Mexico is a beautiful country that attracts many foreigners every year. Some of them choose to stay longer than just a vacation and are interested in buying property in Mexico. However, the process of buying real estate in Mexico as a foreigner can be complicated due to the country’s legal system. In this article, we will discuss the question of whether foreigners can buy property in Mexico and explore the two most common methods of doing so: Bank Trusts and Corporations.
Foreign Ownership of Property in Mexico
Foreigners can legally own property in Mexico, but there are some restrictions. The Mexican Constitution prohibits non-Mexicans from owning property within 100 kilometers of the country’s borders or within 50 kilometers of its coast. To get around this restriction, many foreigners purchase property through a Mexican Bank Trust or a Mexican Corporation.
Bank Trusts
Bank Trusts, or Fideicomisos in Spanish, are the most common way for foreigners to purchase property in Mexico. A Bank Trust is a legal arrangement in which a Mexican Bank holds the title to the property on behalf of the foreign buyer. The buyer is the beneficiary of the trust and has all the rights of ownership, including the right to sell or rent the property. Bank Trusts are authorized by the Mexican government and are regulated by the Ministry of Foreign Affairs.
Advantages of Bank Trusts
One of the main advantages of a Bank Trust is that it is a legal and secure way for foreigners to own property in Mexico. The Bank Trust provides protection for the buyer, as the bank is responsible for ensuring that the property is free of liens or encumbrances. In addition, the trust allows for easy transfer of ownership, as the buyer can transfer the beneficiary rights to another person without going through the lengthy process of transferring title.
Disadvantages of Bank Trusts
One of the main disadvantages of a Bank Trust is that it can be expensive. The buyer must pay a fee to the bank to set up the trust, and there are ongoing annual fees to maintain it. In addition, the bank may also charge fees for any services related to the property, such as property tax payments or maintenance fees.
Corporations
Another way for foreigners to purchase property in Mexico is through a Mexican Corporation. The Corporation is a legal entity created under Mexican law, and the foreign buyer is the sole shareholder. The Corporation then purchases the property, and the foreign buyer owns the Corporation. The buyer can then sell or transfer the property by selling the shares of the Corporation.
Advantages of Corporations
One of the main advantages of a Corporation is that it can be less expensive than a Bank Trust. The buyer only needs to pay for the creation of the Corporation and any associated legal fees. In addition, there are no ongoing fees to maintain a Corporation, as there are with a Bank Trust.
Another advantage of a Corporation is that it can provide greater control over the property. As the sole shareholder of the Corporation, the foreign buyer has complete control over the property and can make any decisions related to it without the need for approval from a bank.
Disadvantages of Corporations
One of the main disadvantages of a Corporation is that it can be more complicated and time-consuming to set up than a Bank Trust. The process of creating a Corporation requires the assistance of a Mexican attorney, and there may be additional legal fees associated with the process.
Conclusion
Foreigners can legally purchase property in Mexico, but they must use a Bank Trust or a Corporation to do so. While both methods have their advantages and disadvantages, the choice ultimately depends on the buyer’s individual circumstances and preferences. It is important for foreign buyers to work with a reputable Mexican attorney and real estate agent to ensure that the process of purchasing property in Mexico is as smooth and secure as possible.
Ready to invest in real estate in Mexico? MexHome is your one-stop-shop for all your needs. Browse the latest homes for sale, condos, land, and commercial properties, and stay up-to-date on market trends. Don’t miss out on the opportunity to secure your piece of real estate in Mexico with MexHome.
