Frequently Asked Questions


Owning Property in México

How do you purchase property in Mexico?

Since 1973, non-Mexican citizens have been able to purchase property in México, with only coastal and border properties owned through a trust deed established with a Mexican bank. Foreigners may directly own rural or urban land in the interior of México, with certain limitations on specific agricultural tracts.

Financing

Real estate transactions in México are generally cash transactions, with limited cases of owner financing available. The. high cost of money (interest rates) has made financing properties unattractive to many. Until recently, there has been an absence of mortgage company services in the area. There are now a few foreign companies or investors making medium term loans available. You may wish lo investigate this.

Trust Deed Ownership in México

How does the trust deed work?

The bank (known as the trustee) holds the trust deed for the person who is purchasing the property (known as the beneficiary). This property is not part of the banks assets and cannot be subject to a lien or attached for bank obligations. The beneficiary has all ownership rights to the property and may sell, lease, mortgage, pass to heirs, etc.. or do any other legal thing with the property .

Why trust deed ownership?

The trust agreement was established by the Mexican government for foreigners interested in owning property in México. It has the benefit of the bank overseeing the deed. A further benefit has been that co-owners can be listed on a trust deed using solidaridad activa. Upon the demise of one, the property automatically goes to the other and probate is avoided. The importance of the designation can not be understated as this allows either party to sell the property and does not require the agreement and signature of all parties. Another advantage is that a beneficiary can be named, which also avoids probate. This beneficiary may be unrelated to the owner.

How long does the Trust Deed last?

As of 1994, trusts may be granted and extended in 50 year periods. If you purchase property currently held in a trust deed, a new 50 year period can be established or the existing trust deed may be assigned. Trusts are renewable at any time by simple application. Multiple properties may be held in one single trust.

It was never the intent that the properties pass back to the government at the end of the trust period, which has been a common fear of purchasers. This does not happen.

Trustee Fees

There is an annual fee charged by the trustee bank for management of the trust. The amount charged varies. Ask your real estate professional for current bank fees.

How are these trust deeds established?

The fideicomiso or trust is established by a Notary. In México, the designation of an attorney, known as a Notary represents a high level of legal standing, and their services are required for the transfer of real estate. Because of the large number of foreign owned properties in México, and especially in areas such as Ajijic, establishing a trust has become a routine procedure. It is not a complicated process, and standard forms are utilized. As part of the escrow process, your real estate professional will assist you in your dealings with your notary.

Direct Deed Ownership

The deed is the history of the property and will indicate who is the legal owner. The Direct Property Deed (Escritura Pública en Dominio Directo) is outright ownership of the property. The buyer is listed on the deed as the direct owner. There is no yearly or administration fee, as there is with a bank trust. However, with a Direct Property Deed there is a process of application for each foreigner who is registered on the deed. The process of giving a notice for a direct deed to Relaciones Exteriores takes a minimum of 8 days and is taken care of by the buyer´s notary of choice.

As of September 1995, a beneficiary can be designated in a Direct Property Deed. Probate is no longer automatic with a Direct Property Deed and a will is not essential to pass on the property when an owner of record dies. A beneficiary in a Direct Property Deed must be a spouse, parent or offspring. For all property owners a Mexican will is strongly recommended. A notary can help you structure your will.

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