FAQ

Frequently Asked Questions

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Can a citizen of Canada or of the USA own real estate in Mexico?

Yes, a Canadian or USA citizen can own real estate by placing the property in a bank trust. (Fideicomiso)

Can the property I own be near or in front of the ocean?

Yes, laws passed in 1973 and 1993 have made it possible for foreigners, foreign firms, and Mexican firms with foreign participation to acquire interests in coastal real estate through a bank trust.

Who is involved in a bank trust?

There are Three parties involved in a bank trust. The seller of the property, which is the Trustor, the bank, which is the Trustee (Fiduciario), and the buyer, which is the Beneficiary (Fideicomisario.)

How much does the Bank Trust cost?

The initial fee is approximately $500 USD for establishing the Trust. In addition, the bank collects the first year’s annual fee of about $500 depending on the bank. This information is based on the current fees the bank charges parties opening a Bank Trust .

Are there additional fees for the Bank Trust?

Yes. There are additional fees for the Bank Trust which is usually between $450 and $600 USD. The bank charges an annual fee to cover its services as a Trustee.

How does a trust function?

Title of the property is transferred to a trust with a Mexican bank acting as Trustee. The Trust Agreement is formalized by the issuance of a permit from the Mexican Ministry of Foreign Affairs. The property buyer is then designated as Beneficiary in the Trust and the beneficiary rights are recorded in the public record by a Notary Public.

What are my rights as a buyer?

As Beneficiary, you have the right to sell your property without restriction.The Trust is a legal substitute for fee simple ownership, but in many cases, the Trustee is the legal holder of the property. You may also transfer your rights to a third party or pass it on to named heirs.

Is the Trust Renewable?

Who is involved in Real Estate transactions in Mexico?

There are normally five players involved in a real estate transaction.
1) Real estate company(ies)
2) Seller.
3)Buyer.
4) Bank.
5)Public Notary.

What role does a Public Notary play?

A Public Notary is a government-appointed lawyer that ensures the proper transfer of the property by processing and certifying all real estate transactions including drawing up and reviewing all official documents.

What are these official documents?

The official documents which are required by law in order to transfer the ownership of property in Mexico include the following :
– A no-lien certificate based on a complete title search from the Public Property Registry.
– A statement from the municipality regarding property assessments.
-Water bills.
-Other pertinent taxes that might be due.
– Appraisal of the property for tax purposes.

If at a later date I decide to sell my property, can anyone buy it?

Yes. If the new buyer is a Mexican National, you can instruct the bank to transfer title to the buyer. If the buyer is also a foreigner, you can simply assign the beneficial rights to your trust. If the buyer decides to open their own new trust with a bank, they also have that option.

If the buyer is a foreigner, is his interest limited to the balance of my 50-year period?

Yes and No. For a buyer getting a new trust, they will automatically have a 50-year trust.
If a buyer were to take over an existing trust, they can renew or extend the trust for an additional 50 years after the remaining years expire.

How much is the transfer tax?

The real estate transfer tax ranges between 2% to 4% of the tax appraisal value, which is generally less than the sales value.

When buying or selling a property in Mexico, who pays the closing costs?

It is common practice that the buyer pays the transfer of acquisition tax and all other closing costs, including the Notary’s fees and expenses, while the seller pays his capital gains tax and the broker’s commission.

How much are closing costs?

The rest of the closing costs, excluding the transfer taxes, vary from 3% to 5% of the selling price.

How long does the home buying process take?

The buying process takes from 30 to 60 days when using a Bank Trust. The process usually takes a week for Mexican national buyers.

How do I pay for a real estate purchase?

An Escrow service held by a third party on behalf of the buyer and seller manages the money portion of the transaction.

Is there a difference between an agent and a realtor?

Yes, a REALTOR is a professional real estate agent who holds membership in the National Association of Realtors through membership in the Mexican Association of Professional Real Estate Agents (AMPI). A REALTOR is held to a higher standard of ethics and strict codes of conduct and continuing education. Ask for an AMPI agent.

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