Real Estate in Mexico
The real estate industry in Mexico is, in many ways, similar to the United States. The purchase of real estate is consummated through a written purchase-sale agreement (promissory contract) that is signed by both parties. Additionally, a typical transaction also involves an agent and a deed to transfer ownership.
Normally, when signing the escritura or official deed, the financial transaction is completed and the property is delivered. Typically, transactions will not take more than 45 days to complete, from the time the purchase contract is signed to the day the real estate is delivered to the buyer. In certain resort areas the process of using "escrow" is being implemented.
Notario Publico (Notary Public)
In Mexico, the official deed will be certified by a Notario Publico or notary public. The Notario Publico is a government appointed lawyer who processes and certifies all real estate transactions, including the drawing and review of all real estate closing documents, thus insuring their proper transfer. Furthermore, all powers of attorney, the formation of corporations, wills, official witnessing, etc. are handled and duly registered through the office of the Notario Publico, who is also responsible to the government for the collection of all taxes involved. In connection to real estate transactions, the Notario Publico, upon request, receives the following official documents, which, by law, are required for any transfer:
1) A non-lien certificate from the Public Property Registry based on a complete title search.
2) A statement from the Treasury or Municipality regarding property assessments, water bills, and other pertinent taxes that might be due.
3) An appraisal of the property for tax purposes.
Fideicomiso (Beneficiary Trust)
Any foreigner or Mexican National can constitute a Fideicomiso (an equivalent to an American beneficial trust) through a Mexican bank to purchase real estate anywhere in Mexico including the “restricted zone”. To do so, the buyer requests that a Mexican bank of his/her choice act as a trustee on his/her behalf. The bank obtains a permit from the Ministry of Foreign Affairs to acquire the chosen property in trust. A Fideicomiso can be established for a maximum term of 50 years period. During this period, you have the right to transfer the title to another party, including a member of your family, with no inheritance tax incurred.
The bank becomes the legal owner of the property for the exclusive use of the buyer/beneficiary, who has all the benefits of the direct owner, including the option of leasing or transferring the rights of the property to a third party or a pre-appointed heir. During this period, the foreigner is considered as a Mexican National. The bank trustee is responsible to the buyer/beneficiary to ensure precise fulfillment of the trust. For practical purposes, even in the unrestricted zones, many foreigners and Mexican Nationals prefer to hold their property under a Fideicomiso. |