BUYING PROPERTY IN MEXICO

A foreigner can purchase real estate in Mexico.  Buying at “lakeside” is an easy process and it is registered with a deed for title to your property.  Purchasing property in Mexico differs depending where you buy. The coastal regions have conditions that apply.  For your information, there are more specific details following.

Interior zone

Foreigners can buy property directly in Mexico’s interior. It is just like owning any property in Canada or the United States. You have the title without a trust and you are in procession of the deed.  A Mexican by birth or naturalization can freely buy real estate anywhere in Mexico.

Border and Coastal Zone

Foreigners can buy property directly in Mexico’s interior. However, the Mexican Constitution of 1917 designated the area within 100 kilometres (62 miles) of Mexico’s borders and within 50 kilometres (31 miles) of the coastline as off limits to direct real estate ownership by foreigners. For many years this area was known as the Prohibited Zone. Because of recent beneficial legislation the area is now referred to as the Restricted Zone. Although direct ownership of real estate by foreigners in the Restricted Zone is not permitted even now, a foreigner can purchase the right to hold, occupy, use, improve, develop, rent and sell real estate by purchasing a beneficial interest in a bank trust which holds the legal title to the property.

With bank trust ownership, the bank holds legal title to the real estate and acts as trustee while the beneficial interest in the trust is owned by the foreign individual. The trustee bank is obligated to deal with the property only for the benefit of the beneficiary. The bank takes its instructions from the beneficiary owner. The beneficiary may be a foreign individual or other foreign legal person such as a corporation. This bank trustee arrangement is very similar to the way a trust works in the U.S.A. and Canada. The trust exists strictly for the benefit of the beneficiary who is for all practical purposes the owner of the underlying property.
The owner’ s beneficial interest in the property may be passed on by will or inheritance, it can be used as collateral for a loan and the property can be freely enjoyed, rented or sold all as determined by the owner beneficiary.

EJIDO LAND

Most people that may be interested in real estate in Lake Chapala Mexico will be obtaining regularized land known that will come with a deed. This system has been in effect for many years and has worked very well with literally thousands of people purchasing Mexican property without any problems.

However there are lands, generally on the outskirts of Lake Chapala, that have not been regularized and which are known as Ejido properties. This type of property was established in 1917 after the Mexican Revolution to break up the large landholdings of foreigners and wealthy Mexicans the land is still owned by the government but control is given to an assembly of Ejidatarios or community members of the ejido. They can apportion the property to individuals, but up until 1992 when some changes were made to the system no one individual could have title to a particular piece of ejido land.

The 1992 Agrarian law changes recognize the individual property rights within the ejido and under certain conditions allow for the lease and sale of property to non-ejido members. This allows the land to transfer from government control and places it in the public land registry where it can then be leased or sold. With over 50 million acres of land presently in ejidos, this would open up substantially the amount of land available for development in Mexico.

However, very little of this transfer has actually taken place, and it will not take place at all if an Ejido Assembly does not wish it to happen. Secondly, this was established primarily for agricultural reasons, not so those foreigners could buy a parcel of land to build upon. It is especially uncertain how this effects ejidos with tropical land forests – will the government allow this type of land to enter under the agrarian law adaptions? Thirdly, it is presently illegal to promote or sell ejido land, and there are severe penalties that could be enforced to those that do so.

Our recommendation and that of the realtors we spoke to is be careful. There are still many uncertainties and no one can promise you for sure that your interests will be protected or indeed the ejido land you’re interested in will become regularized. With so many other options why would you want to take a chance?
NOTARY

A Notary is needed to close any sale. In Mexico, a Notary Public is a quasi-governmental official who reviews all documents of importance with respect to the sale of real estate. A Notary Public in the United States typically has minimal training and responsibility. In the U.S.A, a notary typically attests to the fact that a person has signed a document.
The training, function and responsibility of Notary Public in Mexico is completely different. In Mexico, a Notary Public is appointed by the governor of a Mexican state for life. In order to seek appointment, the person must be a Mexico licensed attorney. This involves attending law school in Mexico, obtaining a law degree, passing an exam and being admitted to the bar in Mexico. To hope for appointment, the prospective Notary Public must then work as an apprentice for several additional years with a Notary Public. A notary does not act as an escrow service. The Notary Public’ s job is to see that certain formalities have taken place. Although a notary is always an attorney, it is not the notary’s job to provide any party with legal advice. Any buyer or seller who wants legal advice should hire a separate lawyer licensed in Mexico.

LAND REGISTRY

In Mexico, deeds, usually known as public instruments, can be researched at the local Public Registry of Property which is open to the public. There is a Public Registry of Property in most cities and towns in Mexico of any significant size. The Public Registry of Property is a government office in which documents are taken for registration so that third parties may research the ownership of land titles and liens on such titles. A Public Instrument must be finalized and signed by a Notary Public. The Public Instrument will typically list the parties involved in the transaction including the notary, seller, buyer, and the trustee bank It will also identify the property. Once the Public Instrument is finalized and signed by the notary, by the seller, by the bank as trustee (if a bank trust is involved) and by the buyer (who will also be the trust beneficiary if a trust is used), the purchase price changes hands and the transaction is considered closed. Note that it can take several weeks for the registry to be updated so you may not get the deed for a month or two. This is normal.