5 August 2020
According to the laws of Mexico, foreigners have the rights to own real estate properties in this country, except the following cases:
1. A foreigner cannot own real estate property which is located in a fifty-kilometer coastal zone.
2. A foreigner cannot be an owner of a real estate property in a hundred-kilometer border area.
In other words, buying real estate closer than 50 kilometers to the sea or 100 kilometers to the state border, a foreigner does not have the right to own this property.
All of this looks and does not sound very encouraging, as the most interesting properties in Mexico are located in coastal areas, where many foreigners seek to move to.
On the Riviera Maya and in other resort areas, at the same time, many foreigners have property - apartments, villas, ranchos and other objects, so a logical question arises: how did they arrange this, and who owns this property?
We will not describe the historical prerequisites for this law, since we are more interested in how, without violating it, to properly buy the property and register it in such way that you would be the actual owner of it during the whole your life and will be able to sell, donate, lease and leave it as an inheritance.
Registration of real estate for a foreigner. Method #1.
The first method, which is also the most common and fastest, is a bank trust or Fideicomiso.
Similar to a US trust, property, owned by one party, is transferred to the other party using a third-party trustee.
For example, a person may suddenly die, leaving his property in trust in favor of his spouse or children, for life, making the trustee responsible for managing the property and providing for the needs and desires of the heirs, who automatically become owners.
When buying real estate property, you make a trust agreement with the bank for 50 years, or until you give the bank instructions otherwise. At the end of this period, the agreement is automatically prolonged, unless you decide to terminate it or transfer the trust to another bank.
In Mexico, several banks are authorized to provide real estate trust services and they charge a fixed fee for opening a trust, which includes the cost of closing it if you decide to terminate cooperation with this bank.
Following the agreement between you and the bank, you, on an ongoing basis, retain the right to reside, rent, renovate, expand (within the framework of legally issued and agreed plans and projects) and sell an apartment, house, or land at your discretion.
While concluding a trust, you specify one or more beneficiaries who will automatically own your trust property if something happens to you.
If you decide to sell your property, you must instruct your bank's trust department in writing to transfer the trust property to your buyers.
Buyers can take over your trust or, if they wish, initiate a transfer of the trust to another bank.
If the buyer is a Mexican citizen, then the property is simply registered for him, and the trust is closed after the completion of the transaction and the transfer of rights to the property.
There is an annual fee of several hundred dollars per year for the maintenance of the trust, depending on the value of the property.
The trustee, that is, your bank, is prohibited by agreement and the laws of Mexico from transferring ownership of property, changing the beneficiary, or doing anything with your property without your written instructions.
If something happens to the bank, and it closes, becomes bankrupt, or for some reason, its license is revoked, then your trust goes to another bank, and you do not lose anything. At the same time, you can choose which bank to transfer your trust to. This is your right and is protected by the laws of Mexico.
Registration of real estate for a foreigner. Method #2.
Opening a corporation.
Some foreigners buy the real estate properties by opening a company in their name, with the subsequent registration of real estate on the company's balance sheet.
Mexican law allows foreigners to open companies and own real estate properties by these companies.
In this case, you will need to come up with the name of the company, the notary checks it for its uniqueness and, if the name is not taken, begins the registration process, which can take from several weeks to a month.
Thus, you own the company that owns the property.
The founders of the company can be several persons - your family members or somebody else on your request.
The cost of opening and maintaining a company is approximately at the level of the cost of opening a trust, with the only difference that the cost of annual maintenance is paid not to the bank, but the accountant.
The option of buying real estate by opening a company is suitable for you in the best way if you are going to buy several properties, including for renting them out. In this case, the cost of their maintenance will not change, while when choosing a Bank trust, you will have to draw up a separate trust agreement for each property.
When selling, alienating, or inheriting, you change the owner of the company or transfer the property from the balance sheet to another person or Corporation, paying taxes on the difference in the value of the property.
Registration of real estate for a foreigner. Method #3
This method is rarely used and the registration is not entirely for a foreigner.
Under Mexican law, there is a law on obtaining citizenship by land law, that is, all those born in the country receive citizenship, and relatives of the born receive a permanent residence permit.
Thus, parents whose children are born buy real estate with registration of it for a child - a citizen of Mexico.
In this case, there is no need to formalize trusts or corporations,and there is a direct entry into ownership.
But there is a drawback - you will not be able to sell or alienate property until the child reaches the age of eighteen.
Also, this option is not very convenient for people who are not planning to have a child or retirement age.
These are brief descriptions of options for registration and taking ownership of real estate in Mexico.
All these methods are transparent, completely legal and protect the owner of real estate.
If the property you like is located more than a hundred kilometers from the border and fifty from the sea, then you will register the property on yourself, according to the same laws as the local population, in compliance with the rules as in your homeland.
If you want to live by the sea, in an ideal climate, but you are only stopped by a lack of understanding of the legality of the acquisition and how to transfer it further, sell it or rent it out, then by choosing one of the above, you can be sure that your apartment, house or land will be yours until you decide to change it.
Write or call us, and we will tell you more about it, and our lawyer will check and register the property. We will accompany you at all stages of the transaction-from the selection of the object and its verification, to the entry into ownership and conclusion of contracts for household services and services.
