HOW TO BUY IN MEXICO

TRUST OR FIDEICOMISO

The trust has its roots in the mexican Constitution and the foreign investment law, there is stablished that a foreigner will be able to purchase property in the restricted zone the same way a national citizen would. The restricted zone is the one from 100km from the borders and 50km from the coasts. Therefore, the property acquired by a foreigner in this strip will have to be through a trust.

The trust is a legal entity with its own personality and assests, therefore all the properties and assests transmitted to it will stop being property of the person providing them and from that point forward will be the trusts property (this trust has a beneficiary who will use this assets and properties in his or her best interest).

The trust has 3 parties: setlor ( the person that provides the properties or assets to the trust), the trustee bank (the bank institution that will hold the trust) and the beneficiary (the person that will be the beneficiary of the trust, this person can be the same as the setlor).

The bank acts as the Trustee, and you and those whom you choose are the Beneficiaries of the trust. As the beneficiary of the trust, you maintain complete control over it, with full use of the property you can rent it, sale it or whatever you want to do with it because it is yours. The Trust ( Fideicomiso ) is initially established for a period of 50 years guaranteed and renewable for another 50 years.

You can get your fideicomiso through a permit granted by the Ministry of Foreign Affairs, such permit is requested with the assistance of a Mexican bank, which is going to be your future trustee bank, after you get such permit, you should establish in the Public Deed the real estate transaction with fideicomiso in the same document.

All this process will be done by your lawyer so you dont have to be worry about the permits, Banks, documents, etc.

We take care of that.

CLOSING GUIDE

1. Offer or letter of intent:

It is the first document that is signed before starting the formal closing process, this document is where the property's address is, the price offered, payment dates and any other observations that you want to agree on. This is signed by the buyer and sent to the seller for acceptance or response to it, once that letter is signed by both parties, continue with the next step.

2) Promissory Agreement

In the Promissory Agreement both parties (seller and buyer) will receive the terms and conditions of the real estate transaction.

The most important in the agreement is the following:

a) Name of the Seller

b) Name of the Buyer

c) Description of the property

d) Price

e) Penalties

f) Date for the execution of the public Deed.

3) Public Notary (CLOSING)

The parties involved ( buyer and seller ) will go to the notary chosen, (the total payment of the property must be made in full before or at the notary same day of the transaction, depending on the promissory purchase agreement), if everything is in accordance on what is agreed, both parties can sign the deed.

After you sign your title, the same day or one day after (not before) you have to pay the notary fee asap, because the public notary has the obligation to pay the taxes related to the real estate transaction; therefore, if you don’t pay, the record of your title in the public registry could take more time and money.

4) Public registry of the property

After 3 months of the execution of your title, you can contact the notary in order to request your original Title with the most important document:

BOLETA DE REGISTRO

CLOSING COSTS

On each transaction you have costs for each parties, that costs are:

  • Buyers
  • Notary Fees (title)
  • ISAI (Impuesto sobre la adquisición de impuestos 3%)
  • Lawyers (if applies)
  • Fideicomiso (if applies)
  • Permits ( if applies )

If you calculate between the 7 or 8% of the property sales price you will cover all the costs, you wont have any surprices at the end, this is for foreing people that need a trust.

If you are mexican you calculate between the 5 or 6% of the property sales Price and you can assure you will cover all the closing costs from the beginning to the end.

Sellers

  • Capital Gain (ISR)
  • All the documents the notary need updated to the date of the closing, each document has a cost but not much.

Our reccomnendation is that once you have your offer accepted ask for a quotation from the notary in order to know exactly the amount you will pay to get the legal documents of the property.