LEGAL & TAXATION
Foreigners are able to purchase property in Mexico’s inland by purchasing ‘fee simple’, meaning that you purchase the title directly. It has only been in recent times that the Mexican government has opened its doors to foreigners being able to purchase property in Mexico’s ‘restricted zones’. Article 27 of the Mexican Constitution states that "....in a zone of 100 km. (62 miles) along any border or 50 km. (31 miles) along the coast, foreign entities cannot acquire direct ownership of the land and waters". In these areas property must be purchased by foreigners through a trust called a Fideicomiso, which the Mexican government introduced as a series of Foreign Investment Laws begun in 1973, and later modified in 1989 and 1993, in order to attract foreign investment and further improve the economy.
For residential property purchases, the Fideicomiso is held in trust by a recognized Mexican bank in the creation and establishment of an independent land trust. The bank, as trustee, is responsible for the correct completion and filing of all necessary documentation and permits to the Ministry of Interior and Foreign Affairs, and for the fulfillment of the Trust Agreement. The property is held in trust by the bank for 50 years, when it can be renewed again for an unlimited amount of time. The bank owns the legal rights to the property, and the purchaser owns the personal usage rights to rent, modify or transfer the property on. A deed prepared by a Notary, signed by the trustee, and registered with the local authorities, is evidence of these personal usage rights to the purchaser. The trust is indirectly guaranteed by the Mexican government, as Mexican law protects banks against bankruptcy, and all real estate transactions involving a trust are governed by federal law, which means that the process for purchasing property anywhere in Mexico is the same. Purchasing property in trust is a popular, and often preferred, method of buying in Mexico, even when purchasing outside the ‘restricted zones’.
The purchase, or sale, document includes either the deed of rights or the transfer of rights, a description of the property, the purchase price, and any special terms and conditions of the sale. The document does not provide valid notice to any third party until it has been recorded and registered in the Public Registry Office of the municipality where the property is located. It is not until the title rights have been formally transferred and registered with the Registry Office by a Notary, that the purchaser will actually gain the legal rights to the property.
In order to ensure correct registration of a property purchase, the following is required:
- an official appraisal of the property
- notarized bank instructions
- property tax certificate
- capital gains tax to be paid by the seller
- buyer acquisition tax to be paid by the purchaser
- registering and stamping by the Treasury (tax office) and the Public Registry of the deed transferring rights to the purchaser
The real estate industry is not regulated by the Mexican government, so it is very important to ensure you use a reputable real estate agent, a known bank, and seek advice from a registered Mexican Attorney.
Legal & Taxation 
