Frecuently Asked Questions

Foreigners

Foreigners often worry about their land being expropriated by the Mexican government. Under the North American Free Trade Agreement, NAFTA, Mexico may not directly, or indirectly, expropriate property except for a public purpose. This is the same as "Eminent Domain" in the U.S. Where it is necessary to expropriate land, swift and fair market compensation must be paid, together with accrued interest.
When you arrive to Mexico, a Tourist Visa is issued. The Tourist Visa allows you to remain in Mexico for up to 180 days (almost six months) without working. You also have the option while in your home country to apply for a Temporary Resident Visa, which is valid for a 12 month period and can be renewed for up to four years.
Yes, a Mexican Foreigner must purchase property within the restricted zone either with a Bank Trust or under a Mexican Corporation. If you want to acquire for residence purposes you need to acquire with a bank trust. If you want to acquire for purposes other than residential, you can acquire via Mexican Corporation with certain requirements and procedures.
IA Tourist Visa, is the visa that is obtained when first entering into Mexico. These can continually be renewed by simply leaving Mexico within the allotted 180 day period, and then reentering.
Is a document for a person who wants to live at least part time in Mexico, but does not necessarily intend to make this their permanent home. To be granted a Temporary Resident Visa status, you must prove you have sufficient resources to be financially independent, or meet certain requirements to be able to work or own a business in Mexico. Temporary Resident Visa "Rentista" status is available to anyone with a monthly income (from investments, social security or other retirement) more than $1,000 USD plus around another $500 USD for each dependent. If one owns property in Mexico, the amount of income required is reduced by nearly one-half.
Is a document for a person who intends to permanently reside in Mexico, with qualifications only slightly more stringent than temporary resident status. After four years of successfully meeting the requirements of Temporary Resident Visa (including restricted time out of Mexico), one may apply for "Inmigrado" status, which allows you to enjoy most of the rights and privileges of Mexican citizen, the primary exception being the right to vote. Inmigrado status does not require you give up your native citizenship, but holders may freely work and remain in Mexico without annual renewals of immigration paper.

The Seller

Yes, you can sell to either a Mexican national, or Non-Mexican Foreigner. A Non- Mexican would also be required to set up a bank trust.

The Buyer

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.
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.
Anyone, even someone in Mexico on a Tourist Visa, may buy property. It is stated that: If you sign a contract, rent a house or condo, buy a house or condo, or lease property, you are no longer a "tourist" and therefore, are invited to apply for a Temporary Resident Visa. But in order to acquire property, it is not necessary to possess a Temporary Resident Visa.
No. Upon application, a foreigner automatically receives his own renewal 50-year permit. However, this is not mandatory.
Yes, Mexican foreigners may obtain direct ownership of property in the interior of Mexico. Mexican foreigners can also own property along the ocean front. By Mexican law, properties within the 50 km of any ocean front and 100 km of any country boarder are acquired via a bank trust or via establishment of a Mexican Corporation.

Define your Budget

I always advise to my clients an approximate rate of 6.5%, this is a conservative and high amount, and I have done many operations in the 4.5% range. I prefer to be conservative on the spreadsheet.
Only recently have new financing tools become available for Mexican foreigners. If using Mexican property as collateral, the rates may be higher, but it leaves home country equity free for other capital raising options.
The pricing per square meter is a constantly changing figure. Especially in the past 2 years, the price has been jumping constantly as this zone continues to be a booming area. Write me for the latest figures.

Include the closing costs on your budget

It is common 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.

Define if you need financing

In Mexico, historically and in many occurrences today, when buying real estate, the transactions are cash operations. Mexican Banks are only recently starting to offer mortgage tools for property acquisitions for the Mexican nationals. Only within a few months ago this year, have major Mexican financial institutions begun offering options to Mexican Foreigners basically for Americans, Canadians, and British. Most Mexican foreigners have used home equity or other assets from their home countries to raise capital for investing here in Mexico. With the new tools now available, allowing for Mexican Property to be mortgaged, many foreigners are now discovering new exciting options to purchase their Mexican ocean front homes.
Yes, you can finance, raise your capital from any bank in the US or Canada that will allow for such operation. In other words, here in Mexico there are no restrictions, it is basically the banks who are processing the loans who will advise to you whether or not they have a program to finance property, in another country. I will send you another email with an introduction to multi national bank here in Mexico, who has just purchased a chain of banks up in the USA. They do offer mortgaging to Americans for properties down here in Mexico, using the Mexican property asset as collateral. Read up, and forward your questions.
That depends on which financial institution you decide to work with. It is still not very common for Mexican Banks to offer loans to Mexican foreigners. Bancomer mentioned above does have a new program, and I only imagine that this tendency will continue with the other 4 major banks of Mexico. Bancomer is requiring 30% down, they will finance the remaining 70%.

