Yes, You CAN Own Property In Mexico!
In Mexico, there are two ways to own property as a foreigner: 1) having a deed to the property; or. 2) obtaining beneficial rights to the property through a Fideicomiso. Both ways provide title protection to purchasers. However, there is no such thing as a 99-year lease!
In 1973, recognizing that many foreigners desired to own property in Mexico, President Echeverria approved the “Fideicomiso” form of foreign ownership of real estate; the “Fideicomiso is available to non-Mexicans. It is similar to a U. S. Bank Trust. The law governing ownership under a “Fideicomiso” was further expanded in the Foreign Investment Laws of 1989 and 1993.
Prior to 1973, ownership laws were different: Article 27 of the Constitution of the Republic of Mexico prohibited foreign ownership of real property within 50 kilometers of any coastline or 100 kilometers of either international border. This is referred to as the “restricted” zone. If the property you are buying is located outside of the restricted zone, you may own the property through a deed in your name.
Consequently, properties located within the restricted zone (including the entire Baja Peninsula) may be acquired by a foreigner through the “Fideicomiso”, which designates the buyer of the property as the beneficiary of the trust. Legal title is placed in the name of the bank, selected by the buyer as his/her trustee. The bank administers the property in accordance with the instructions of the buyer/beneficiary. The buyer/beneficiary enjoys the same rights of ownership of a Mexican National. The buyer may build on the property, tear down existing buildings, modify them, rent, lease or sell at anytime, conforming only to the general laws of the country established for all persons.
The duration of the “Fideicomiso” is fifty years; however, it can be renewed for unlimited, additional, fifty-year periods. In other words, title to the property may rest in the beneficiary indefinitely, provided that it is renewed within the terms established by the law.
The procedure for establishing the “Fideicomiso” is as follows:
1. Application is made to the Secretary of Foreign Relations for the permit to establish the “Fideicomiso”.
2. Upon receipt of the permit, the bank acting as the trustee sends instructions to the “Notario Publico” for preparation of the deed to the beneficial rights.
3. Applicable taxes are paid.
4. The deed is recorded in the municipality where the property is located.
The cost for the permit to establish the “Fideicomiso” is (as of 12.01.06) approximately $2,400 USD. Annual bank administration fees generally range from $450 to $500 USD. Additional closing costs, such as an official appraisal, notario (attorney) fees, certificates, and registration costs must be paid for processing all required documents.
Prior to commencement of your purchase transaction through Land’s End Realty, you will be provided with a written estimate of all of the closing costs involved in your property purchase.