For many years, foreign investors found it difficult, if not impossible, to make a secure property purchase in Mexico. Laws restricted what foreign investors could do, and there was no good way to ensure that the seller of the property was the legal owner. With changes to Mexican law regarding foreign property ownership, the process of purchasing Mexico real estate is much more like purchasing property in the US than ever before.

Not all properties are sold with title insurance, so that should be the first thing you look for, as a buyer of Mexico real estate. If you cannot get title insurance, or the property owner says you don’t need it, think twice about buying the property. As a purchaser, it’s very important to follow the procedures established by the government when it comes to Mexico property sales.

Mortgages are still relatively new in Mexico, and many land sales are still executed with cash. The concept of an escrow account is foreign, in more ways than one! Some buyers are beginning to incorporate escrow accounts into sales transactions, but don’t be alarmed if your transaction doesn’t involve an escrow account. The money to purchase the land isn’t released to the seller all at once, but rather at certain points in the transaction. Your purchase contract will spell out when funds will be released to the seller while the sales transaction is concluded. It may take several weeks to conclude a property sale.

Since Puerto Vallarta falls within the coastal zone, all Puerto Vallarta property purchased by non-Mexican citizens will be held in trust, in a fideicomiso. Mexican law makes no exception to this rule and this is the only way in which foreign owners can hold property. The fideicomiso is a very safe type of ownership and is frequently used by Mexican citizens as well. In a fideicomiso, a bank of the purchaser’s choosing holds the deed to the property and acts as a trustee in the sole interest of the beneficiary-owner. A fideicomiso is established for 50 years and can automatically be renewed for another 50-year term. A property sale doesn’t have to extinguish an existing trust. Sellers can simply designate a new beneficiary-owner, who will receive the remainder of the fideicomiso, and can then renew it at expiration.

If you would like more information about the safety of ownership for Puerto Vallarta property, mortgage lenders or real estate purchases, please contact a Select Mexico Properties sales representative today. We can provide you with the information you need to get started on your purchase of Mexico real estate.

Photo Credit: Lisa Kong

You want to buy property in the coastal zone in Puerto Vallarta, but you’re concerned because the details of the sales transaction are so different than what you’re accustomed to in the US. How can you be sure that you’re making a safe real estate purchase? What is a fideicomiso? Is being the beneficiary of a trust the same thing as owning land?

One and a half million Americans own residential property in Mexico. Unfortunately, buying Mexico property has gotten a bad name because many foreign buyers have fallen victim to fraudulent property transactions. Yes, there is a way to make safe real estate purchases in Mexico, and a fideicomiso offers so much transaction security that many Mexican citizens prefer fideicomisos to other types of property transactions.

A fideicomiso is a 50-year, renewable trust that is administered by a bank. The bank actually purchases the property and holds the deed for the beneficiary. The bank’s role is to act in the sole interest of the beneficiary, which means that the beneficiary has all the rights of ownership. The bank cannot take away your land or reject its fiduciary obligation to you. The government will not claim your land, and provided that the sale has been properly registered with a notario publico, no one else can establish an ownership claim on your property. A fideicomiso is a necessity if you plan to buy property within 50 km of the coastline or within 100 km of a national border, and a good idea if you plan to buy elsewhere.

There are many caveats to observe when buying land in Mexico. Your best bet is to work closely with a notario publico on the purchase of your property. In Mexico, a notario publico is a real estate attorney with some recognized judicial powers. They are appointed to the positions they occupy. The notario publico verifies that all elements of the land sale are correct and legal, and that the transaction satisfies Mexican law. Since your land purchase must be reviewed and registered by the notario publico, there’s no reason to contract a non-notario publico attorney for additional advice or representation. The notario publico and his or her staff will provide you with all of the advice and guidance you need, as well as the registration services that will close your property purchase.

In short, not only is a fideicomiso safe, it’s the only safe way to buy property in Mexico. Since this method of ownership was established, not one buyer who has established a fideicomiso has lost his property rights. That should indicate the protection that this method of ownership provides.

Photo Credit: Craig Jewell

If you’re considering the purchase of real estate in Mexico and you’re not a Mexican citizen, you should know that Federal law limits foreign ownership of property within 50 km of the coastline and areas designated as border zones. To meet the requirements of the law, coastal property is held in trust, called a Fideicomiso, usually by a Mexican bank.

So do you really own coastal real estate in Mexico within 50 km of the coastline? Yes. Trusts are one hundred percent safe, and work to both establish and protect your ownership rights. In fact, the only way to guarantee your ownership stake is to use the Fideicomiso system.

The local Notario Publico will also register your purchase. In the case of a land purchase, registration is an essential step in establishing your ownership claim. Don’t be tempted to assume that the Notario Publico is a notary public like those in the US. In Mexico, the Notario Publico functions more like a judge than a notary. Notarios Publico must be Mexican by birth; must have studied for a minimum of six months under another Notario Publico; and must be a legal professional with the title of lawyer.

There are other age and character requirements for a Notario Publico, but these qualifications establish him or her to act as an arbitrator, mediator and judge; ensure that all documentation in a land purchase is correct and consistent with Mexican law; ensure that all taxes are paid; and formalize or register all land purchases. In Mexico, the Notario Publico can also issue judicial opinions and intervene in judicial proceedings.

The Fideicomiso system, along with formal registration of property by a Notario Publico, works to ensure your legal rights under Mexican law. When you are ready to purchase land in Mexico, you should work with a qualified attorney to ensure that your rights are properly established and recognized.

Photo Credit: diylibrarian