will the property.
Some people have chosen to accept title through a Mexican Corporation, thereby holding title as Mexican entity. Technically if you are purchasing property as an investment (i.e. rental property, multiple properties, a partnership, or future development) you should hold title through a corporation. Many Foreigners have been advised that by holding title through a Mexican Corporation, you can save time and money vs. a fideicomiso. What is not disclosed is that a Mexican Corporation is legally obligated to file taxes monthly, with the filing done by a certified Mexican Accountant, among other obligations. Also, holding title through a corporation significantly changes your capital gains taxes should you decide to sell the property. Please consult an accountant or attorney to discuss the best options for your tax situation.
Once an agreement is reached between Buyer & Seller and a Promise of Purchase Agreement is signed by both parties, the next step is the Closing Process. The Buyer applies for a Permit from the Ministry of Foreign Affairs (SRE permit) which comes from Mexico City. Once the permit has been approved, an Official Land Survey and Certified Appraisal is ordered. At this time 2 No Liens Certificates are also ordered from the Property Tax Office and Water Company (CESPM), ensuring the property has no encumbrances prohibiting the sale and transfer. Once the permit is approved and all the official documents are ready, the next step is to present all of the paperwork to the Notario Publico. It is the Notary's job to oversee the transaction, collect all applicable fees and taxes, and document the sale.
When this step is completed, the transaction is recorded in the Public Registry Department (RPPC). Once the Public Registry (RPPC) is finalized, the Buyer will receive their completed fideicomiso, which is a document about 70 legal sized pages, printed on both sides in Spanish. The time frame for the entire procedure can be as little as 45 days up to several months, depending on the property.
Yes there are! If you are purchasing a leased property, the campo administration will charge a fee to change the names on the existing lease, or to issue you a brand new lease agreement.
For fideicomiso/escritura (Mexican Title) transactions, all buyers must pay a 2% buyers acquisition tax, No-Lien Certificates, Appraisal, and Survey fees. There are also fees for the Public Registry, The Publico Notario fees, plus the IVA tax to be accounted for. Some of the fees are set while some are a percentage based on appraisal/sale value.
This is one of the most misunderstood aspects of Mexican Real Estate. Many people don't know that in Mexico, the only legal lease is for a maximum 10 year period. Additionally, the Mexican Government only recognizes lease contracts that are in Spanish and Notarized by a Mexican Notario Publico. Most campos in San Felipe offer 5 or 10 year leases, depending on the landowner. For example, Pete's Camp and Campo Ocotillos both offer 10 year leases. Campo Ocotillos goes the extra mile for residents by legally registering the lease agreements for your protection.
Please remember as a Foreigner you do not get title to your leased property. Should the landowner decide to sell the campo, or not renew your lease agreement you will lose your lease rights, unless specified otherwise in your notarized contract.
Another confusing issue is Ejido properties. For a indepth explanation of Ejido land, please visit the MLS Baja website here: