Congratulations on your desire to buy a home in Mexico! Follows is the law with respect to where in Mexico you may buy a home outright and where you will need to buy it in Trust.
CONDITIONS TO BUYING A HOME:
Any foreigner may buy a home or land in Mexico that is intended to be a residence. If the home or land falls within 50 kilometers from the ocean [or 31.06 miles] or within 100 kilometers from the international border with the United States or Guatemala or Belize borders [or 62.10 miles], you must hold title to the home or land via a real estate trust [aka FIDEICOMISO]. But if your purchase is outside this Restricted Zone, you do not need a trust and may take title to the home or land by direct ownership. 1993 FOREIGN INVESTMENT LAW:
The law opens Mexico to foreign investment as a general rule and carves out exceptions where foreign investment is either prohibited or regulated.
In the area of Real Property, foreigners may acquire direct ownership rights in the Restricted Zone provided that:
1) it must be for nonresidential purposes, [this includes residential development],
2) incorporate as a Mexican company
3) the transaction is registered with the Ministerio de Relaciones Exteriores office.
When the purpose of use of the investment is residential and made by the foreign investor himself or herself, or when a Mexican company with foreign investors or wholly-owned foreign investors seeks to acquire land, property, or buildings ( in either case in the Restricted Zone), the transaction must be undertaken trough a FIDEICOMISO or REAL ESTATE TRUST - a Real Property Trust via the bank. HOWEVER, when there is residential development the foreign developer can be considered to be involved in non-residential activities, i.e. not living in it, and hence no trust is required and direct ownership ensues. But if the foreign developer intends to keep one of the condos or homes, then that unit only must be held via a real estate or fideicomiso trust.
The Trust must also be registered with Relaciones Exteriores (Office of Foreign Relations in section III of the Registry), the bank becomes the trustee, and the beneficiary [foreign investor person or Mexican company with foreign investors] is given the rights to use and profit from the land without acquiring direct ownership rights.
CAVEATS:
PROVING CLEAR TITLE:
There are three ways to prove clear title:
1. Escritura, or title to the land or home.
2. Certificado de libertad de gravamen, or certificate of no liens.
3. Predial pagado, or property tax paid.
This is the most important aspect of purchasing property anywhere but in Mexico be extra careful and confirm that the person or seller of the property is, in fact and in law, the legal owner of that property.
·There is no formal escrow in Mexico but a Conditional Deposit Agreement should be utilized and the bank to act as trustee should also act as the escrow agent.
·Trusts provisions are good for up to 50 years and may be renewed for up to another 50 years at the request of an interested party.
·Relaciones Exteriores (Office of Foreign Relations) is given the lead role in the regulation of foreign investment.
·In Mexico, all parties (Mexican and foreigners) need to register with Relaciones Exteriores in order to constitute a Mexican company and during this process the newly-created entity must elect one of two clauses:
1) Exclusion of Foreigners clause, or
2) Calvo clause agreement (Article 27 of the Mexican Constitution).
·Foreign persons who regularly operate in Mexico and Mexican companies with foreign investment must also register with Relaciones Exteriores.
·Existing Mexican companies who obtain foreign investment capital must change their Exclusion of Foreigners Clause to the Calvo Clause (Article 27) in order to acquire real property rights thereto in Mexico.
·Relaciones Exteriores reserves the right to verify compliance on any matter associated with the trust permits.
·The permit for the bank to acquire title to the land as Trustee must be granted or denied within 30 business days of the application or it is deemed automatically granted. The registration of the acquisition into Relaciones Exteriores must be within 15 business days of its application for registration or it is deemed automatically granted.
·Sanctions for the contravention of its provisions, such as anyone involved in an effort to transfer ownership rights over to the foreign investment in violation of the relevant provisions of the law may be subject to fines up to the amount of the transaction, in addition to possible civil and criminal penalties.
dtmlaw@gmail.com
dtmlaw@gmail.com
