Here are some guidelines for success in a real estate acquisition in Mexico:
1. Have a trusted Real Estate Professional. The National Association of Real Estate does not exist in México. There is no licensing of Real Estate professionals. AMPI is México’s effort to regulate real estate professionals, but has no real success yet. There are certifications and official training real estate agents can receive in México. There is very limited, accurate comparable data. Multiple Listing Services are very primitive. So it is Very Essential that you have a VERY TRUSTED Proffesional.
2. Strike Deal when Ready. If a resale, get a copy of the existing deed/trust. Use a legally binding purchase and sale contract.
i. You are in México and the official language is Spanish, so have the purchase contract written in both languages. ii. Have a Mexican attorney review it to ensure it is favorable to you and you know what you’re getting into. iii. If the title is not clean, make sure you can get your escrow deposit back. iv. Use an escrow account controlled in the United States. v. If the property can not be delivered by a certain date, the builder should be in default and you should be able to get you money back. 3. Have a Mexican attorney, approved by one of the US title companies, to conduct a thorough title search. 4. Choose the Notario that you like and are referred to. They have a standardize fee structure, so fees do not vary greatly. 5. Have one of the US title companies provide a letter stating it will underwrite a clean title policy. Ensure there are no exclusions other than loss of property due to erosion of the land into the ocean. 6. Do not provide the balance payment for the property until the Notario has signified that the seller has conveyed the property over to you. The escrow officer should have the responsibility to release the payment. 7. Ensure the purchase price is the recorded price in the public registry. While the seller wants to minimize his capital gains tax and might ask you to record the purchase at a lower price, you will be stuck when you sell the property at a later date. Your lower basis will result in high capital gains taxes
Bank Trust
The fideicomiso, or trust, is one of the most dynamic vehicles for owning property anywhere in the world. The fideicomiso allows the Mexican government to exercise its discretionary power by only permitting approved foreigners to acquire ownership rights to real estate within the "restricted areas" of México.The "fideicomiso" is set up through a Mexican bank for a period of up to 50 years and can be renewed for 50 years. To acquire the land the purchaser must obtain a permit from the Ministry of Foreign Affairs. The buyer can lease, sell or transfer the property to another family member, and if he dies, his property can be passed to an heir. At the end of the 100 years the property can be sold.
Forming a Mexican Corporation - General information for each shareholder: (minimum TWO shareholders)
- full legal name
- nationality
- date and place of birth
- marital status
- occupation
- address in the United States or Canada
- photocopy of current passport
- Corporate purpose of the company. This refers to the main activities to be performed by the organization. This is required so that the by-laws can be prepared correctly.
- Initial Capital Stock: (the minimum amount is $50,000.00 MN), and the percentage of shares for each stockholder. Also, the kind of stock and the amount to be issued.
- Corporate address.
- Names and positions of the members of the Board of Directors of the Company, as well as the name of the commissioner (“spy”) for the corporation (We suggest that you appoint a Mexican Accountant as the commissioner) The corporation may have a Sole Administrator instead of the Board of Directors, if preferred.
- Five possible names for the corporation, listed in order of preference. If a Mexican Corporation already has the name you suggested the Foreign Affairs Ministry will then move too next name on your list. If all five names have been already used it will be necessary to submit a new list.
- Name and positions of the officers of the company and the powers to be vested in them.
The presence of least two shareholders will be required at the time of signing the deed of incorporation before the Mexican Notary Public.
Restricted Zone
The Mexican Constitution of 1917 created “the restricted zone” which is the land area within 100 kilometers of México's international land borders and within 50 kilometers of México's ocean front. This zone was to prevent foreigners from owning land which they could create a starting point from which to invade México.Within the Restricted Zone, foreigners can not obtain direct title to land or property. In areas outside the restricted zone, foreigners can receive fee simple title to the property. In 1971, México decided to increase tourism and foreign investment, so it created a legal structure in which foreigners could own the land - a fideicomiso, which is very similar to a living trust in the United States.
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