BUYERS GUIDE TO OWING PROPERTY IN MEXICO
Owning a Home in Mexico Is Possible!
Come join the thousands of US and Canadian citizens who have vacation and retirement homes in Los Cabos.
This guide is designed to give you a general idea of how one owns property in Mexico. Our brokerage has many years of experience behind us, and offers an in-house closing department to assist you with every step of your home buying journey.
MEXICO’S RESTRICTED AREAS
Defined under the Mexican Constitution, the "restricted zone" is the band 100 kilometers deep from any Mexican border, and 50 kilometers from any coastline. No one other than Mexican nationals are permitted to acquire land within the restricted zone. Because it is so long and skinny, the entire Baja Peninsula is considered to be within the restricted zone. In order for non-Mexican nationals to own property in the Baja, a Mexican bank trust (a fideicomiso) is required.
A FIDEICOMISO (BANK TRUST) PROVIDES FOR LEGAL OWNERSHIP. IT IS NOT A LEASE...AS SOME PEOPLE TEND TO BELIEVE.
Exactly like in the U.S., this Trust gives the Buyer full ownership of the property they are purchasing, but instead of being the "owner", they are the stated Beneficiary of the Trust.
As Trustee, the Mexican bank acts on behalf of the foreign Beneficiary in any and all transactions involving the property held in the fideicomiso. However, the Beneficiary retains the use and control of the property and makes the investment decisions regarding it. The Beneficiary has the right to use, improve, lease without limitations, sell without restrictions and to pass the property to named heirs. In essence, the Beneficiary has the same absolute rights to use, benefit and enjoy the property as if it were in fee simple (direct) ownership.
A fideicomiso is renewable in 50 year increments, and there is an annual fee to maintain the Trust with the bank of approximately $500 to $700, depending on the bank.
CLOSING COSTS AND TIME FRAME FOR CLOSING ESCROW
The closing costs involved in a transaction in Mexico are similar to what you know in the States or Canada. They amount to roughly 4% to 6% of the purchase price, but can vary depending on each situation. The fees cover the appraisal that establishes value for purposes of property tax assessment for the Purchaser and the Seller, which is required by the Notary Public for preparation of the deed for the transfer. Estimated closing costs can be provided upon request.
The time frame for closing escrow averages 60-120 days, depending on the complexity of the transaction, which includes establishing the fideicomiso with the bank.
I hope this information has been helpful. For any additional questions please go to the Home Page and send me an email.
Greg Gritton, Real Estate Advisor
Cabo4Sale Real Estate & Development
US Cell 702-306 6883
Email: greg@cabo4sale.com
