Understanding Mexico’s Real Estate Regulations: A Must-Read Guide for Overseas Buyers

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Buying property in a foreign country can seem daunting, particularly when it comes to understanding local laws and regulations. However, purchasing real estate in Mexico, specifically in enchanting locations like Puerto Vallarta or Riviera Nayarit, can be a straightforward process if you arm yourself with the right knowledge. This guide aims to simplify Mexico’s real estate regulations for overseas buyers.


The Restricted Zone

First thing’s first, acquaint yourself with the term “Restricted Zone”. Mexico’s constitution restricts ownership of land by foreigners within 50 km of the coast or 100 km of international borders. However, don’t let this put you off. Thanks to a legal concept called a “fideicomiso”, or bank trust, foreign nationals can purchase and control property within the restricted zone.


Understanding the Fideicomiso

The fideicomiso is a bank trust wherein the bank (the trustee) holds the property on behalf of the foreign buyer (the trust beneficiary). The trust has a duration of 50 years but can be perpetually renewed. While the bank holds the title, all rights of ownership, including renovations, rentals, and sales, belong to the trust beneficiary, i.e., the overseas buyer.


The Role of the Notario Publico

In Mexico, a Notario Publico (Public Notary) is much more than a simple document certifier as is common in many countries. They are law-educated officials appointed by the state governor and play a crucial role in all real estate transactions. The Notario Publico is responsible for verifying the land title, ensuring there are no liens on the property, calculating and paying the property taxes, and recording the deed in the Public Registry of Property.


Buying through a Mexican Corporation

An alternative to the fideicomiso, foreign buyers can also set up a Mexican corporation to buy property. This is often preferred by those purchasing commercial property or intending to conduct business in Mexico. However, setting up a corporation involves accountant fees, permits, and it must be done in good faith – you cannot create a corporation solely for the purpose of buying a house.


Closing the Deal

Closing costs on real estate transactions in Mexico typically range between 5-7% of the property’s appraised value, which includes acquisition tax, registration fees, and the Notario’s fees. An escrow service is commonly used to secure the transfer of funds until the transaction has been completed.


While it may initially seem complicated, buying property in Mexico as a foreign national is a well-trodden path. By understanding the basic regulations, and with the assistance of a knowledgeable and reputable real estate agent and Notario Publico, you’ll be one step closer to owning a slice of paradise in places like Puerto Vallarta and Riviera Nayarit.


Remember, this guide provides a general overview only, and rules can vary slightly from state to state. Always seek professional legal advice to understand your obligations fully when purchasing property overseas.

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