Foreigners Buying Real Estate in Mexico are Advised to Hire a Mexican-Based Lawyer

Mexico’s real estate market is diverse and robust and if purchased through the correct channels, a secure investment. The Mexican real estate market continues to flourish offering excellent ROI in the form of vacation rentals, appreciation for investors and a better lifestyle with affordable luxury housing for your retirement.

Foreigners can purchase property in Mexico however, there are restrictions regarding buying property within the restricted zone, which is any property within 50 kilometers from the coast or 100 kilometers from the border.

Foreigners may purchase property within restricted zones, provided it is held in a fideicomiso (bank trust), or the buyer can create a Mexican corporation. The trustee bank is a Mexican bank authorized by the federal government to act as trustee. Owning property through a fideicomiso provides the buyer with all the rights and privileges of property ownership, and although the bank holds the property, it is not considered a bank asset.

Before a foreigner can purchase property in Mexico, there are several steps to complete, information to verify, and the process may be intimidating and frustrating if you do not have the proper representation.

There are many reasons why it is crucial to consult a Mexican real estate lawyer before making an offer or signing any documents. We will address a few of the benefits of using a lawyer in this article.

The Notario and the Lawyer
Some buyers believe they do not need to hire a lawyer since the notario is required to register the title deed in the public registry. Unfortunately, there are still many issues that may arise regarding the title on your purchase.

A notario in Mexico is an experienced lawyer who has been licensed by the Federal Government and the State. The notario is responsible for verifying the identity of the parties and the registration of the deed at the Public Registry Office. If the real estate transaction has not been recorded in the public registry by a notario, it is not valid.

It is true the notario publico is required to finalize every real estate transaction, but the notario does not represent you. They are an unbiased representative of the government. Although the notario registers the property and issues certificates of no encumbrances, if a discrepancy is found after the fact, the buyer will have no recourse against the government or the notario for any errors.

If you do not speak fluent Spanish we suggest you retain the services of an English-speaking internationally licensed lawyer who is governed by, and accountable to a professional order.
A lawyer will perform a complete title search on the property, researching the chain of ownership, confirming the seller is authorized to sell the property, and make sure no one else has a claim on the property.

Dealing with government agencies and utility providers can be difficult at the best of times nevermind under time constraints. The lawyer will deal with these agencies for you.

Your lawyer will deal with the following processes on your behalf:

• Prepare the contract and review the terms and conditions of the transaction.
• Submit the permit to the Mexican Ministry of Foreign Affairs.
  
• Provide a comprehensive title search on the property and reveal any liens.
  
• Collect all the non-debt certificates from government agencies.
  
• Arrange appointments with the bank to create the fideicomiso.
  
• Confirm that property taxes are paid to date.
  
• Obtain an active cadastral (property survey)
  
• Review your plans for the property and determine the best strategy for the purchase.
  
• Review options for creating a Mexican corporation for property ownership without a fideicomiso.
  
• Coordinate with the notary public, bank and verify the seller’s documentation.
  
• Provide accounting, tax reduction and capital gains advice.  
  
• Confirm the property may be titled and it is not Ejido land.

There is no need to buy title insurance; a competent lawyer will ensure you receive the title deed.

Do not expect your lawyer from back home to represent you during a real estate transaction in Mexico since only a licensed Mexican attorney can provide advice on Mexican law.
 
Pre-Construction Contracts
Many foreigner investors enjoy the perks and the discounted price of a pre-construction sale. In these cases, you are trusting the developer to use your funds and eventually deliver the property and the title deed.
This is risky if you do not have a solid contract reviewed by a lawyer. The lawyer will ensure your funds are protected if for any reason the project is not finished, the developer declares bankruptcy or you do not obtain a title deed. Your lawyer should conduct due diligence on the developer and determine their legal status, license, and ensure all building permits are in order, review the company’s history and previous projects, and finally confirm the title holder of the property.

There is no Title Deed on Ejido Land

Foreigners have heard stories about the Mexican Government repossessing property and question whether buying in Mexico is a safe investment. These incidents may be referring to foreigners who have purchased Ejido land ‘propiedad comunal.’

Foreigners have bought land from private citizens at a discounted price only to find out that they do not legally own the land. Ejido is property given to Mexican citizens for agricultural purposes, it is not private property and was not intended to be sold to foreigners.

A lawyer will establish whether or not the property you are interested in is Ejido land.  Purchasing Ejido property puts your investment in jeopardy since the communal commissary or the government may reclaim these properties at any time. This scenario took place in Puerto Vallarta where a developer sold condos on Ejido land.

Other examples of loss of property include foreigners unknowingly purchasing property which was encumbered or not legally owned by the seller. Similar situations took place in Tulum; properties were confiscated because they were not obtained through legal channels. It is critical to have a real estate lawyer representing you during a real estate transaction so you can be confident you will not lose your investment.

Guaranteed Title Deed

The notario does not provide a Guaranteed Title, choose a law firm that does.

One of the main issues foreigners have with purchasing property is obtaining the title deed for their property, they experience huge delays, misrepresentation, fraud and unforeseen claims on the property often prevent the buyer from receiving the title deed.