Living in Mexico is, for sure, a nice proposition for many Americans. But is it possible for Americans to buy and own Land in Mexico? Let’s find out.
It’s perfectly legal for Americans to buy and own land in Mexico without any restrictions. However, you’ll have to set up a bank trust (fideicomiso) if you want to buy land or properties in restricted zones that include 31 miles from the Mexican coast and 62 miles from Mexico’s borders.
To be able to offer accurate information, I keenly followed the legal steps offered by Lee Harrison, an American ex-pat who has bought a beachfront property and lived in Mexico for over 8 years. I also followed the story of Amy and Chad Wells, an American couple who own a three-bedroom vacation home in Baja California, Mexico as they highlight the somewhat tedious process of fideicomiso.
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Can Americans buy land in Mexico?
As a foreigner, you’re legally allowed to buy and own land in Mexico. Unlike in the past, the process is straightforward with clear-cut rules on what needs to be done. There are, however, a few special rules that you’re required to abide by when purchasing property in Mexico.
While you can buy land in most parts of Mexico, things can be a bit tough if you want to purchase land near the country’s borders or a beachfront property. In addition to the extra fees, you’ll be required to adhere to the conditions of the 1993 Foreign Investment Law of the United Mexican States.
What does the law say concerning Americans buying and owning land in Mexico?
As I noted earlier, Mexican law is clear and straightforward when it comes to Americans buying and owning land in Mexico. While you can buy land anywhere within the country, you’re required by law to use what is known as fideicomiso when buying land in areas known as restricted zone (Zona Restringida).
What is Fideicomiso?
Before digging deeper into fideicomiso (bank trust), it’s important to understand what Mexican nationals refer to as a restricted zone. The Mexican constitution uses the phrase “Restricted Zone” to refer to some of the most desirable lands or areas that foreigners might want to buy.
Restricted zone normally refers to land and properties that are within 31 miles (50 km) of the Mexican coastal line and 62 miles (100 km) from Mexico's international borders. These areas are generally prime, so you’ll need a fideicomiso to purchase such areas.
With that in mind, a fideicomiso is a bank trust that foreigners must use to legally purchase property in a restricted zone.
Since the 20th century, foreigners were not allowed to hold land in their names within the restricted zone. But in 1973, the Mexican government began relaxing these laws as a way of encouraging foreign investment.
The current version of this law was introduced in 1993 and it allowed foreigners to own land within the restricted zone as long as they use fideicomiso.
The idea of using fideicomiso is to allow foreigners to buy property in a restricted zone through the trustee, which must be a bank within Mexico. This means that the bank (the trustee) is the legal owner of the land but you (the foreign buyer) are the beneficiary of the trust, so you have all the rights to lease, rent, sell, or pass on the land.
Features of Fideicomiso
Given that fideicomiso is the safe and legal way for Mexican foreigners to own residential or commercial property in Mexico, especially in prime areas along the ocean, it’s important to know its features. They include:
- A fideicomiso lasts for 50 years. It can thereafter be renewed by the owner or his heirs.
- It doesn’t expire provided that it’s renewed after 50 years.
- It can be held by one or more individuals. In other words, a couple can own a fideicomiso and even list their heirs.
- It can be easily transferred when the owner sells the property.
- You can hold multiple properties in Mexico using a single fideicomiso.
- Setting up a fideicomiso costs you between $500 and $1,000.
- It has annual maintenance fees ranging from $500 to $700.
What are the advantages of using Fideicomiso to buy land in Mexico?
Besides allowing you to buy and own some of the prime lands within Mexico, the fideicomiso gives you a certain level of asset protection. This is because it allows you to do estate planning and pass your private property to your heirs even without a formal Mexican will.
On the other hand, the process of setting up a fideicomiso is tedious and bureaucratic. It must also be renewed after 50 years!
Is there any alternative to Fideicomiso?
For some reason(s), you may want to buy and own land in Mexico without the fideicomiso. Well, you can consider forming a Mexican corporation.
