FREQUENTLY ASKED QUESTIONS ABOUT REAL ESTATE IN MEXICO 

Can foreigners really own real estate in Mexico? Can you recommend a bilingual real estate attorney? Can I mortgage my purchase in Mexico? Who will take care of my property when I am not using it? If you are just beginning your search for Mexico real estate you will undoubtedly have many questions about the process. We have done our best to answer many frequently asked questions here. If you do not find the information you are looking for, please do not hesitate to Contact Us.

1. Can a foreign individual, corporation, or trust own property in Mexico, or is it a lease?

Yes, you can own property in Mexico!  No, it is not a lease.  Decades ago, the law did not allow foreigners of any sort to own property within 30 miles of the coastal waters, and within 50 miles of the borders. The purpose of this legislation was to protect Mexico’s sovereignty though the establishment of the restricted zone. Today, the most common way to own residential property along the Mexican coastline or borders is trough a "Mexican Trust" called "Fideicomiso". The "Trust" is completely safe and provides foreign individual, corporations, and trusts with all the rights of ownership. A Mexican bank is required by law to administer and represent an owner of a Mexican Trust. The beneficiary of a "Trust" can be a foreign individual, corporation, or trust.

2. Can I establish a Mexican corporation?

Yes. To create a Mexican corporation is a fairly simple matter that requires a minimum of two partners, both of which can be foreigners. A Mexican corporation is permitted to purchase real property and/or operate a business. Virtually all Mexican corporations hire an accountant (CPR) to handle the required paperwork; given that accounting and tax declaration is complicated due to the existing fiscal laws which change frequently, and with the addition of new laws which occur often.

3. What would the annual expenses be for Mexican property?

Property tax ("predial"): Based on the Municipality appraisal value. A 4-bedroom house on the ocean pays between $1,000 and $1,500 USD

Bank Trust fee: Each bank has different fees. Some have a fixed rate and some others calculate it according to the appraised value of the property. You can expect yearly fee between $500.00 and $1,000.00 USD

Federal Zone tax: If your property is right on the beach you will pay this tax every year, and it is calculated on the frontage of the lot. A 66-foot ocean front lot pays about $400.00 USD a year.

4. Can I rent my property while I’m not using it?

Yes. Many people are aware of this area given the tourist tradition of the last 25 years. Recently, the internet exposure has increased the awareness of this area considerably. There are a number of rental organizations that contribute to a high occupancy rate. Some owners handle their rentals successfully through a web site. Property rental is an excellent way to quickly recover your initial investment.

5. How can I provide maintenance to the property and cover the expenses if I don’t live in Mexico?

Most condominium buildings have an on site administrator who takes care of the property. A monthly maintenance fee is paid by each unit to cover expenses. Most houses have a casita (small house) at the entrance to a property that houses the caretaker. The caretaker provides various services to the owner and guests. The cost for caretaker service is easily offset through rentals.

Property Managers are also available. They provide services such as property maintenaince, paying utility bills, purchasing cleaning supplies, paying salaries, supervision of employees, greeting and assisting your guests, and coordinating the immediate repairs the property may need. Akumal Real Estate is happy to recommend Property Managers in the area.

6. Can I bring my own furniture and appliances from a foreign country to Mexico?

Yes. You can bring in one shipment of personal belongings which includes appliances for the property. In order to eliminate problems, accurate paperwork is required. Usually, arrangements are made in Mexico prior to bringing or shipping your belongings. In the past years this was a common practice. Today, you can find a good variety of just about everything you need in Cancun and Playa del Carmen. Most often the prices of merchandise is slightly higher than the US or Canada. You must factor in the cost of shipping or transporting your belongings which can be expensive. The stores in Cancun include Sam’s Club, Wal-Mart, Costco, Home Depot, Sears, Office Max, Office Depot, as well as many Mexican stores and department stores. Playa del Carmen now has Sam's Club, Wal-Mart, and other large grocery, furniture, hardware, and decor stores.

7. Can I import my vehicle from a foreign country?

Yes. According to the law, the maximum time you can import your vehicle is for a 6 months period. Recent legislation states that you do not have to leave the country and renew your vehicles papers as long as you have a valid tourist or FM3 visa. In any case, a trip to the southern border at Chetumal is only 2.5 hours from Tulum. In Chetumal you can renew your importation certificate. On the way there are some interesting places to visit You can either drive your car into Mexico, or have your vehicle shipped from Miami to Puerto Morelos.

8. How complicated is it to retire in Mexico?

This part of Mexico is becoming ideal for retired people. There is an important American community increasing continuously, attracted by the beauties of the area, the warm winters, and practically no crime. Cancun provides daily direct flights to the major cities of the United States and Europe. To obtain your immigration status as retired is a matter of a few days and about $500.00 USD, if you hire a lawyer for the paper work. It is less expensive if you do it yourself, however we recommend using a lawyer or legal firm with experience to facilitate the process.

9. How complicated is it to move to and work in Mexico?

It is much easier than for a Mexican to get established in the States. You can either open a corporation or work for someone else. If you are going to work for someone else you will need a letter stating they are offering you the job, explaining your position in the organization and the salary you will receive. If you are opening a corporation you can get your immigration papers as the administrator of your company and you will need a notary and a reliable accountant firm. In any case, Akumal Real Estate can assist you in the process and advise you. We have a large list of clients whom we have helped with this issue.

