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MEXLAW > Legal Services  > How Do Foreigners Lose Their Investment in Mexico?

How Do Foreigners Lose Their Investment in Mexico?

Foreigners investing in Mexican property need to follow the legal process in order to protect their investment. 

When you hear reports of a foreigner losing their life savings and getting caught up in a legal battle over the property in Mexico, understand that this situation is entirely avoidable. 

If you buy real estate through the correct channels and use a Mexican lawyer during your purchase, buying property in Mexico, it is a safe and secure investment. 

These are a few grave mistakes foreigners make when it comes to buying real estate; 

  • They bought the property from someone who is not the legal owner. There are incidents where squatters have taken over the property and sell it to an unsuspecting foreigner with a promise that the title deed is in process. 
  • Foreigners buying property or building on Ejido land, this land does not have the appropriate title. The buyer and “seller” are making agreements and doing a private assignment of rights, which means that they are at risk since the communal commissary or the government may reclaim the land at any time.
  • Buying property under a Mexican citizen’s name – Presta Nombre (lend a name). Foreigners may use this tactic to buy land within the restricted zone and avoid the fideicomiso setup and annual fees. You may trust your Mexican friend explicitly not to take possession of your property, but what if this person has financial problems and the government or his bank takes possession, or the property ends up in a divorce settlement or as part of his estate?

Even if there is a written contract between you stating the land belongs to you, this contract will not hold up as the is an illegal practice.    

  • Do not be fooled by salespeople that come from your country; this association does not make them trustworthy. Unscrupulous foreigners acting as developers or real estate agents have conned many fellow foreigners into purchasing land that was not theirs to sell. 
  • The seller resells the property and disappears, how did they do this? Because the previous buyer did not follow the legal process, and the deed was not updated in the public registry.
  • If the seller is financing your purchase, the buyer must have the financing registered at the public record. You must make sure the property you are paying for is not subject to liens from the seller’s financial issues. Discuss options with a lawyer before you sign the contract.

All of these cases can be avoided by hiring a lawyer in Mexico who will; 

  • Perform due diligence on the property
  • Follow the chain of ownership
  • Determine if there are any outstanding liens
  • Make sure that the seller is authorized to sell
  • Confirm no one else can lay claim to the property 
  • Ensure it is registered in the public registry as your property

Obtain a copy of the fideicomiso and ensure there are no errors; the names are correctly spelled and it includes your beneficiaries.

As a foreigner, make sure you buy Mexican real estate through the proper legal channels to protect your investment. 

Before you sign any contracts in Mexico consult an attorney at contact@mexlaw.ca.