1. HOW CAN I PURCHASE A PROPERTY IN MEXICO?
Foreigners can own property within Mexican territory, however, they cannot hold property titles within 100 km of the border and within 50 km of the coast. This area is known as the restricted zone.
However, in Mexico there is a System that allows foreigners to buy a property, providing excellent protections for the owner of the property.
To purchase real estate in the restricted zone, foreigners must acquire the property through a bank trust formalized with a Mexican banking institution. As the purchaser, you will be designated as the primary beneficiary who can designate substitute beneficiaries in the event of death, thereby avoiding probate proceedings in the event of death.
The bank trust is established for 50 years, renewable for the same period of time. Before expiration, the trustee bank will inform you that it is time to extend the term for another 50 years.
2. CAN I ACQUIRE IN CO – PROPERTY?
Yes. In the trust, both co-owners will be designated as primary beneficiaries. It is common for such co-owners to designate themselves as substitute beneficiaries, and they may also designate other third parties, such as their children, as substitute beneficiaries in the event of death.
3. CAN I PURCHASE THROUGH AN LLC?
Yes, the trustee bank would designate the LLC as the primary beneficiary of the trust. However, since the LLC is a foreign entity, there are additional requirements for such LLC to conduct business in Mexico.
4. IF THE BANK THAT HOLDS MY TRUST CLOSES, IS THERE ANY RISK OF LOSING MY PROPERTY?
No. With the assistance of the Mexican Banking Commission, the trust bank would be replaced by another.
5. WHAT ARE MY CLOSING COSTS?
Closing costs are generally paid by the buyer and vary on a case-by-case basis, depending on the purchase price, and are generally between 5% and 9% of the purchase price. Closing costs include notary fees, government taxes and duties, bank trust fees, government permits, title insurance fees, and more.
Seller is responsible for Capital Gains Tax, unpaid utilities and property taxes. Such fees must be paid at or before closing. ARK REALTY will make sure all items are paid for, so the buyer receives a clear title.
6. WHAT IS THE ROLE OF THE NOTARY PUBLIC IN MEXICO?
The notary public is an official appointed by the government. Part of his responsibility is calculating, withholding, and paying taxes on behalf of the buyer and seller at closing. The notary public will issue a deed by means of which the real estate transaction will be formalized, and this document will be registered in the Public Registry of Property.
7. PROPERTY TAXES
As a general rule, property taxes are very low in Mexico. Property taxes vary depending on the jurisdiction in Mexico in which your property is located. Taxes are paid annually, and the assessed value is determined at the time of sale and is based on the purchase price.
8. ONCE I OWNER, HOW DO I TRANSFER TITLE?
As the primary beneficiary of the trust, you would instruct the trustee bank to:
i) extinguish the trust and transfer the title if the buyer is a Mexican national, or
ii) assigns the rights of the trust agreement to a foreign buyer
9. WHAT ARE THE NEXT STEPS:
1. FIND YOUR PROPERTY AND SUBMIT AN OFFER,
2. IF THE OFFER IS ACCEPTED, the following is:
– Carry out due diligence to verify that the property is in good legal standing.
– Draft the deposit and purchase contract in both Spanish and English.
– Coordinate with the notary public and the trustee bank the draft of the deed that will contain the trust.
– Receive funds in trust.
– Be a closing date to execute the deed.
– Release funds from the guarantee deposit, once the terms and conditions agreed by the parties are fulfilled.
– Submit a certified copy of the deed.
10. WHAT ARE THE DOCUMENTS THAT WERE EXPECTED TO BE PROVIDED FOR THE TRANSACTION?
– Copy of passport and driver's license.
– Copy of proof of address (no more than 3 months).
– KYC document (Know Your Customer).
– Entry visa at closing.