1. - Can I as a foreigner acquire Real Estate Property in Mexico?

Yes, you can acquire Real Estate Property as a Foreigner in Mexico.

Property in Mexico can be legally owned by foreigners. If you buy Real Estate property outside of the restricted zone (which is defined on article 2 fraction VI of the Foreign Investment Law as the area of the national territory located a hundred kilometers from the borders and fifty kilometers from the coastline) you are allowed to own the property and hold title on your name without a Bank Trust (Fideicomiso) or a Mexican Corporation.

This grants you nearly the same rights you receive when you purchase property in many parts of the world.

2. - What happens if I want to acquire Real Estate Property in the restricted area? for example beach property?

However, the Mexican Constitution prohibits foreigners from directly owning property in the so called restricted zone; Foreigners can acquire real estate property in such area through a REAL ESTATE TRUST (FIDEICOMISO) or a MEXICAN CORPORATION (articles 10 and 11 of the Foreign Investment Law).

3. - When do I use a REAL ESTATE TRUST (FIDEICOMISO) to acquire Real Estate Property in the restricted area ?

Real Estate Trusts are formed only when the investor has residential purposes.

There are three parties that form this contract: The Trust Founder/Grantor (seller), the Trustee (Fiduciary, any Financial Institution in Mexico) and the Beneficiary (Buyer). The Real Estate property is transferred to the Trustee; the Beneficiary obtains the right to "use" the property and to obtain all the products and benefits from it.

To form a Real Estate Trust it would be necessary to apply for a special permit from the Foreign Affairs Ministry which takes approximately two weeks.

The duration of a Real Estate Trust is 50 renewable years. Also as part of the contract, substitute beneficiaries (heirs) are designated. They will assume the remaining time of the initial Real Estate Trust. If Initial Real Estate Trust is set to expire, a new Real Estate Trust will have to be established.

The Real Estate Trust allows the beneficiary to sell the property rights to another foreign or Mexican

The annual obligation of a Real Estate Trust is reduce to pay a yearly fee to the Trustee, which varies from one Bank to another. Most Financial Institutions will send the annual bill to the address provided when Real Estate Trust is established. There are different kinds of Real Estate Trusts on which the Trustee's fee varies depending on the time the Bank has to spend administrating the Trust.

4. - What are the benefits of REAL ESTATE TRUST?

    • The Beneficiary acquires the right to use and enjoy the Real-Estate subject-Matter of the Trust.
    • The Beneficiary shall have the possession of the Real-Estate with all authorities to occupy it.
    • Alternate Beneficiaries may be appointed for the event of death, who shall enjoy the benefits in a simultaneous or successive manner.
    • The Beneficiary shall have the right to transfer its rights and to freely agree upon the contribution or payment.
    • The Beneficiary shall have the authority to instruct the Trustee to transfer the Real-Estate Property to individuals or legal entities with legal capacity to acquire them.

5. - When do I use a MEXICAN CORPORATION to acquire Real Estate Property?

Mexican Entities are incorporated only if the buyer has commercial purposes which include of course, the acquisition of a Real Estate property.

Under the 1993 Foreign Investment Law of Mexico, a Mexican business company is considered Mexican under said law, even if all the shareholders are foreigners. Thus, foreigner can acquire real property in the restricted area. This, however, is only for non-residential property (used for non-residential purposes), such as:

  • Promotion and sale of timeshare rights of use to real estate (here no ownership of real estate is given but rather rights of use);
  • For industrial, commercial or tourism activity that may simultaneously contain a residential component for the subsequent buyer;
  • Real estate acquired by credit institutions, financial intermediaries, and auxiliary credit organizations to recover debts owed to them and in the ordinary course of business;
  • Real estate used by entities in the course of their business consistent with sale, development, construction, subdivision and other activities included in the development of real estate projects, until these are sold to third parties that use them for residential occupation; and
  • Generally, real estate destined for use in commercial, industrial, agricultural, cattle, fishing, forestry, or service related activities.

It is a violation of the mentioned Mexican Foreign Investment Law to place a retirement or vacation home in the name of a Mexican corporation (since it will be used for retirement or vacation of the owner). It will also be more costly than a trust due to periodic tax declarations and taxes on corporate assets.

6. - What's the information and documents needed to form a Mexican Corporation?

  • Complete names of at least two shareholders, including their middle name to avoid any future identity problems (Entities are as well allowed to appear as shareholders, though different information may be required).
  • Marital Status, Nationality, Occupation, Address, Place and Date of Birth, telephone and fax number, cell phone and email.
  • Three options in order of preference to name the Mexican Corporation.
  • Purchase price (if any).
  • Percentage of ownership of each shareholder in the corporation.
  • Main purpose of the corporation.
  • Administration of the corporation (who will be its legal representative).