It is said that if you are not a Mexican Citizen, you can not own property…this is only partially true. Foreigners (non citizens) are prohibited from owning property in a restricted border zone. This zone is 50 kilometers from the coastlines, and 100 kilometers from the borders. However, Foreigners can own property within these zones through the “Fideicomiso”

Buying property in the U.S. or Canada is different from buying in Mexico. In most cases, property in the U.S. or Canada is held “fee simple” which means title is held by you, in your name.

In Mexico, within the above mentioned restricted zones, title is held in your name, in the form of a Bank Trust. Let us explain:
In an effort to increase foreign investment, the Mexican Constitution was amended in 1971 to allow foreigners (non citizens) to purchase residential Real Estate by establishing a Bank Trust. The foreigner becomes the beneficiary owner of this trust. This trust can be encumbered just like in the U.S. You have the right to sell, rent, build upon, take a loan out on, and leave the property to your heirs. The trust also allows you to designate Substitute Beneficiaries, so in case of death, there is no Will to probate.

Closing costs are traditionally paid by the buyer. They include for the most part, the following items which are normally based on a percentage of the appraised value of the property:

• Notario: Legal fees & Certificate stating the property is free of all liens and burdens.

• Real Estate Acquisition tax of aprox. 2.2%

• Public Registry fee

• Appraisal fee

• Fideicomiso – Bank Trust

• Misc. – Title Insurance or home insurance

Normally, closing costs are approximately 3% to 5% of the total appraised value. In Mexico, a “Notario” (notary public) is responsible for transfer of title from the seller to the buyer. He will also provide an itemized statement of closing costs at the completion of the transaction.