Making the Offer

The offer to purchase contract is normally a simple document. In some cases you might consider to have a lawyer review it, within the grace period noted in the contract due to the legally binding conditions and the fact that you will be signing and dating.
Once you have found the right property, let your TOP Mexico buyer´s representative know as soon as possible that you're ready to reserve or to write an "offer to purchase", a written document that declares how much you are willing to pay for the home provided that certain conditions are met.
Your offer should have a time limit for the seller to accept it, reject it, or make a counter-offer. You should also include the date, if you plan to use an escrow account, outline conditions, amongst other items. If a counter-offer is made, you will have some time to respond. Often, several offers go back and forth until an offer is accepted, or one party decides to end negotiations.
Yes, it is usually accompanied with an earnest deposit.
When you sign an offer to purchase document, the sales agent will ask you for “earnest money." This refers to a monetary commitment that shows that you the buyer are serious about wanting to buy. Earnest money is usually given when purchasing an existing property. Usually, you will be asked to deposit for 5 up to 10 percent of the sale price.
The earnest money on most occasions is made out to the notary, the sellers listing real estate agency or into escrow. I recommend using an escrow account which may cost a little more, but allows for safer administration of monies.
An escrow account involves a process whereby an impartial third party, such as an attorney, an escrow company or a title company, is entrusted with the job of seeing that the transfer of ownership from the Seller to the Buyer takes place according to the terms of the written contract agreed upon by all parties involved. The escrow agent (third party) holds any funds safely until all the conditions and details have been realized as instructed by the contract and disburses the funds to the proper parties at the proper time as outlined in the escrow agreement signed by both the buyer and seller.
In the offer to purchase a time period is normally stated for a response from the seller to either accept or reject the offer. Once offer has been accepted, and if all documents are in order and clear, the establishment of the bank trust or corporation can be realized. This may take near 4 up to 6 weeks. With the bank trust or corporation established, the notary public can be contacted to initiate its process which may be 7 days approximately.
Normally the escrow account quantity is forfeited. On some occasions a penalty amount less than deposited into escrow by the buyer can be defined.
Most developers, when selling condos in Pre construction, will ask for investors to reserve units with a certain quantity ranging from $10,000 up to $20,000
Usually, once a reservation has been made on a unit, the developer will forward a copy of the contract for review by the investor. A certain amount of time is allowed to the investor to review such contract ranging from 7 days up to 30 days. If the investor decides to proceed, 20% up to 50% might be requested as down payment. 90% of the unit value is then collected during the construction process. And the final 10% is usually collected at the actual title transfer.

Retaining legal counsel

Not always, but many people prefer due to the fact that many of the legal contracts and other paperwork involved in buying a home in Mexico are complex and can be confusing to the general public, many people prefer to work with an attorney. An attorney can review contracts and make you aware of special considerations and potential problems, and can also coordinate and accompany you to the closing.
Investors should hire competent Mexican legal counsel when contemplating any real estate investment. Mexican laws and practices regarding real estate differ from those in the United States.
Your Buyer’s Representative can assist you in finding a quality attorney.

Escrow account

An escrow account involves a process whereby an impartial third party, such as an attorney, an escrow company or a title company, is entrusted with the job of seeing that the transfer of ownership from the Seller to the Buyer takes place according to the terms of the written contract agreed upon by all parties involved. The escrow agent (third party) holds any funds safely until all the conditions and details have been realized as instructed by the contract and disburses the funds to the proper parties at the proper time as outlined in the escrow agreement signed by both the buyer and seller.
Yes. Please ask your agent about the companies that offer such services.
No. Establishing an escrow account is not always necessary. Using this tool depends on the buyer and seller.
There are basically three companies that we recommend - Stewart Title, Mexlaw, and First American Title.
Yes, it is always advisable to notify the listing agency and the seller of your desire to utilize an Escrow account.

Purchase Contract

In pre-construction projects, a reservation contract is used to hold a unit, until the investor has sufficient time to review the plans and Purchase Contract. For more details, review Making the Offer to Purchase.
The Purchase Contract is basically a contract giving beneficiary rights to the investor of a specified unit or units. The contract also outlines the payment schedule, dates of delivery, size and location of the unit, size and location of the complex amongst other details.
Other names for the Purchase Contract are Hard Contract, Promissory Contract or Assignation of Beneficiary Contract.
These contracts can be reviewed by the buyer, and it is also recommended that a Mexican legal counsel do a revision as well.
The buyer signs on the buying part. The legal representative of the developing company, or the person who has legal authorization and capacity will sign on behalf of the selling part.
No, not until the property has established a regimen of condominium will the developer be able to transfer title of the individual condo units and at this time, will the operation be recorded and realized with a Notary Public.
Several items are necessary to be contained within this document. Payment plan, delivery dates, items to be included with delivery amongst others. Call me for more information on contract reviews.