Owning Real Estate in Mexico
Owning real estate in Mexico has become very common for Canadians and Americans due to the changing banking system, new laws regarding ownership, financing becoming available and the security provided by title insurance.What Types of Ownership can a Foreigner have in Mexico,
and What is the Acquisition Process?
On the Mexican mainland, a foreigner can purchase property fee simple (direct deed), except when the property is located in the restricted zone: 50 kilometers (32 miles) from the shoreline or 100 kilometers (62.5 miles) from the borders. However, buyers can acquire residential properties located within the restricted zone, through a Mexican Bank Trust called a Fideicomiso. 
The bank, for an annual service fee (of less than $500), serves as a trustee that holds the legal title to the property. In the past only Mexican banks could hold this title, now foreign banks operating in Mexico can provide the Fideicomiso, these banks include ScotiaBank, HSBC and others. The cost for the permit to establish a bank trust is generally less than $1000 U.S. dollars. To purchase through a Fideicomiso, a foreigner must first register at the Secretariat de Relationes Exteriores for a permit to establish the trust. Upon receipt of the permit, the trustee bank sends instructions to a Notario (a governor appointed attorney), who prepares the deed (Escritura) to the beneficial rights. Applicable taxes are paid (two percent of purchase price), and then the deed is recorded in the local municipality. The foreigner, as a beneficiary of the Fideicomiso, has the right to use, improve, lease, sell, mortgage, and will the property. When the owner dies, the estate becomes the beneficiary. A second beneficiary to the trust can also be named through a Mexican will. Co-owners can be listed on a Fideicomiso to avoid probate. An owner can indefinitely extend the Fideicomiso in 50 year periods by paying the renewal fee. Recent changes to Mexican law allow foreigners to purchase commercial or nonresidential property as a Mexican corporation, without the need for a Fideicomiso. The corporation can now for the first time be set up with 100% foreign ownership.
Title Insurance
Questions of the title may be resolved through the title company rather than through the Mexican Courts. Many purchasers in the U.S., and in Mexico as well, find it comforting to obtain a title policy. The title insurance policy issued for Mexico is 99 percent similar to an American Land Title Association (ALTA) policy. There are differences in the law and the language, i.e., there is no Spanish equivalent of “marketability.” Ejido rights and agricultural reform have a part in the Mexican policy. In addition, in Mexico, mineral and water rights belong to the federal government, not to the owner of the land. Fidelity National Title and Stewart Title Guaranty Company are examples of American companies now offering title policies in Mexico.