Question 1

How can a citizen from another country acquire property in Mexico for residential purposes?

Accepted Answer

If the property that you whish to acquire is located along to the coastline or the Mexican border (the Restricted Zone), you can acquire it through an Irrevocable Trust and Transfer of Ownership Agreement, entered with the fiduciary department of a Mexican bank.
If the property is located outside the Restricted Zone you can simply acquire it with just a permit granted by the Mexican federal government.

Question 2

What is the Restricted Zone?

Accepted Answer

It is a strip of land of 50 km along the coastline and of 100 Km along the borders of Mexico, where by law, foreigners can only acquire property trough an Irrevocable Trust and Transfer of Ownership Agreement, entered with the fiduciary department of a Mexican bank for 50 years and renewable for another 50 year period. 
 
Anywhere else in Mexico a non-Mexican citizen can acquire direct ownership on a property.

Question 3

What is an Irrevocable Trust and Transfer of Ownership Agreement?

Accepted Answer

It is a contract by which the seller of the property (trustor), irrevocably transfers the ownership of a property to a fiduciary institution (Mexican bank), granting the buyer (beneficiary), the exclusive right to use it and exploit it for 50 years. At the end of the 50 years period, this can be extended for another 50 years.
 
The beneficiary can, at any time, sell the property.

Question 4

Can an “LLC” or a Canadian “Inc.” acquire property in Mexico through an Irrevocable Trust and Transfer of Ownership Agreement?

Accepted Answer

Yes.

Question 5

Can a “family trust” or a “living trust” become a beneficiary in an Irrevocable Trust and Transfer of Ownership Agreement?

Accepted Answer

No.

Question 6

Could a non-citizen of Mexico acquire real estate for business purposes in Mexico?

Accepted Answer

Yes. A foreign individual or corporation can acquire property within the Restricted Zone, via a Mexican corporation or an Irrevocable Trust and Transfer of Ownership Agreement; and directly or through a Mexican corporation, if the property is located outside the Restricted Zone.    
 
FMT will be pleased to assist you or your clients in all real estate business endeavors in Mexico.

Question 7

What is the average cost of a real estate closing in Mexico?

Accepted Answer

It can range from 5% to up to 6 % of the purchase price, approximately.

Question 8

Tell me more about the escrow services provided by FMT?

Accepted Answer

Because in Mexico escrow services are not regulated by law, at FMT we recommend using the services of our US-based and regulated escrow service provider. 
An escrow is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. 
It helps make transactions more secure by keeping the payment in a secure escrow account which is only released when all the terms of an arrangement are met as overseen by the escrow company.

Question 9

Whay it is important to perform a Title Search?

Accepted Answer

Before you list or buy a property in Mexico FMT recommends obtaining from the Public Property Registry, a Certificate of No Liens of the property. This document will tell you if the property belongs to the person that is selling it and if it is free of any encumbrance.
 
Nevertheless, we strongly recommend performing a legal title search examination of public records to determine and confirm a property's legal ownership and find out what claims or liens are on the property. A clean title is required for any real estate transaction to go through properly.

Question 10

Tell me more about the closing services provided by FMT?

Accepted Answer

The closing (also called the settlement) is the culmination of a lot of work performed on behalf of the buyer and seller by various real estate related professionals. This can include the real estate agents, attorneys for each party, the mortgage broker, the lender, title insurance company, pubic notaries, etc. They each have a vested interest in making sure that your closing happens timely and without problems.
Given the number of professionals that could be working together to prepare for the Closing, it is important that all parties involved communicate well. With First Mexican Title, our customers can trust that we do everything in our power to provide the best possible service to the buyer and the seller.
It is important to bear in mind that in most cases a closing process in Mexico can take up to 3 months.
On closing day, the buyer and the seller complete the legal transfer of the real estate with the representative of FMT, which will be conducting the settlement. At settlement, both, the buyer and seller or their legal representatives, will review and sign a public deed before a Mexican Public Notary and make affirmations as to certain facts, by this, completing the closing process. 
Settlement can take as little time as fifteen minutes to sign all the documents and transfer ownership. Normally at the end of closing, the seller will receive the funds via wire transfer from the escrow company and the buyer will receive the keys to their new home.
FMT will complete the transaction by supervising the recording the public deed with the Public Property Registry that applies and forward the duly registered public deed containing the title to the buyer in about a month's time.

Question 11

Do you need legal and tax advice before purchasing and selling property in Mexico?

Accepted Answer

Bear in mind that you are acquiring property in another jurisdiction, therefore, there are special sets of tax, administrative and civil laws that regulate the purchase and sale of real estate in Mexico by foreign citizens.
 
FMT will be very happy to advise you or your clients on these important matters.

Question 12

Why the services of a Public Notary in Mexico is much more expensive than in the US or Canada?

Accepted Answer

In Mexico, all real estate transactions must be closed (formalized) before a Mexican public notary, who is a lawyer commissioned by the government for these matters.  Furthermore, notaries in Mexico are responsible to calculate, collect and pay to the local and federal governments, the capital gains tax and the property acquisition tax in all real estate transactions. Finally, notaries are responsible to file the public deeds containing property titles at the Public Property Registry.

Question 13

Is it recommended to purchase title insurance in Mexico?

Accepted Answer

It is commonly accepted in Mexico that it is not necessary to acquire title insurance due to the scrutiny which a real estate closing goes through in Mexico, however, there are a few that think that extra protection doesn’t hurt anyone.
FMT will be please to perform for you the title research required by title insurance companies to issue a title insurance policy.

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