It is a common misconception that foreigners cannot own Real Estate
in Mexico, but the reality is that they can. However, there are restrictive
zones, as described below, and we have to consider the following alternatives:
Outside the Restricted Zone, a foreigner or foreign corporation can
acquire any type of real estate as any Mexican National, holding the
property as a direct owner complying with Mexican law.
Within the Restricted Zone, a foreigner or foreign corporation may obtain
all the rights of ownership but it must be in a bank trust known as
Another alternative is to purchase non-residential property through
a Mexican corporation which can be, under certain conditions, 100% foreign-owned,
with a provision in its by-laws that the foreigners accept to be subject
to Mexican laws and agree not to invoke the laws of their own country.
Also, that the real estate acquired be registered with the Foreign Affairs
Ministry and is used for non-residential activities. In other words,
under said conditions, foreigners can acquire, directly, properties
destined for tourist, commercial and industrial use.
The Restricted Zone
The Mexican Constitution regulates the ownership of the land and establishes
that "...in a zone of 100 kilometers along the border or 50 kilometers
along the coast, a foreigner cannot acquire the direct ownership of
the land." These areas are known as the "Restricted or Prohibited
Zones". Nevertheless, the latest Mexican Foreign Investment Law,
which became law on December 28, 1993, makes the allowances mentioned
or Bank Trust:
Any foreigner or Mexican National can constitute a Fideicomiso (the
equivalent to an American beneficial trust) through a Mexican bank in
order to purchase real estate anywhere in Mexico, including the Restricted
Zone. To do so, the buyer requests a Mexican bank of his/her choice
to act as a trustee on his/her behalf.
The bank, as a matter of normal course, obtains the permit from the
Ministry of Foreign Affairs to acquire the chosen property in trust.
The Fideicomiso can be established for a maximum term of 50 years and
can be continually renewed every 50 years. During these periods you
have the right to transfer the title to any other party, including a
member of your family.
The bank becomes the legal owner of the property for the exclusive use
of the buyer/beneficiary who has all the benefits of a direct owner,
including the possibility of leasing or transferring his/her rights
to the property to a third party or to a pre-appointed heir. During
this period, the foreigner is considered as a Mexican National.
The trustee is responsible to the buyer beneficiary to ensure precise
fulfillment of the trust, according to Mexican Law, assuming full technical,
legal and administrative supervision in order to protect the interests
of the buyer/beneficiary. Fideicomisos are not held be the trustee as
an asset of the bank.
For practical purposes, even in unrestricted zones many foreigners and
Mexican Nationals, for that matter, prefer to hold their property under
Most real estate transactions are "opened" after a written
purchase offer is accepted by the seller and when a purchase-sale agreement
(promissory contract) is signed by both parties. In most cases, a deposit
is required by the broker in order to transmit the offer to the seller.
If the transaction is being conducted directly with the seller, it is
highly recommended that a real estate broker or a lawyer be consulted
before signing any papers or handing over any money.
In some areas it is common practice to deliver to the seller, as an
advance payment, the equivalent to a 20-50% (including the initial deposit)
of the total price upon signing the purchase-sale agreement which should
contain a penalty clause applicable in case there is a breach of contract
by any of the parties.
Normally, when signing the escritura or official deed, which needs to
be certified by a Notario Publico or notary public, the balance is paid
and the property is delivered. This should not take more than 45 days.
In certain resort areas the custom of using "escrows" is being
Publico or Notary Public
The Notario Publico is a government appointed lawyer who processes and
certifies all real estate transactions, including the drawing and review
of all real estate closing documents, thus insuring their proper transfer.
Furthermore, all powers of attorney, the formation of corporations,
wills, official witnessing, etc. are handled and duly registered through
the office of the Notario Publico, who is also responsible to the government
for the collection of all taxes involved.
In connection to real estate transactions, the Notario Publico, upon
request, receives the following official documents, which, by law, are
required for any transfer:
nonlien certificate from the Public Property Registry based on a complete
statement from the Treasury or Municipality regarding property assessments,
water bills, and other pertinent taxes that might be due.
appraisal of the property for tax purposes.