 The Fideicomiso - In spite of what you may have heard, foreignors can own property in Mexico. However, in accordance with Mexican law, foreigners can not acquire direct ownership of residential property 60 miles from the border and 30 miles from the coastline. This area is known as the restricted zone.
In the restricted zone, however, banks can act as trustees for foreignors interested in purchasing real estate. The trust is known as the Fedeicomiso. It works essentially like a trust in the US. The trust has legal ownership of the property and you own the trust. There is an initial fee to set up your trust and an annual maintainence fee. Generally, the fee to set up this trust is about $550 and annual maintainence fees are about the same.
The seller must cancel the existing trust. Your loan will move quickly, the transfer of title may not. Don't wait until the last minute! To ensure that your transaction is not held up, make sure that the seller has applied to cancel their existing trust.
Title insurance is not required in Mexico, but it is highly recommended, especially for properties not located in larger developments. We work with and recommend Stewart Title. We work very closely with developers and can help you get a discount on title services as well.
Always record the real purchase price of your home. Don't let anyone try to talk you into recording the sale for less than the amount you agree to pay. This has been a common practice in Mexico but will cost you thousands of dollars in capital gains taxes when you decide to sell. We are happy to explain how the process works...please ask.
If you're buying in Mexico and want to finance it...TALK TO US FIRST! It is extremely important to coordinate your financing at the beginning of the transaction in order to protect your deposit! In addition to important verbiage in the contract, you will also want to set up a loan contingency. This gives you time, usually 21 days, to make sure that your finances are in order and to make sure that you qualify for the loan you want. Of course, contacting us first to get pre-approved for your loan is even better because it gives you the same negotiating power as a cash buyer!
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