Mexico Purchase Process for Real Estate

While the process for purchasing real estate in Mexico is relatively straightforward and well regulated, it does involve many stages, a great deal of paper work and the assistance of a well respected lawyer and a good notary public.

Foreigners wishing to buy land or property in Mexico today are no longer restricted in any way, but a certain amount of due diligence and research on the part of the buyer should go into sourcing the right property or the right parcel of land because some investment real estate opportunities in Mexico are far better than others.

Whilst prices in the most popular parts of Mexico have risen quite substantially over the past few years the country remains affordable and there are still some areas of the country that seemingly offer the investor inimitable value for money; but because many of these incredibly affordable areas have poor infrastructure, services and facilities they can actually present less of an opportunity than a headache for the property investor.  This is why it is imperative that a property investor considering the Mexican real estate market spends a certain amount of time on the ground in the country in the search for property opportunities.  There is no substitute for practical working knowledge of a country when looking for the best locations for real estate investment opportunities.

To facilitate the search an investor would be wise to draw on the services of an estate agent.  In Mexico there are many estate agencies in every town - from single one man enterprises to franchises of the big name international realtors - the key to finding a good estate agent in Mexico is basically gut feel.  If an investor can get a recommendation for a decent realtor from a trusted source then so much the better, but if not then an agent local to the area in which an investor is hunting for opportunities and with whom they feel comfortable working is probably the best bet.

The other professionals a real estate investor will need to employ are a lawyer and a notary public.  A notary public plays a far more important role in the entire purchase process for real estate in Mexico than they do in many other countries.  In Mexico the notary is a high position granted directly by the State Governor and any individual who achieves the office of notary public handles certain specific functions in the entire property buying process such as preparing the deeds to property for example.

The notary public is also responsible for conducting a number of searches on the property an investor is buying – the real estate investor’s lawyer will also conduct his own independent searches.  The searches should be conducted to ensure that the title deeds associated with real estate or land in Mexico are clear of any liens or outstanding claims, debts or issues.  Furthermore checks will be conducted to ensure all taxes due on or from the real estate are up to date and that building permits are in place and that any utilities to the property have been legally installed and maintained.

But of course before any of these checks can be carried out, suitable investment real estate in Mexico has to be sourced.  Previously non-Mexican citizens were not permitted to purchase land or real estate within land border and coastal zones, nowadays this restriction has been lifted and anyone wishing to buy close to the coast for example can do so but their property purchase has to be placed in a trust to which they are the beneficiaries and which they can then will as they wish.

Once property has been sourced and a successful offer made for it the Convenio de Compra/Venta or sale agreement can be drawn up.  This will include the cost of the property and any conditions for the sale; it will be signed by the buyer and vendor and a deposit of up to 10% of the property’s price will be due.

If the real estate to be purchased falls within either the land border or coastal zones a bank trust will need to be established for the buyer to purchase via.  Permission to purchase will then be applied for from the Foreign Secretary’s office – this procedure is usually just a formality – and the property investor’s lawyer and notary public will conduct their thorough and detailed searches and checks on the property and the vendor.

If all is found to be in order with the real estate the sale will be closed, the outstanding purchase price will need to be paid and all taxes, fees and charges will be due.  The entire purchase process takes an average of three months in Mexico, although with a complicated sale the duration of the purchase process can be even more drawn out.

In terms of the additional costs for vendors and buyers associated with the purchase process for real estate in Mexico these include: -

Acquisition Tax
VAT
Appraisal Tax
Land Registry Fee
Public Notary Fee
Fees for Establishing a Bank Trust
Lawyer Fees
Surveys
Foreign Office Permit
Service Fees
Income Tax on Property Gains
Real Estate Agent Fees

Finally, while it is now possible to raise finance to purchase property in Mexico locally, interest rates charged by Mexican banks tend to be higher than those offered by banks in Europe or the US.  Furthermore Mexican lenders prefer to deal with clients with whom they have already established a business relationship and then they will only lend up to a maximum of 80% of the sale price.  Beuacse of these facts the majority of investors arrange their finance to buy property in Mexico outside of the country.

South/Central America:- Mexico Property Reports
Complete listing of all current property reports for region: South/Central America:- Mexico

Mexico Real Estate Investment Guide

Mexico Guide for Real Estate Investors