Mexican law allows private ownership of land by foreigners.
Property can be purchased and owned outright for residential use by foreign nationals outside the 100Km restricted land border zone, or outside the 50km coastal zone. Inside the restricted zones foreign nationals may own land through a fidecomiso (a trust) has to be set up through a bank and provides ownership of the land and property in all but name.
These land trusts where introduced by the government so that foreign nationals could invest in property inside of the restricted zones.
The trust holds the deeds to the property and you or other named persons, whom you specify, are the sole benefices to the trust (property). Even through the property is bought through a trust you will still have full rights to do whatever you wish to the property.
This includes renting, developing, leasing or selling the property. The trust allows you to name a beneficiary upon your death. This person does not have to be a resident of Mexico in order in inherit the property.
You do not need a Mexican will in order for your wishes to be fulfilled as the property trust does this for you.
Title insurance.
When purchasing a property in Mexico you will need to have title insurance in place. This insurance covers you should the property turn out to have any previously unforeseen liens or charge bought against it before you take possession of the title deeds.
Notary public/ lawyers
In order to purchase a property in Mexico you will need a notary public. Unlike the UK a notary public in Mexico is appointed directly by the state governor. The notary public has the power to witness and certify important business documents. Under Mexican law the deed to the property must be prepared by the notary public.
The purchaser of the property has the right to choose the notary public. The notary public will ensure they all documentation and permits are in order so that the transaction can proceed.
The notary public or lawyer will runs a series of checks on the property. These checks will make sure that the property has no unpaid mortgage and that the property you are buying has a clean history. They will also check that all the taxes and utility payments are up to date.
Be aware that under Mexican law liens are passed on with the title of land. This is why title insurance should be used.
Outline of property purchase.
Once you have agreed a sale and negotiated a price the following will take place…
- Convenio de Compra/Venta (sale agreement). This initial sale agreement will be set up, once this has happened you will be expected to pay a small deposit ( normally between 5% - 10% of the property value) and cancellation charges are set, should either party withdraw from the sale. These cancellation charges are normally around the same cost as the deposit.
- If the property is inside the exclusion zones then at this point you will need to set up a trust.
- You will need to seek permission from the foreign secretary’s office to buy the land. This is a very small formality and usually has no repercussions. You will be asked to signs what’s called a Calvo Clause. The clause states that you will not seek foreign jurisdiction in dealing with the property transaction.
- When buying from a large developer, the Notary public who will ensure that all of the developers permit's are in order.
- Obtain a copy of either the land or property deeds from the seller. The Notary will check the deeds out.
- If buying Avaluo (land) the notary is required at this pint to do a full appraisal of it.
- Your notary or lawyer will request official documents from you. These can include your birth certificate, marriage certificate, visa (or tourist permit), photo id (passport). This is so that you can prove your stay in Mexico is legal.
- The seller of the property has to present to the notary documents these include, original title deeds, up to date tax receipts and utility bills and up to date details of land service fees.
- Capital Gains Tax (CGT) is paid by the seller. The Notary will state how much this is.
- Payment is made at the same time as the deed is signed over to you. This will be done at the Notary’s Public Office.
- The lawyers/ Notary public fees are paid at the same time as the are taxes. Both will be have to be paid at the time of completion. On average you should expect the property purchase process to take at least 3 months.
If you would like more information about living, owning or buying a property in Mexico, then please feel free to contact us.