Buy a house in Mexico as a foreigner

Mexico is one of the most popular tourist destinations in the world. It is a beautiful country with a lot to offer to its visitors. The country has been making major strides in terms of economic development and tourism.

If you are thinking to buy a house in Mexico as a foreigner, you might have heard that it can be quite difficult for foreigners to buy property there. There are many factors that come into play when it comes to buying property in Mexico and trust services are one of them.

Real estate market Mexico

Mexico is a country that has its own unique culture, landscape and climate. With the help of real estate agents, you can buy a house in Mexico as a foreigner. It is important to note that there are specific laws and regulations for foreigners buying houses in Mexico.

To buy a house in Mexico as a foreigner, there are certain things to consider before doing so. First of all, you need to know what your rights are when buying property as a foreigner. You also need to know what the process of buying property entails and how much it will cost you.

Mexico is one of the top destinations for foreign investors who want to buy real estate assets or invest in the stock market because it offers lucrative returns on investments. Foreigners looking for properties should be aware of these opportunities before investing their money into Mexico’s economy.

Can I own a property in Mexico as a foreigner?

Foreigners can own property in Mexico. It’s perfectly legal. Outside the restricted zones—50 kilometers (about 31 miles) from shorelines and 100 kilometers (about 62 miles) from international borders—foreigners can hold direct deed to property with the same rights and responsibilities as Mexican nationals. And inside the restricted zones, foreigners can control land through fideicomisos (bank trust agreements) again with the same rights and responsibilities as Mexican nationals. Alternatively, foreigners can hold land in these areas through a Mexican corporation. However, if it’s a residential property that the foreigner plans to use personally, rather than a commercial property or one used purely as an investment, it should be held in a fideicomiso.

In the restricted zones, if a foreigner buys,  the property title is held within a bank trust or a Mexican corporation—not directly. The trust is easily transferrable when an owner is ready to sell. This is a safe, legal, and extremely common vehicle for foreign ownership in Mexico.

Buying a property in Mexico

Mexico’s excellent property market makes it the ideal place to invest in real estate. If you decide to buy a house in Mexico as a foreigner, these are the stepso follow

  1. Find your property: If you want to own property in Mexico, the first thing you need to do is find the perfect place. Find a professional realtor and make sure you’re negotiating in good faith with each other. Once your desired price is agreed upon, start with the paperwork.
  2. Document the deal with a sales contract : Your real estate agent or solicitor can help you to pull together a sales contract which documents the terms and conditions of the sale, as well as the final price you agree on. This contract may vary slightly depending on your target area’s customs, so having professional support and advice is essential. Sales contracts — and all the other paperwork involved when you buy a property in Mexico — will be in Spanish. It’s common for realtors to provide an English reference copy for you to check, but it’s also important to know that the Spanish copy will be the legally binding version. Have a friend look at or re-read the content to ensure its accuracy.
  3. Deposit: Once you’re happy with the sales contract, you’ll need to make a downpayment. The downpayment for contracts can vary depending on the amount of work you’re using them for. But, it should usually be around 5%-10% of the sale price.
  4. Create a Fideicomiso if required: People who want to buy property or land in the restricted zones will need to either create a fideicomiso (trust) or have the previous fideicomiso transferred over to their ownership. Fideicomiso instructions last for 50 years, so if you transfer an existing arrangement to your name, you’ll need to check how long it’s valid for, and renew in good time.
  5. Make the purchase with a permission:  This is where your notary will step in. You’ll need to seek permission both for the purchase of the property and to sign an agreement that binds you by Mexican law in any real estate dealings.
  6. Valuation and due diligence checks : It is vital to do this valuation for the purposes of tax, regardless of the state of your property. Any further surveys or checks need to be applied after this. You can frequently request for a notary to handle your transaction documents in many different ways. They will typically be able to accommodate changes by rearranging the information, implementing new information, or cancelling the old copies.
  7. Sign the escritura and pay the final taxes : The escritura will ultimately become your title to the property once you’ve finalised your purchase and paid all the outstanding costs. First, you’ll need to visit your notary to sign the escritura, then you’ll pay any existing outstanding costs. The property registration process will start as soon as you’ve made the final payment.
  8. Ownership registration within 3 months of closing: Once you’ve closed the deal and finish registering your rights to Mexico, you’ll be able to start living openly in the country and be legally owner of your property.

What is a fideicomiso?

A fideicomiso is a trust, a legal contract that allows people to buy a house in Mexico as a foreigner with all the rights of a Mexican citizen. 

 The contract is made with a Mexican bank and is issued in the name of the foreigner.

Fideicomisos allow foreigners to buy property without having to pay a large amount of money upfront. This comes with some risks, such as not being able to sell the property back in case of emergencies or not being able to transfer ownership if you are no longer living in Mexico.

A fideicomiso has been around for about 50 years and has become more popular with the increase of foreign investment into Mexico.

Property Purchases in Mexico and Escrows

Escrow accounts are fairly a new thing in Mexico, adopted from the US and Canada. It’s important to know how a seller handles escrows. If they are willing to provide an escrow service, they’ll usually have one set up in order to help buyers and sellers complete the transaction securely. ($600-$800 USD). Escrow is rare when it is a single-family home or a direct sale by owner of a property that is already built. Escrows are more common in pre-construction or pre-sale properties, but even then they are typically are only offered to buyers towards the last 25% of a new project being complete.

To sum it up, don’t be afraid if a seller or developer doesn’t offer escrow. A lot of Americans or Canadians that are in Mexico will tell you “Escrow often protects against fraud cases!”, and that’s good general advice, but it is still a new thing in Mexico, and until it is more widely adopted you won’t see it very often. So, if you find your dream property and they don’t offer escrow, it’s not a deal-breaker. There are other ways to make sure your purchase is safe.

Due diligence

Due diligence is the process of evaluating the risk and merits of an investment. Though there are no laws that prohibit peopleto buy a house in Mexico as a foreigner, there are certain precautions that should be taken to avoid any legal issues.

Due diligence is a process that every investor has to go through before they invest their money in a particular business. It’s important for every investor to keep track of all the risks involved with an investment, not just for their own sake but also for the sake of other investors.

To buy a house in Mexico as a foreigner, it can be quite complicated and risky due to Mexican real estate law. Some countries have different laws on what kind of properties foreign citizens can buy within their borders, while others have different regulations on how investments must be made.

You should definitely do some steps of due diligence when buying into a new project:

  1. Legal due diligence: Confirm that the Seller is the legal owner of the property, or has a legal contract of sale or transfer from the owner. Insist on seeing the deed (escritura) for the property on which the construction is to take place.
  2. Building permits: Confirm that the Seller has current/paid-up construction permits in place for the project contemplated
  3. Confirm the reputation of the developer. Ask for references of happy previous clients, and check them out.
  4. The same goes for the master broker/marketing entity. Confirm his track record, reputation and experience in preconstruction projects.
  5. Finally, be sure you are happy with the sales agent who you are dealing with directly. Do they understand, and can they explain to you the legal structure on which the development is based?

Buy a house in Mexico as a foreigner

Now, you know that it´s totally legal to by a house in mexico as a foreigner, although, make sure you go through the process with a reliable real estate lawyer to help you.