For detailed information about the background, geography, people, government, economy, communications, transportation, military, and transnational issues of Mexico, click here
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Financing a Property
For Americans and foreigners, obtaining a mortgage for the purchase of property in Mexico was previously almost impossible. Historically, most real estate transactions in Mexico have been cash only purchases, due to the lack of available financing options for American and foreign buyers. However, in recent years, U.S. and Mexican banks have begun offering mortgage products for the purchase of real estate in Mexico, recognizing the security of the purchase system, and the popularity of this investment.
U.S. title and escrow companies began entering Mexico in 2004, and since that time, the real estate purchasing process began to take steps to mirror the process in the U.S., adding to the comfort of foreign buyers. Following this, several banks and other lenders recognized the additional security this offered in the lending process, and began to develop the Mexico mortgage loan programs as we know them today.
Contact a member of AMPI to advise you, or refer you to certain financial institutions (banks and mortgage brokers) offering traditional mortgage services
For further information on financing a property in Mexico, click here
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Buying a Property
Article 27 of the Mexican Constitution of 1917 prohibits foreigners from owning outright residential real estate within thirty miles (50km.) of any coastline or sixty miles (100 km.) of either border. This area is known as the “restricted” zone. In 1973, however, the fideicomiso was established and approved for the purchase of real estate located in the restricted zone. For the first time since 1917, a non-Mexican could invest in a recreation or retirement home and feel safe that his or her investment was secure.
Under the bank trust, legal title is placed in the name of a Mexican bank, in trust, under a permit from the Secretary of Foreign Relations. The Mexican bank holds the title to the vacation or retirement home for the buyer/beneficiary of the trust, the non-Mexican who purchased the trust rights in the property. The bank administrates the property in accordance with the instructions of the buyer/beneficiary. The buyer/beneficiary enjoys the same rights of ownership as does a Mexican national. He may build on the property, tear down existing buildings, modify them, rent, lease or sell at anytime conforming only to internal bank regulations for this type of trust and to the general laws of the country established for all persons. Additionally, the beneficiary may finance the purchase and instruct the trustee bank to enter into the security agreement with the lender.
The trustee bank may not, without express written consent from the beneficiary, sell, transfer or encumber the property.
The beneficiary may name the parties he or she selects as co-beneficiaries and may name substitute beneficiaries upon death of the primary beneficiaries, thus avoiding probate in Mexico. Care must be taken however, in establishing the wording and terminology used in the succession of rights in conformance with applicable Mexican law.
A permit to establish a Mexican bank trust (fideicomiso) can now be obtained for a term of fifty years and can be renewed. In acquiring a property with an existing trust, the seller may assign the rights in the existing trust and the new buyer will enjoy the term established in the original trust permit. In other words, a trust established in 1995 will expire in 2045. Prior to 1993, the term of the trust was thirty years. Thus a trust established in 1990 would expire in 2010, unless extended or the original trust permit extinguished and a new permit obtained for fifty years.
Many foreigners acquiring property in the interior (i.e. not in the restricted zone) also put the property in trust in order to avoid the need for probate proceedings for the heirs. If no trust is used a Mexican will indicating disposition of the property is recommended.
For detailed information and professional advice about buying a property in Mexico, consult a member of ICREA’s member association, AMPI.For additional resources on buying property in Mexico, click here
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Other Industry Sources
For additional industry and government sources,
click here Mexican Central Bank
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