A Guide to Buying Property in Mexico

The Mexican property market continues to buck the global downturn and is still a good property investment location according to many independent sources.  Due to the fact that only around 25% of property in Mexico is financed with mortgages and there’s a housing shortfall of around 6 million homes, banks and lending institutions have been very selective about who they give loans to.  This has helped shield the Mexican economy to a certain extent from the disastrous downturns seen in the UK, Europe and North America caused in part by sub prime mortgage lending.

Within the last 3 years there’s been a 60% increase in holiday home purchases in Mexico, largely driven by North Americans buying real estate with a view to retiring and taking advantage of the lower costs of living.  It is possible for anyone to buy property in Mexico, but there are some things you need to be aware of and in this article we will detail them for you. 

Overseas buyers can own property in Mexico outright providing it’s outside of Mexico´s restricted zones.  Restricted zones comprise of any land that’s within 100 kilometres of any international border or 50 kilometres from any shoreline.  As with any Latin American country however, there are loopholes and if you’ve set your heart on buying ocean front property in Mexico don’t panic.

In order to purchase Mexican property within the restricted zones you’ll need to set up a fidecomiso.  This is a trust where the bank (the trustee) holds the trust deed on behalf of the purchaser (the beneficiary).  The trustee is the legal owner of the property, but the beneficiary has all ownership rights and responsibilities and can sell, lease, mortgage and pass on the property to heirs.

The fidecomiso trust has a life of 50 years and is renewed with an application to the bank.  If you’re buying a property in Mexico that already has an existing fidecomiso the trust can be transferred to the new owner for the rest of it’s 50-year period, or renewed.

Another thing to bear in mind when buying property in Mexico is there’s no regulation or licensing of real estate agents.  Anyone can set themselves up as a Mexican realtor so you need to consider using a number of Mexican estate agents to find the best property at the right price.  Always use a lawyer in your property transaction, and it’s worthwhile considering title insurance. 

When choosing a property lawyer for your purchase it’s best to select your own.  You may find that you’re offered the seller’s lawyer’s services or the real estate company are offering a lawyer free of charge, but beware!  Sometimes things that seem free really aren’t.  Check that your lawyer has a “cedula professional,” this is a document that shows the lawyer can practice in Mexico, the document includes the lawyer’s photo and signature.

Providing you keep your eyes open, don’t believe everything you’re told, and ensure you’re using a professional lawyer, the purchase of property in Mexico is relatively straightforward and should take around 70 days from the start of the process to receiving your title.  Then it’s crack open the tequila time as you sit back and enjoy your beautiful new property.