In this section we will explain how to buy or rent ‘safely’ and what you should ‘beware’ of.

As we have said in the “Real Estate” section - NEVER, NEVER, NEVER buy property that is Ejido Land or Indigenous Land – no matter how good the deal.  Land in these areas cannot be owned by foreign nationals.

Yes, there have been cases where land in these categories has been ‘regularized’ and can be owned.  If offered land in these areas that is "in the process of being regularized", NEVER, NEVER, NEVER – you know the rest!  Wait until the regularization process is complete and you can actually take title in your name before you even consider buying.

In most areas where foreigners choose to live, you will find lots of Real Estate companies, many of which have franchises from the major companies you are familiar with.  However, there are some differences you should be aware of.  The Real Estate companies in Mexico are not regulated the same way they are in the United States and Canada.  Just about anyone can become a Realtor if they have a visa with working papers or if they are a Mexican national.  In some areas, like Lake Chapala and the popular coastal areas, there are local organizations (similar to our MLS) that Realtors can belong to (although they don’t have to).  These organizations usually require a certain amount of basic training to quality for membership.  It is always important to deal with a reputable Realtor.

The process of buying a home here is much like it is north of the border.  However, the formal contract and title transfer is handled by a notary, not a lawyer.  Typically you will sign a preliminary sales agreement, usually in English.  If it is not in English be sure to have it translated so you understand the contract.  The formal agreement will be executed on closing in the presence of the Notario.  Both buyer (or whoever they appoint as Power of Attorney) and seller (or whoever they appoint as Power of Attorney) attend the closing, along with their respective real estate agents.

Both the buyer and seller use the same Notario, and the buyer is responsible to pay all the closing fees and the seller of course, pays the real estate commission.  It is the Notario’s responsibility to go over the contract with both parties to ensure agreement, ensure that the title is clear and taxes are paid and to verify that the seller is paid the agreed amount.  If everything is correct, he will have both parties sign and then arrange for transfer of title.  He will also handle the required government documentation.

Handling the money is different than back home. It is not normal for the Notario to receive and disburse the payment for the property.  This is usually handled by the Realtor (if you are using one), or by private arrangement with seller or developer. 

Title Insurance is just now being introduced to this area of Mexico and so far is not widely used.  (Americans are used to the US Banks insisting on Title Insurance where mortgages are involved.  Title Insurance isn’t used in Canada.)

If you are buying property in the ‘Restricted Zone’, the process is very similar except that instead of transferring title to the property, the Notario will arrange for a Bank Trust with the buyer(s) as beneficiaries. 

Direct Deed – you can name your beneficiary, however, he/she must be a ‘vertical’ family member i.e. spouse, parent, or blood child – not aunts, uncles, cousins or step children.

Fedicomiso – one benefit of a trust is you can name anyone as beneficiary.  It is a very simple procedure.  Upon providing ‘proof of death’, the beneficiary is elevated to the position of Trustee, and then they can add their own beneficiary.  The downfall of the trust is the annual fee.

Another option for owning property is in a registered Mexican company.  Foreigners can own a Mexican company 100% (depending on the business), contrary to how it was many years ago.  The company can own property, even in the ‘Restricted Zone’.  The company is a legal Mexican entity and can own property, even if the company is ‘foreign owned’; with a company there is no need for a trust. The company would however, have to pay capital gains on the sale of the property.