Forming a Mexican corporation requires at least two partners. The best part is that all the partners can be foreigners, so you do not require a Mexican national to open a corporation. This will take you around two weeks and will cost you about $1,500.
After forming a Mexican corporation, you can use it to acquire land and properties within the country following the normal process just like Mexican citizens would do.
The only downside of acquiring land through a Mexican corporate entity as a foreigner is that you can’t act on behalf of the corporation unless you have the country’s resident status. This means that you can only act through the power of attorney, which gives the attorney control over your money, land, property, or anything else that you buy through the Mexican corporation.
With that in mind, you can acquire property in Mexico through a Mexican corporation if you want to start a business in the country. But if you want to buy land or residential property for residential or personal reasons, then fideicomiso is the best option for acquiring land in Mexico.
What’s the process of buying property in Mexico as an American?
Still interested in buying property in Mexico? Well, let’s highlight the process of buying property in Mexico as an American.
Find the right property
One of the first things to do is to find the right land, residential, or commercial property in Mexico. Of course, you wouldn’t like a residential property up in the cold mountains when your desire is to live in a beach property in Mexico.
As such, it’s important to work with a credible Mexican real estate agent to help you find the right private property for you.
Make an offer
You can make an offer to the seller either verbally or through a promissory agreement (contrato de promesa) via the realtor.
Document and sign the sales contract
You should be ready to start the formalities once you mutually reach an acceptable deal. In most cases, these processes will be done by your Mexican real estate agent or Mexican lawyer working together with the notary. All you’ll have to do is go through the documents, sign them, and write the check.
The sales contract is known as the promesa de compraventa. It stipulates the price of the land and the terms of the sale including payment arrangements and penalties for defaulting.
Pay the deposit
If you’re okay with the sales agreement and documents, you’ll be required to pay a deposit, which should be between 5% and 10% of the sale price. You have to make sure that the records of all your real estate transactions are safely kept.
Create Fideicomiso if the property is within the restricted zone
If the land is within the restricted zone, you’ll have to create a fideicomiso or have the fideicomiso of the previous owner transferred to your name during the real estate transaction. The fideicomiso lasts for 50 years, so you have to make sure that it’s valid or renewed accordingly.
Obtain permission to complete the purchase
This permission to complete the purchase is obtained from the foreign secretary’s office through your notary. You’ll be asked to sign a statement that you’re bound by Mexican law and won’t seek foreign legal jurisdiction in dealings concerning your property in Mexico. In short, Mexican property laws will always govern your land dealings.
Although title insurance isn’t a must, you shouldn’t ignore it. It might come in handy just in case someone else claims your land either by fighting your case in Mexican courts or trying to reimburse you.
Get the official valuation
Known as avaluo, your notary will arrange or perform this activity. The valuation is for property tax purposes.
Sign the Escritura
Once you paid all the outstanding costs and finalized your purchase, you’ll sign the escritura at your notary’s office. This will become your property title and the registration of the property in Mexico will start as soon as you make the final payment.
Ownership registration and closing costs
Once you pay property taxes on your beachfront property and other fees, the property will be registered in your name. This can take about three months.
The closing costs are generally 5% of the purchase price. It includes a notary fee of not more than 1.5%, a Mexico transfer tax of 2%, a fee for setting up the fideicomiso, and a few other fees here and there.
Here is a table of the costs involved when buying property in Mexico.
The average Cost of Buying Land in Mexico
Now that you can legally buy and own land in Mexico as an American, you probably want to know the average cost of buying property in Mexico. Well, there’s something for everyone from smaller plots to large pieces of land. It all depends on what you want and where you’re looking for.
With that in mind, here’s a look at the average prices of land in some of the areas where you might want to buy property.
Keep in mind that I’ve done extensive research and these are some of the best places that Americans buy property in Mexico. Again, the prices below are just for land without beachfront property.
How can you find land in Mexico?
