Questions & Answers

Q: Can a USA or Canadian citizen own real estate in Mexico?
A: Yes, by placing the property in a bank trust. (Fideicomiso)
 
Q: Can I own property near or in front of the ocean?
A: Yes, laws passed in 1973 and 1993 have made it possible for foreigners, foreign firms, and Mexican firms with foreign participation to acquire interests in coastal real estate through a bank trust.

Q: Who is involved in a bank trust?
A: Three parties. The seller of the property is the Trustor, the bank is the Trustee (Fiduciario), and the buyer is the Beneficiary (Fideicomisario.)

Q: How much does the Bank Trust cost?
A: The cost to establish a Bank Trust with the Trustee bank will vary bank to bank and depending on what type of trust you will hold, but typically will be between $1,500 - $4,000.  

Q: Are there additional fees for the Bank Trust?
A: Yes. The bank charges an annual fee to cover its services as a Trustee. This fee varies depending on which trustee will hold the title, but typically between $350 - $700 a year.  

Q: How does the trust function?
A: Title of the property is transferred to a trust with a Mexican bank acting as Trustee. The Trust Agreement is formalized by the issuance of a permit from the Mexican Ministry of Foreign Affairs. The lot or home buyer is designated as Beneficiary in the Trust and the beneficiary rights are recorded in the public record by a Notary Public.

Q: What are my rights as a buyer?
A: The Trust is a legal substitute for fee simple ownership, but in many cases, the Trustee is the legal holder of the property. As Beneficiary, you have the right to sell your property without restriction. You may also transfer your rights to a third party or pass it on to named heirs.

Q: Is the Trust Renewable?
A: Yes. According to the Foreign Investment Law passed in 1993, trusts can be renewed for an indefinite number of successive 50 year periods. In effect they run in perpetuity.

Q: Who is involved in Real Estate transactions in Mexico?
A: Normally there are four parties involved in a real estate transaction. These parties include the seller, the buyer, a bank and a Notario.  In some cases there might be a lender involved.

Q: What role does a Notario play?
A: A Notario is a government-appointed lawyer who processes and certifies all real estate transactions including drawing up and reviewing all official documents to ensure the proper transfer of the property.

Q: What are these official documents?
A: The official documents which are required by law in order to transfer the ownership of property in Mexico include a certificate of no liens, a statement from the municipality regarding property assessments, water bills, and other pertinent taxes that might be due, an appraisal of the property for tax purposes and the deed which will all be part of the Bank Trust.  

Q: If at a later date I decide to sell my property, can anyone buy it?
A: Yes. If the buyer is also a foreigner, you simply assign beneficial rights. If the new buyer is a Mexican National, you can instruct the bank to endorse the title in favor of the buyer.

Q: When buying or selling a property in Mexico, who pays the closing costs?
A: It is common practice that the buyer pays the transfer of acquisition tax and all other closing costs, including the Notary's fees and expenses, while the seller pays his capital gains tax and the broker's commission.

Q: How much is the transfer tax?
A: The real estate transfer tax is 2% of the sales price.

Q: How much are closing costs?
A: This cost will depend on the sales price and the actual recorded price of the property.  To give you a ballpark estimate if your purchase price/recorded price is 100K -150K you can expect to pay 10K - 15K which includes the transfer tax.  The closing department will provide a cost estimate within the inspection period that will outline all the closing costs.