Purchasing Land in Mexico
Mexican law allows almost anyone to purchase land in the interior of the country (more than 31 miles from a coastline or 50 miles from a boarder). Within restricted zones, foreigners may not directly own real estate, but a real estate trust (a fideicomisos) with a Mexican Bank or national as trustee, may own property. Additionally, Mexico requires all foreigners to apply for and obtain a permit from the Ministry of Foreign Affairs prior to contracting to acquire real estate in Mexico.
Mexico has yet to regulate real estate transactions. All that is required to establish a real estate business is for an individual to obtain a work visa. As such, there is no regulation nor consumer protection in Mexico's real estate industry.
Should you decide to own property in you own name, a deed called an escritura, must be prepared by a Mexican notary public. In some states in Mexico it is now possible to name beneficiaries in the deed, but if this is not the case you should have a Mexican will prepared to avoid expensive legal fees and probate at the time of death.
In Mexico, the notary public (notario público) is a public official with a law degree, appointed by the State Governor. He has the capacity to attest and certify documents and business and legal transactions that require authenticity. He also provides for strict security of original records and documents. As such, any document not notarized by a Mexican notary public is not legal.
Ejidos
An "Ejidos" is similar to a US Native American Reservation, except the communal members of an Ejidos are based not on genetic criteria (as is the case for US Native American tribes), but on personal affiliations of people who were residents of the local community in 1917 when the Ejidos were created. The 1917 Mexican Constitution limited the land that could be owned by one individual to 247 acres of irrigated land (more if the land were not irrigated.) Title to the excess land was transferred to a local Ejidos which, at the time, could not sell or mortgage the property.
Today, there are about 28,000 Ejidos in Mexico which own about 209 million acres of land. With population increases since 1917, more than 1/2 of all Ejido members (ejidatoros) farm 12 acres or less. Additionally, more than 1/2 of the ejidatoros are over 50 years old, while more than 1/2 of the total Mexican population is under 20 years old. As a result, the law was changed in 1992, allowing more flexibility in disposition of Ejido land.
An Ejido that wants to sell or mortgage a portion of their property must first join the Mexican government's Program for Certification of Ejidal Rights (PROCEDE), which proscribes procedures to both certify ejidal boundaries and membership. After completing the PROCEDE process, an ejidatoro may be granted "parcel certificates" that give them the right to rent and mortgage specific plots. The holder of a parcel certificate, after other members of the ejidatoro decline to exercise their right of first refusal, and after satisfying other conditions, may sell their parcel to outsiders.
Source: National Real Estate Investor, June 26, 2007, 78-79
If buying property from a developer, have the notary public check to see that the developer has permits for the development as well as for construction in the development.
Have the notary public determine that the land is not ejido
land.
Customary Procedure
The notary public will need from both parties to the transaction:
- proof of full names
- marriage certificates
- proof of dates and place of birth
- official identification with a photograph, such as passport or driver's license, and visa to prove that you are in Mexico legally
- the deed;
- Up-to-date tax receipts
- water bills
- subdivision (fraccionamiento) fees
- any other public utilities bill, paid up to the date of sale
- The capital gains tax, if any, is typically paid by the seller. However, through mutual agreement, it may be paid by the buyer. The notary public will determine capital gains taxes through an official appraisal (Avaluo).
The Buyer:
- ordinarily pays notary fees incurred, which must be paid when the title is signed over to the buyer
- For the transaction to be valid, the notary public must register the escritura in the Registro Público de la Propiedad (Public Registry of Properties). A normal time frame for this registration is two weeks.
In many cases, title insurance is available from affiliated of US title insurance companies. You should availed yourself of this option.
other
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