The Myths and Realities of Buying Property in Mexico
When buying property in Mexico, it’s important to know a number of things. Firstly, foreigners can’t acquire just any piece of land in any location. Real estate agents are not regulated by any authority and it doesn’t require any particular training, degree or license to be a real estate agent. This opens the door to potential disappointment, if not disaster.
With so much at stake, Easy Legal Mexico breaks down the myths and realities for foreigners buying a property in Mexico. Easy Legal Mexico is a law firm in Merida that has expertise in Mexican real estate law, among other legal matters.
“FOREIGNERS CAN’T ACQUIRE BEACHFRONT PROPERTY IN THEIR OWN NAME.”
This is a REALITY. In our constitution, it is established that a foreigner can’t acquire land in the coast and 100 km around it and/or in the border and 50 km around it. But this restriction does not have to stop you at all if you wish to acquire a property in or near the coast or border. There are legal fixtures in place to allow you to buy it. One of the them is by setting up a trust for the acquisition of a property in a restricted area. This is done through a Mexican bank and is maintained by paying a yearly fee. Another way to own property is through forming a Mexican corporation and acquiring it through that.
“IF I ACQUIRE LAND THROUGH A MEXICAN CORPORATION, ONE OF THE PARTNERS NEEDS TO BE MEXICAN.”
This is a MYTH commonly used by unscrupulous businesspeople to take advantage of buyers. Their goal is to be part of the corporation and eventually extract a profit from it. The only requirement to form a Mexican corporation is that the number of partners is at least two. You may even accept a foreign corporation as one of the partners. AND THAT’S IT!! There are other steps, but they follow the constitution of the corporation, which declares how the corporation is divided among its partners, among other details.
“ONCE I OWN PROPERTY IN MEXICO, I NEED TO CREATE A MEXICAN WILL FOR MY HEIRS”
This a MYTH. You can make a will in the country through a Notary Public. You can also choose to dispose of your Mexican property in the client’s country of origin, and have it translated and notarized. That is just as good as a Mexican will. If you acquire property through a trust, you don’t have to worry because a beneficiary is named at the moment of the trust’s formation.
“IF THE LAND HAS A DEED, IT MEANS EVERYTHING IS FINE”
This is a MYTH. The deed of a property can have many problems, from the lack of inscription in the public registry of property, to duplicity of deeds (two deeds for the same property), with lots of possible issues in the middle. It is very important to verify that the deed is inscribed, that the physical location and dimensions of the lot matches the ones that appear on the deed, that there is only one deed for that property, among other things. A seller will try to tell you the deed is all you need to feel confident and maybe try to convince you to use their attorney, but this is a common mistake and the beginning of a lot of terrible stories that circulate about buying property in Mexico. Always use a professional, your own professional, in real estate.
“AS LONG AS YOU HAVE A DEED AND THE BUILDING PERMIT FROM THE COUNTY, YOU CAN BUILD ANYTHING YOU WANT.”
This is a MYTH, and a very dangerous one. Depending on the area, you need special permits from different authorities. Building is not permitted everywhere and some lots — especially on natural reserves and some beachfront areas — have very strict restrictions that don’t allow any kind of building in them, and your deed won’t protect you or help you to get your money back. If you are caught building in a restricted area, you may even face jail time. We urge you to use a professional to check what you can or can’t build on your property, and even to perform an environmental study as a part of your due diligence process just to make you know exactly what is permitted on that .
“MEXICANS THINK ALL FOREIGNERS ARE RICH AND OVERCHARGE FOR EVERYTHING.”
Unfortunately, this is all too often a REALITY. That’s why it is important to carefully choose the people who will help you and give advice as you pursue a property purchase. A good professional will surround you with a good team of professionals in every area (attorney, accountant, architect, builder, etc.). There are too many horror stories that result from bungled property purchases, but there are even more positive stories. And ultimately the gold of this article is exactly that: to create yet more positive stories and, little by little, to put an end to any adverse experiences.