Buying in Mexico
It is perfectly legal for a foreigner or foreign corporation to acquire any type of real estate, holding the property as a direct owner, with the exception of properties located in the Restricted Zone.
Fidecomiso
Any foreigner or Mexican National can establish a Fideicomiso (the equivalent of an American beneficial trust) through a Mexican bank to purchase real estate anywhere in Mexico, including the Restricted Zone. For practical reasons, even in unrestricted zones, many foreigners and Mexican nationals prefer to hold their property under a Fideicomiso.
To do so, the buyer requests a Mexican bank of his choice to act as trustee on his behalf.The bank, as a matter of normal operations, obtains the permit from the Ministry of Foreign Affairs to acquire the chosen property in trust.
The Fideicomiso can be established for a maximum term of 50 years and can be automatically renewed for another 50-year period. During these periods you have the right to transfer the title to any other party, including a member of your family.The bank becomes the legal owner of the property for the exclusive use of the buyer/beneficiary, who has all the benefits of a direct owner, including the possibility of leasing or transferring his rights to the property to a third party.
The trustee is responsible to the buyer/beneficiary to ensure precise fulfillment of the trust, according to Mexican law, assuming full technical, legal and administrative supervision in order to protect the interests of the buyer/beneficiary. Fideicomisos are not held by the trustee as an asset of the bank.
The Federal Zone
The Mexican Constitution regulates the ownership of land and establishes that “in a zone of 100 kilometers along the border or 50 kilometers along the coast, a foreigner cannot acquire direct ownership of the land.”
However, the latest Mexican Foreign Investment Law, enacted December 28, 1993, provides a solution. Within the Restricted Zone, a foreigner or foreign corporation can obtain all the rights of ownership with a bank trust, known as a Fideicomiso.(See section above “Fidecomiso”)
The Notary Public or “Notario”
A Public Notary or Notario is a government-appointment lawyer who processes and certifies all real estate transactions, including the drawing and review of all real estate closing documents, thus ensuring their proper transfer.
Under Mexican law, the deed to a property must be prepared by a Notario, who will ensure that all documentation and permits are in order and and that there are no liens or judgement against the property, so that the transaction can proceed. He will also calculate the seller’s capital gains taxes and the buyer’s acquisition taxes.
Furthermore, all powers of attorney, the formation of corporations, wills, official witnessing, etc. are handled and duly registered through the office of the Public Notary, who is responsible to the government for the collection of all taxes involved.
In connection with real estate transactions, the Public Notary, upon request, receives the following official documents, which are required by law for any transfer.
- A non-lien certificate from the public property registry, based on a complete title search;
- A statement from the treasury or municipality regarding property assessments, water bills and other pertinent taxes that might be due:
- An appraisal of the property for tax purposes.
In summary, everything official to do with your real estate transaction should be done by a Notario.
Ejido Land
As a means of providing land to the poor farmers of Mexico (peons/campesinos) who were so poor they could not pay for land, communal groupings were created in the form of communal farms. The Agrarian Reform Ministry, via Mexican Presidential declarations created the communities communal farms, today known as "Ejidos". The "Ejidos" consist of a defined governing body ("Comisariado"), land parcels ("parcelas") and members ("ejidatarios"), thus creating an agrarian community or town ("ejido"). The land is divided into two sections, one being communal in nature which is held directly by all of the members in common, and where the community services and residences are situated, and the other section is made up of individual parcels, which are identified as being held individually by each member of the community (in "ejidatario" possession), which they use to farm.
The Mexican government always retains the ownership of the "ejido" land and provides that the communities hold and use it under the agrarian rules of Mexico. Unless the parties in question qualify as a member, they are not normally permitted to hold the status of an "ejido" member nor a part of the land set aside for the "ejido".
Ejido land cannot be sold to non-ejido members until it is converted into private property. There are exceptions where non-ejido members can acquire "posessionary" rights to ejido land, however the rules governing posessionary rights are not very secure, especially for foreigners. Consequently, foreigners cannot legally become ejiditarios.
For years Americans and Canadians have been persuaded to “purchase” ejido parcels or beach front lots without fully understanding that they can’t legally own ejido property nor can the ejidatarios (those individuals that have the beneficiary interest in the land) legally sell it. Hence, all potential buyers of Mexican real estate should know the difference between private property and land denominated as “ejido”..
Article 27 of Mexico’s Constitution allows the federal government of the United States to create agrarian lands for the benefit of their citizens. With its constitutional inception in 1917, Mexico began the process to provide “campesinos” (farmers) a beneficiary interest to land owned by the government. Entitled under “La Ley Agraria” (the Agrarian Law), these government parcels, known as “ejidos” are recorded with the Registro Agrario National (National Agrarian Registry) in Mexico City. The ejidatarios can live, farm,homestead and construct dwellings on the property but they do not own it. Under Agrarian Law, the ejidatarios can not sell,lease,subdivide,joint venture,contribute,mortgage or encumber the property. In essence, they have the use and benefit of the land, but they do not have title to it.
In summary…Nayarit Properties…does not participate in the promotion or sale of ejido property. If you are unsure you might want to stick to buying private property. There is plenty of private or “regularized” property to buy!!!