10. What kind of financing is available in a real estate purchase?

Presently there are a few American institutions providing financing to Americans and Canadians in order to purchase houses or condominiums that are already built. In most transactions, the only financing is provided by the seller. Most transactions are by cash with the purchaser making arrangements back home. Mexican banks do not lend to foreigners.
 



Fidecomiso - The Mexican Trust System

While many aspects of buying a home in Mexico look and feel like buying in the United States (U.S.) you should remember that you are purchasing property in a foreign country. The manner in which you will purchase in Mexico is different from that which you are accustomed to in the U.S.; it is not better or worse, it is just different.

There is no doubt that you have heard of and been confused by the trust system that prevails in Mexico, namely the Mexican "fideicomiso", and the so called "restricted zone". To clarify any explanations you might have received in the past, a "fideicomiso draft, which matches with an American trust agreement". Also you might be at the time knowledgeable that the so called "restricted zone" is a strip of land 60 miles from the border front and 30 miles along Mexico’s coastline. Nevertheless, the following clarifications might be of help for you:

For historical reasons, the Mexican Constitution of 1917 prohibits any and all foreigners from holding direct title to land residing within 60 miles of its border or 30 miles of its coastline. Amendments to the Constitution in 1994 altered this prohibition by allowing foreigners to own direct title of property for commercial purposes, but still restricted direct title ownership for residential purposes. The Mexican trust system was designed and encoded into law to permit foreigners to purchase "restricted zone" property for residential purposes only in a manner consistent with Constitutional provisions.

Usage of Mexican trust, a "fideicomiso", allows non-Mexican nationals to purchase property in the "restricted zone" by placing a property into a bankruptcy remote trust recorded in a Mexican Trustee’s name. The Mexican trustee is a bank’s trust department and the property remain off balance from bank.

The trust agreement that governs the manner in which your property is managed stipulates that, while the owner of record of the property is the Mexican trust, the "ownership rights" of the property belong to the trust’s beneficiary. The beneficiary of the trust is the purchaser of the property: you are the beneficiary. Trustees are paid an initial fee for recording the property in their name and are subsequently paid an annual trust maintenance fee. The trustee is prohibited by the trust agreement and by Mexican law from transferring the property or the beneficiary rights to the property, without the written permission of the beneficiary.

To place residential property in the "restricted zone" into a trust, one has to first obtain a permit from the Mexican Foreign Affairs Ministry (Secretaria de Relaciones Exteriores. SRE). We will submit the request for the SRE permit on your behalf.

Many people erroneously refer to the trust arrangement in Mexico as a leasing transaction. Do not be confused by misinformation. The home that you will buy will be put into a trust with you being the beneficiary of the trust; you are not a lessee. You have all the rights that an owner of property in the U.S. has, including the right to enjoy the property, sell the property, rent the property, transfer it through last will, etc.

Bank Trust fee: Each bank has different fees. Some have a fixed rate and some others calculate it according to the appraised value of the property. You can expect yearly fee between $500.00 and $1,000.00 US.

 


 

English - Spanish Real Estate Glossary

Some key words you may encounter in Spanish and their equivalent in English

Abogado:  Lawyer, attorney

Adquisición: Acquisition

Apoderado: Agent through a power of Attorney

Arrendamiento: Lease

Avaluo: Property appraisal report

Beneficiario: Beneficiary

Bienes raíces: Real Estate

Cedula Catastral: Cedula Cadastral. The document that verify that a property is registered and contained the elements that define the property

Certificado de libertad de gravamen: Lien release certificate

Cesión: An Assignment of Rights or Obligations

Concesión: Concession

Convenio: Agreement

Corredor: Broker

Derechos: Rights

Ejecución de Hipoteca: Foreclosure

Ejido: Common land owned by a community

Escritura: Deed

Estudio de impacto ambiental: Environmental impact study

Estudio topografico:  Land or plot survey

Fideicomiso: Trust agreement

Fideicomisario: Trustee or beneficiary

Fideicomitente: The trust grantor

Fiduciario: Fiduciary

Garantía: Guarantee

Gravamen: Lien

Gravamen de Liberación: Lien release

Hipoteca: Mortgage

Honorarios: Fee

Impuesto Predial: Property tax

Impuesto Zona Federal: Federal Zone Tax

Indice de porcentaje anual: Annual percentage Rate (APR)

Inscripción: The act of recording a registry of a public record

IVA: Value added tax

Levantamiento topográfico: Survey

Medidas y colindancias: Measurements used to describe the location, metes and bounds of a plot of land

Notario publico: Notary public

Perito: A licensed or certified expert in a particular field

Póliza: Policy

Predio: Land

Propiedad: Property

Registro: Registry

Registro Publico de la Propiedad y Comercio: Public Registry of Property and Commerce

Salario mínimo: Minimum wage

Titulo de propiedad: Property title

Traspaso: Transfer

Zona Federal: Federal Zone or Restricted zone
 


 

 

 


 

 

 

 


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