You may not understand every detail that is involved in buying property in Mexico, but don’t let that be a deterrent to purchasing your dream home. The purchasing process is not as complicated as you may think. Here are three steps to complete as a non-local to ensure a smooth purchasing process.
When Mexico was experiencing economic hardship in 1917, the government enacted a law to make it more difficult for other countries to purchase property by setting up a “Restricted Zone.” Once enacted, this regulation made it illegal for a foreigner to directly own property in this zone, which applied to real estate within 100km of any Mexican border, or 50km from any Mexican coastline.
However, through a bank trust called a Fideicomiso, it is still possible for non-Mexican nationals to own real estate along one of Mexico’s beautiful beaches! A Mexican bank is designated as the trustee, holds the title of the property, and is the owner of the record. A non-Mexican buyer then becomes the beneficiary of the real estate trust and enjoys unrestricted use of the land (along with the options of renting or selling it). Once the trust expires after 50 years, the beneficiary has a contractual right to renew, rent, sell, or bequeath the property to whomever they choose.
The Mexican government may not directly or indirectly confiscate your property for any reason except for a public purpose, such as building roads. This act is similar to the U.S. Eminent Domain process and must be done through a legal condemnation proceeding.
There are a few key players in the purchase of Mexican properties. Here is who you need and what they will do for you:
Taxes and fees vary across the states in Mexico, but here are the costs most commonly associated with a Mexican real estate purchase.
Total closing costs including taxes, notary fees, setting up the escrow, appraisal fees, origination fee, application, establishing the trust, and obtaining the SRE Permit will total approximately 5%-7% of the property’s sale price if the property is paid for in cash. If financing is obtained, the total closing costs will be approximately 7%-10% of the property’s sale price. Title insurance is optional but guarantees the property owner that their property is free and clear of any claims, judgments, liens, or other legal issues.
When it comes down to it, the process of purchasing a dream piece of real estate in Mexico is not that different than purchasing a property in many other countries. If you enlist a team that has specific experience and expertise, such as the team at Chileno Bay Resort & Residences, your home buying experience will be hassle-free, safe, and expeditious from start to finish.
To request information about our beautiful beachfront villas, and to begin the process of buying real estate at Chileno Bay, contact Chileno Bay Residences today.