The Purchase Process a Property in Mexico, Step By Step

Keep in mind that most of the processes described here will be done by the notary, working with your agent. All you really need to do yourself is sign the documents and write a check for the fees.

# 1. Make an Offer and Come to Terms on a Price
This is usually done verbally, either with the seller or through your real estate agent.

# 2. Sign The Sales Contract
This can be called a promesa de compra venta, convenio de compra venta, or contrato de compra venta, depending on local custom. Here is where you document the price and specify the terms and conditions of the sale, including any special payment arrangements and penalties for default.

# 3. Pay A Deposit
Normally, this will be 5% to 25% of the sales price.

# 4. Initiate Creation Of The Fideicomiso If The Property Is Within The Restricted Zone
Alternatively, you can transfer the previous owner’s fideicomiso into your name. This can save you time and money, but a transfer does not reset the 50-year clock… the fideicomiso will need to be renewed 50 years from the time it was originally created.

# 5. Obtain Permission To Complete The Purchase From The Foreign Secretary’s Office
You will be asked to sign a statement indicating that you will not seek foreign legal jurisdiction in dealings with your property transaction… in other words, Mexican property law will govern.

# 6. Conduct The Title Review And Get The Official Valuation (Called Avalúo)
Once again, the notary will perform or arrange these activities. The valuation will be used to establish the home’s value for tax purposes… so the age-old practice of underreporting the sales price will not work here.

#7. Sign The Escrituras
Sign the escrituras at the notary office, and make the closing payment. When signed and recorded, this escrituras will be your title to the property.

# 8. Pay Taxes, Collect Fees, And Initiate The Property Registration
All of this is done by the notary. You’ll just need to hand over the money.

# 9. Final Registration
Final registration in the property registry will be completed and recorded within three months.

# 10. Closing Costs
Closing costs should be about 5% or 6% of the purchase price. This includes a 1.5% notary fee, transfer tax, purchase tax and a few other odds and ends, including the fideicomiso setup fees. This will be higher if you get a mortgage. (some restrictions may apply).

Don’t Buy In Mexico without Being Aware Of These Issues

Here are a few things you should know about buying in Mexico… ways in which Mexico is different from what you might expect.

A.- Prime, Oceanfront Ejido Land… Why It’s Mexico’s Best Bargain
Without the issue of Ejido land (pronounced eh-HEE-doh) there wouldn’t be anything exciting to talk about when it comes to buying Mexican real estate.

Ejido land is the source of almost all the stories you’ve heard about confiscation of property from foreigners in Mexico. Ejido land can be a terrific bargain, because after buying it, it’s not really yours.

Ejido land is communal agricultural land, which was granted to a community… often an indigenous community. Much of this land, while not worth that much at the time, is now prime, sought-after beachfront property.

In order to buy some of it, you would need the approval of 100% of the community members, separation of your parcel from the ejido, and conversion of that parcel to a freehold title. (And that’s over-simplified… simply identifying the community members and their descendants who should have a vote can be hard.)

Converting ejido land to private ownership is a complicated and difficult process… which is why so many have ignored doing it legally, resorting instead to bribing officials, falsifying records, or just hoping no one will say anything down the road.

There are, however, reputable legal firms in Mexico or our legal department who specialize in converting ejido land into land that can be sold via a freehold title. If you feel you’ve got an irresistible opportunity to buy legally converted ejido land.

B.- No Restrictions On Foreign Ownership… Almost
Generally speaking, there are no restrictions on the ownership of residential property in Mexico, and you can hold the title in your own name. You can choose to hold it in a trust—for asset protection or estate planning purposes—but it’s not required.

If the property is near the coast or an international border however, special rules will apply. See the following paragraph.

C.- Special Rules Apply When Buying Near The Coast Or Land Border
Mexico has a restricted zone—called the Zona Restringida—that occupies a band within 50 kilometers (31 miles) of the coast or 100 kilometers of an international land border. Since the early 20th century, non-citizens have not been able to hold property in their own name within this zone.

But in order to encourage foreign investment, the government created a workaround in 1973, formalized in its current version in 1993. In short, it authorized the use of a trust to purchase property within the restricted-zone. This trust is called a fideicomiso (fee-dey-com-EES-oh) and it’s similar to a Land Trust in the United States.

In U.S. trust parlance, you (the property buyer) are the Grantor of the trust, and also the Beneficiary… so you fully control the purchase, sale, and management of the property. A bank of your choosing acts as the Trustee. The idea of having to use a fideicomiso, actually toyed with the idea of creating a corporation—with all its overhead and reporting requirements—just to get around it. But that was counterproductive.

Instead, to appreciate the benefits of having the property in a trust. It gives you a level of asset protection, and more importantly, allows you to do estate planning—using beneficiaries and contingent beneficiaries—without having to probate a Mexican will or follow normal probate protocols.

Fideicomiso must be renewed after 50 years.

D.- The Notary: Not Like The States… Not Like France… Not Like Peru…
The role of the notary in Mexico is different from their role in most of Latin America, Europe, or the United States. The notary is appointed by the state governor and must be an attorney with at least five years of experience.

As a buyer in Mexico, the notary is your representative in the process. He is not an impartial third party, and does not represent the seller. Consequently, there is usually no reason hire to Kasamex and its legal team to represent you in a straightforward property sale. For example, if you’re forming a corporation or starting a business concurrently with the purchase.

The notary will perform a title search, prepare all the paperwork, process the real estate transaction, record the new title with the municipality, and collect the taxes and fees. Trust in Kasamex and its legal team serve as your translator at the notary office.

E.- Great! An English Sales Contract (Which May Not Be Valid)

The official language in Mexico is Spanish, and all official documents are in Spanish… including your sales contract and closing documents.

Keep in mind however, that when there’s a conflict between the English version and the Spanish documents that you signed, the Spanish (official) version will govern.

Make sure that any changes made by you and the seller on the English version make it through to the Spanish version at the end of negotiations.

And remember Kasamex always be on your side.

Welcome to Mexico!!