FAQ

Can non-Mexicans own real estate in Mexico?

Ownership of real estate in Mexico is via a Mexican land trust called a fideicomiso (fee-day-coe-me-so). The trust has a term of 50 years and can be renewed in perpetuity to allow for long-term control of the asset or to will the land from generation to generation.

What is the history of the Mexican property trust/fideicomiso?

With the advent of the North American Free Trade Agreement (NAFTA), the Mexican government recognized that it was crucial to make foreign investment in Mexico safer and easier for non-Mexicans. Because the Mexican Constitution prohibits non-Mexicans from purchasing or owning real estate within 60 miles of the U.S. international border, or within 30 miles of the Mexican coast, an innovative and secure method of holding title was created. This method allows non-Mexicans ownership through a Mexican property trust called a Fideicomiso. This is a trust agreement, much like an estate trust in the U.S., which gives the Purchaser all of the rights of ownership. In order to gain the rights of ownership, the Department of Foreign Affairs in Mexico City issues a permit to the Mexican bank of the Purchaser’s choice, allowing the bank to act as Purchaser of the property. Essentially, the bank acts as the “Trustee” for the trust and the Purchaser is the “Beneficiary” of the trust. The trust is not an asset of the bank; the banks simply act as the Trustee to hold the trust.

What is the function of the trustee bank?

Much like living wills or estate trusts in the U.S., the Mexican bank, or Trustee, takes instruction only from the Beneficiary of the trust (the Purchaser). The Beneficiary has the right to use, occupy, lease and possess the property, including the right to build on it or otherwise improve it. The Beneficiary may also sell the property by instructing the Trustee to transfer the rights to another qualified Purchaser, or bequeath the property to an Inheritor. The initial term of the trust is 50 years, however the trust can be renewed for additional periods of 50 years indefinitely, providing for long-term control of the asset.

What rights do I hold as a purchaser of Mexican real estate?

A Purchaser holds the same rights as a property owner in the U.S. or Canada, including the right to enjoy, sell, rent, improve the property, etc. This is not to be confused with a land lease. The property purchased is placed in a trust with the Purchaser named as the Beneficiary of the trust — the Purchaser is not a lessee. If the property purchased is already held in a trust, the Purchaser has the option of assuming that trust, or having the property vested in a new trust.

What is a Notary?

Notary in Mexico, officially called a Notario Publico, is a licensed attorney. They are certified by the State or Federal government to act as an official and unbiased representative of the government of Mexico. A Notary in Mexico has far greater responsibility than a Notary in the United States or Canada. The Notary will perform a number of tasks including the authentication of legal documents, the calculation of capital gains tax, and is responsible for approving and sanctioning every real estate transaction in Mexico. Any real estate transaction not ratified before a Notary and duly recorded in the Public Registry is considered invalid and not an enforceable sale and/or purchase.

What does the Notary do in a real estate transaction?

In a real estate transaction, the Notary is equally responsible to both Buyer and Seller – a bipartisan participant responsible to the Mexican government. A Notary’s job is to insure the legality of the transfer of title, to calculate and retain Seller’s capital gain tax on behalf of the Mexican government, to collect the Purchaser’s 2% Acquisition Tax, and finally to pay appropriate departments such as the Department of Foreign Affairs. A Notary also will coordinate appraisals, certificates of no liens, certificates of no debt and request all corresponding permits. After Closing, the Notary must record the transaction at the Public Registry and at the Cadastral Office (Tax Office). For this service the Notary charges a fee based on the value of the property.

Why hiring a Closing Lawyer is important?

Much like a title and escrow agent in the United States or Canada, the Closing Lawyer’s role is to coordinate all aspects of the sale process, working with both buyer and seller and their respective legal counsel or representatives to perform the following services:

• Act as a liaison between the buyer, seller and Mexican Notary
• Collect all documentation required from both buyer and seller to perform the transaction in Mexico
• Oversee and coordinate the completion of all due diligence requirements
• Research the complete recorded history of the property and ensure that the title is free and clear of encumbrances by the date of closing. If there are recorded easements and encroachments that limit the rights to use the property, the Closing Lawyer will alert all involved parties
•  Prepare the escrow agreement and instructions to be signed by buyer and seller and coordinate and confirm all deposits to a unique 3rd party escrow account
•  Obtain all title commitments and title insurance on behalf of Buyer
• Create and provide all final closing statements, prorates and escrow instructions
• Provide you with a final closing binder, complete with your Trust, final statements, receipts, copies of all executed agreements and all documentation related to the closing process.

What is a Terminación de Obra?

The main objective of a Terminación de Obra is to notify the Secretariat of the conclusion of a maintenance, construction, or minor reconstruction project. For more information on Terminación de Obras, please click HERE.

What is Licencia de Construcción de Obra Mayor?

A Licencia de Construcción de Obra Mayor is the permit required to build a space greater than 50 m2 (square metres). To obtain more information on the permit requirements, click HERE.

What is an Aviso de Uso y Ocupación?

This is the document that guarantees that your property is 100% habitable and once issued, the owner is solely responsible for the operation and maintenance of the property. The Adviso de Uso y Ocupación is often linked to the Terminación de Obra. For more information, please click HERE.

What is a RFC?

Simply put, a RFC is your tax ID, and allows you to engage in economic activity in Mexico and for you to pay income taxes. With a RFC you can also issue and receive facturas. It is important when you are filing taxes in Mexico to obtain as many facturas as possible. Collecting facturas will help to offset the amount of taxes you have to pay to SAT. You must be a legal resident of Mexico to obtain a RFC. A RFC is not required to purchase or sell property in Mexico, there are provisions in the law that allow foreigners acquire and sell real estate without it. For more information on RFCs, please click HERE. **Note: a Mexican corporation will never have a CURP, only a RFC**

What is a CURP?

A CURP is a population registry code. You are automatically issued one of these if you are a Mexican National or once you become a resident. This unique identifier will be printed on your temporary or permanent resident card. For more information on CURPs, please click HERE.