Buying Property in Mexico FAQ
WHAT TO KNOW BEFORE YOU BUY
For many, owning property in Mexico is a dream—whether it's a beachfront villa, a vacation home, or an investment property. However, buying real estate in Mexico is different from purchasing in the U.S. or Canada. Understanding the process can help ensure a smooth transaction. Here are the most frequently asked questions to guide you through buying property in Mexico.
1. How long does it take to close a real estate transaction in Mexico?
Typically, closing a real estate transaction in Mexico takes between 60-90 days. However, delays can occur due to processing times with trustee banks, permits, and other administrative requirements.
2. What is a Notary Public in Mexico, and what role do they play?
A Notary Public (Notario) in Mexico is a highly specialized attorney appointed by the government. Unlike in the U.S. or Canada, a Mexican Notary has significant legal responsibilities, including verifying the legality of the transaction, authenticating documents, and ensuring all taxes and fees are correctly paid. The Notary is essential in finalizing real estate transactions and registering the property with the Public Registry (Do not expect speed in their process.)
3. What is a Fideicomiso, and why do foreigners need one?
In Mexico’s "restricted zone"—within 100 kilometers (about 62 miles) of the border or 50 kilometers (31 miles) from the coast—foreigners cannot directly own land. Instead, they must use a Fideicomiso, a bank trust that grants all ownership rights while the bank holds legal title. This allows the buyer to sell, lease, improve, and pass the property to heirs just as they would with fee-simple ownership.
4. Who is the trustee bank, and does it affect ownership?
A trustee bank manages the Fideicomiso but does not own the property. Even if the bank faces financial trouble, the property is protected under Mexican law and transferred to another trustee. Some banks may provide better service than others, so selecting one with a local office can make the process smoother.
5. Do I need to be in Mexico for the closing?
Not necessarily. Buyers and sellers can grant a limited power of attorney to handle closing remotely. Any documents signed outside Mexico may need to be apostilled or certified, depending on the country of origin. E-sign is now used more widely as long as an ink signature is obtained ASAP.
6. When do I take possession of my new property?
Unless otherwise agreed upon, possession occurs once the title is transferred and funds are released from escrow.
7. How should I title my property?
Buyers can title property in their individual names, jointly, or through legal entities such as an LLC. However, family trusts are no longer widely accepted by trustee banks. Consulting a tax or legal professional can help determine the best option for your situation.
8. Can I purchase property through a Mexican corporation?
Yes, but only if the property is for commercial use or investment purposes. Residential properties cannot be held in a corporation unless they generate income. Consulting with both U.S. and Mexican legal and financial advisors is recommended before taking this approach.
9. How does escrow work in Mexico?
Unlike in the U.S., escrow is not a standard practice in Mexico. However, many buyers use third-party escrow services to ensure a secure transaction. The funds remain in escrow until the Fideicomiso is signed and recorded.
10. Who facilitates the closing process?
The Notary is the final authority in the transaction. However, buyers often work with real estate agents, attorneys, and closing coordinators to ensure all paperwork and payments are properly handled.
11. Should I purchase title insurance?
Title insurance is highly recommended as it provides financial protection in case of legal disputes over ownership. While not mandatory, it offers peace of mind.
12. Do I need a lawyer to buy property in Mexico?
While not required, hiring a Mexican real estate attorney can help protect your interests and navigate the complexities of the transaction.
13. When will I receive my official title?
Once the title is signed by all parties (buyer, seller, Notary, and trustee bank representative), ownership is transferred. However, it takes about three months for the Notary to officially register the title.
14. What is the Public Registry?
The Public Registry records all real estate transactions, making them legally recognized. The Notary ensures the new title is properly recorded.
15. Is my personal information public?
Only the owner's name is public. Other personal details remain confidential under Mexican privacy laws.
16. What is an Apostille, and why is it needed?
An Apostille is an official certification required for foreign documents to be legally recognized in Mexico. It verifies the authenticity of signatures and seals.
17. What is ISABI?
ISABI (Impuesto Sobre Adquisiciones de Bienes Inmuebles) is Mexico’s real estate acquisition tax, typically 2% of the registered value of the property. It is paid at closing.
18. How are property taxes paid in Mexico?
Property taxes (Impuestos Prediales) are relatively low in Mexico and must be paid annually. Discounts are often available for early payments in January or February.
19. How do I pay annual trust fees?
Trustee banks charge annual maintenance fees ranging from $464 to $812 USD, depending on the bank and services. These fees can be paid via wire transfer.
20. Does it matter which trustee bank I choose?
While all trustee banks operate under the same regulations, having a local trustee officer can simplify administrative processes, making transactions and future modifications easier.
21. Are properties held in trust considered assets of the bank?
No. The property belongs to the trust’s beneficiary, not the bank. If the bank ceases operations, the trust is transferred to another institution.
22. Are Mexican real estate taxes deductible in the U.S.?
Under the Treaty to Avoid Double Taxation, certain taxes—such as capital gains—may be credited in the U.S. Buyers should consult their tax advisor for specific deductions.
23. Can I renew my Fideicomiso when it expires?
Yes. The trust is initially granted for 50 years and can be renewed for another 50. After 100 years, a new permit must be obtained.
24. What is an Assignment of Rights?
An Assignment of Rights (Cesión de Derechos) allows a buyer to take over the seller’s existing Fideicomiso. This option can reduce closing costs and speed up the process.
25. Does my attorney need to be present at closing?
Not necessarily. Many attorneys oversee the process remotely, but buyers can grant them power of attorney if needed.
26. Will my Fideicomiso be in English?
No, the official document is in Spanish. A certified translator can provide an English copy if needed. Many documents are LEGAL Spanish on the left side and “COURTESY” English on the right side. Spanish prevails.
27. Can I pass my property to my heirs?
Yes, you can designate beneficiaries in your Fideicomiso, allowing a seamless transfer of ownership upon your passing.
28. Who pays closing costs?
Typically, the buyer pays closing costs, while the seller is responsible for capital gains tax and any legal fees they incur.