If you are actively seeking to acquire real estate in Mexico, we will tell you here some of the important policies and legalities that you should consider as a foreigner.
Mexico’s beautiful landscapes and authentic Latin American culture make it an attractive place to invest in real estate, both for Mexicans and foreigners.
Whether you dream of having an exclusive house surrounded by the incredible forest of Valle de Bravo, where you have the opportunity to enjoy the view of the lake and a barbecue outdoors; or a spectacular balcony overlooking the Pacific coast to enjoy the magnificent sunsets in the company of your family and friends on an incredible summer afternoon. With Ancana, you can find the vacation home of your dreams in Mexico.
The Mexican government recently made some changes to its “Property Ownership Laws” , making it easier for foreigners to purchase real estate in Mexico. With it becoming perfectly legal for foreigners to own Mexican real estate, we will briefly tell you what you need to know to acquire a property in your favorite destination in Mexico.
Foreigners own property through a trust
Mexican laws establish that foreigners cannot be absolute owners of properties located in restricted zones, defined as 50 km (31 miles) from the coast and 100 km (61 miles) from the border. So how do foreigners purchase properties within these restricted zones?
The Mexican government has created a special contract (also called a Trust), which allows foreigners to legally own property within the restricted areas. This contract was created specifically for the benefit of foreign buyers, with the trust being executed between a Mexican bank and the seller of the property in the restricted zone.
A Mexican bank must be appointed as trustee and as such holds title to the property and is the owner of record.
The bank, as trustee, purchases the property for the foreign buyer and has a fiduciary obligation to follow the instructions given by the trustee (the foreign buyer). As a buyer, you retain and enjoy all property rights while the bank holds title to the property. The trust empowers the buyer to use, enjoy, and even sell or inherit the assets held in trust.
And what about financing?
For a foreigner it is not as simple as going to the bank and requesting a mortgage in Mexico to obtain financing for the purchase of a property. Instead, you would need to obtain international financing, either through a bank in your home country or through a third party.
Ancana provides financing options for qualified buyers when purchasing a fraction on our platform. Keep in mind, Ancana sets our interest rates based on market rates in Mexico, which may be higher than what you are used to in your home country.
What is the process of buying a property in Mexico?
Now that you have a bit of context about what it means to legally acquire property in Mexico, we will tell you the steps you need to follow.
Step 1. Hire a real estate agent or agency
One of the most important steps that you must take into account is to find a real estate agent or agency that can support you in the different procedures and processes that have to be carried out. In addition to being able to help answer any questions related to your property, they will be able to help with your questions on taxes, insurance, titles, purchases, etc.
Step 2. Determine your price range
Step 3. Find the right property that suits your needs
Step 4. Make an offer
Once you have found the perfect property and you have all the information in order, you should start writing an Offer to Purchase. This is done in the form of a “promissory contract”, which will be drawn up by your lawyer and signed by you and the seller.
This is a reservation agreement to secure the property and for the seller to take the property off the market.
Step 5. Reserve 10% as security deposit
Once the offer is accepted in writing, the property must be reserved by making a deposit of a certain amount (generally ranging from 10% to 40% of the value of the property). This deposit is kept in the custody of a third party, and should not be deposited directly with the seller.
If you’re working with an attorney or real estate agent, they likely have a system they can recommend. Another option is to use a cashier’s check in the name of the seller and have your lawyer, notary or a trusted third party keep it. If you are working with a title insurance company, they will usually provide escrow services for you.
Other papers you should have on hand
Make sure you have copies of paid bills for water, electricity, telephone, cable, and other public services that the property may require. Unpaid bills remain linked to an address and will be your responsibility, not the previous owner’s.
Step 6. Closing on the property
Once you have all the paperwork in order, and the purchase agreement is ready for you to sign, you will meet with the notary, the seller, and your lawyer or broker for the closing. You will get the legal document that will name you as the rightful owner and you will take with you a check to settle the rest of the payment or you can transfer the rest of the payment to the escrow account and have whoever acts as escrow agent release them once that you have the documentation in hand.
Your attorney will establish the Trust so that the title to the property can be properly transferred. Once all of this is in place, the closing and transfer of the held funds and deposits will be scheduled with a Mexican Notary Public.
With Ancana you can acquire your own luxury vacation home in your favorite destination, both for Mexicans and foreigners, by fractional ownership. Our highly qualified agents will help you find everything you ever imagined in your dream property. Look no further and acquire your co-owner residence now!
If you would like to know more about how co-owner residences work, we recommend you read this article: Fractional ownership explained
Owning a vacation home has never been this easy.
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