If you do not have a trusted partner in Mexico, your best option for finding land to buy in Mexico is online. You can consider looking at the following real estate listings.
- Century 21 Global
- Point 2
- Baja 123
- Lamudi (Spanish)
- Metros Cubicos (Spanish)
- Top Mexico Real Estate
Is it safe to buy land or property in Mexico?
Besides its proximity to the United States, Mexico has a lot to offer to Americans. From Mexico’s great weather, and vibrant culture to its gorgeous beaches and amazing scenery, there are endless reasons why many Americans are looking to buy land and own property in Mexico.
According to the Annual Global Retirement Index, Mexico regularly features in the top 10 of the best retirement destinations in the world. And even if you aren’t looking to retire, land and real estate in Mexico is generally affordable so you might be tempted to give it a try.
However, the question that’s probably lingering through your mind right now is whether it’s safe for Americans (or foreigners for that matter) to buy land or property in Mexico. Well, here’s the good news!
It’s very safe for foreigners to buy land in Mexico. But just as you would with any major investment such as buying property, you have to perform due diligence before making any purchase or signing any contract.
Are there risks involved in buying and owning land in Mexico?
While it’s legally possible for Americans to buy and own land in Mexico, it’s important to tread carefully and with due diligence. Without this, you may not only lose your hard-earned money but you may as well find yourself embroiled in a legal dispute.
That being said, here are a few things that you should know when buying property in Mexico.
A sales contract written in English is not valid
Yes, you read that right! A sales contract that’s written in English may not be valid! Spanish is the official language in Mexico, so all the paperwork including your sales contract and closing documents must be in Spanish!
If you happen to deal with a good and honest realtor, he/she will provide you with an English version of the contract. This is to help you understand the terms of the deal and everything else that’s included.
But even with this, you must keep in mind that the Spanish version of the contract will prevail if any conflict arises from the English version.
Stay Away from Ejido land
Some years ago, there were heart-wrenching cases where the Mexican government repossessed land and properties owned by foreigners in Baja California. If you dig deeper, you’ll find out that most of these properties were on what’s classified as Ejido land.
Ejido land is almost similar to native reserves in the United States. Through 1917’s land reforms, the Mexican constitution set aside ejido land for communal use which is generally owned by the state.
The system gives Mexicans what’s known as “usufruct rights.” This is to say that Mexicans can use the ejido land but cannot change it substantially or sell it. And while you can use the ejido land, whatever is on the land is ultimately owned by the state!
So when looking to buy land in Mexico, you have to be very careful. In other words, do your due diligence and stay away from any deal involving ejido land. This is because it’s illegal for ejido land to fall under foreign ownership.
Although it’s technically possible to privatize ejido land, the process is always very complex and may involve falsifying documents and bribing officials, so you should just avoid ejido land at all costs.
How to avoid getting scammed when buying property in Mexico
Keep in mind that the possibility of getting scammed when dealing with Mexicans is high. You can do the following to lower your chances of getting scammed.
Know the real estate market
By knowing how the Mexican real estate market works, it’ll be impossible for the prices of land that you’re interested in to rise out of nowhere. In short, do not accept to buy land if the prices are suddenly hiked just because you’re American.
Get a referral
It’s not a must for real estate agents in Mexico to be licensed or even get trained. This means that they act independently and it’s a lot easier to fall prey to unscrupulous agents.
For this reason, it’s recommended that you get a referral from a trusted friend or an associate.
Meet the seller
While you can work with real estate agents, you must meet the seller. Get to know him, his reason for selling, and any other information that might be of help to you.
Do not wire or mail money
When buying land in Mexico, you should make sure that all your real estate transactions are done face-to-face. If the seller is unwilling to meet you, then walk away from the deal.
Trust your instincts
Walk away from the deal if your instincts tell you that something is amiss.
About THE AUTHOR
Brittany has been in the land business since 2020 when the world was starting to shut down. Since then, we’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans mostly in the western United States. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.Read More About Brittany Melling