Information to buy property in Mexico
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FREQUENT QUESTIONS
First. Property Acquisition in Mexico
Foreigners can acquire properties directly within Mexican territory. However, foreigners cannot acquire ownership of properties within a strip 100 km from the border or 50 km from the coast. This area is known as a restricted zone.
However, there is a process in Mexico that allows non-Mexicans to acquire properties within the Restricted Zone, providing great protection and is very similar to full ownership. This process consists of the constitution of a trust formalized with a Mexican banking institution.
Through said trust, the buyer will be designated as the main beneficiary and in turn may designate substitute beneficiaries in the event of death, thus avoiding hereditary procedures after death.
Likewise, the bank trust has a duration of 50 years, renewable for the same period of time. So, before its expiration, the trust bank will notify that it is time to extend the term for another 50 years.
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2. Can I acquire in co-ownership?
Yes. In the trust, both co-owners will be designated as main beneficiaries. It´s common that such co-owners designate themselves as substitute beneficiaries, and they can also designate other 3rd parties, such as their children, as substitutive beneficiaries in the event of death.
3. Can I acquire through an LLC?
Yes, the trustee bank would designate the LLC as the main beneficiary of the trust. However, since the LLC is a foreign entity, there are additional requirements for such an LLC to conduct business in Mexico.
4. If the bank holding my trust ceases doing business, is there any risk of losing my property?
No. With the assistance of the Mexican Banking Commission, the trustee bank would be replaced by another.
5. What are my closing costs?
Closing costs are typically paid by the buyer and vary on a casa to casa basis, depending on the purchase price, and are usually between 5% to 9% of the purchase price. Closing costs, include notary fees, government taxes and duties, trustee bank fees, government permits, among others.
The seller is responsible for the Capital Gains Tax, any unpaid utilities, and property taxes. Such fees must be paid upon or prior to closing. We will make sure that all items are paid, in order for the buyer to receive a clean title.
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6. What is the role of the Notary Public in Mexico?
The notary public is a government appointed official. Part of his responsibility is to calculate, retain and pay taxes on behalf of both the buyer and the seller at closing. The notary public will issue a deed by means of which the real estate transaction will be formalized, and this document is recorded in the Public Registry.
7. Property taxes.
As a general rule, property taxes are very low in Mexico. Property taxes vary according to the jurisdiction in Mexico in which your property is located. Taxes are paid annually, with the assessed value being determinate at the time of the sale and based on the purchase price.
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8. Do I need an attorney?
Yes, the real estate transaction is subject to the execution of multiple legal documents, therefore it is important to have a real estate attorney to guide and advise you during the process. We have a experienced team real estate attorneys that would assist you during the transaction.
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9. Once I´m an owner, how do I transfer title?
As the main beneficiary of the trust, you would instruct the trustee bank to:
i) Extinguish the trust and transfer the title if the buyer is a Mexican National, or
ii) Assign the rights of the trust agreement to a foreign buyer.
The next steps:
Find your property and submit an offer.
If the offer is accepted:
> Conduct due diligence in order to verify that the property is in good legal standing,
> Draft the escrow and purchase agreement in both Spanish and English,
> Coordinate with the notary public and the trustee bank the draft of the deed that will contain the trust,
> Receive funds in escrow,
> Set a closing date to execute the deed,
> Release funds from escrow once the terms and conditions agreed by the parties are met,
> Deliver a certified copy of the deed.
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What are the documents that I´m expected to provide for the transaction?
Application form
Copy of passport & drivers license
Copy of a proof of address (not older than 3 months)
KYC (Know Your Costumer) document
Entry Visa at closing.
Source: Secure Title. Latin America. Since 1997.
Article 27 of the Constitution of the United Mexican States
In Conclusion,
It is for all this that the entire Riviera Maya and the Yucatan Peninsula are creating many opportunities for true investors who understand the business of investing in studios, apartments and houses for long-term rentals or for tourism since they know that they can obtain a good return on investment by putting your properties to work, adding to this the super added value that the properties acquire over time, their surplus value… READ MORE…
There are many reasons to invest in Riviera Maya. Above all, it is your choice.
Meanwhile start planning your trip to Riviera Maya. Hope you see you soon.
After that we will take a cocktail in front of the sea ; ).
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