So you’re thinking about buying a property in Mexico…

Maybe you’re like us: you never imagined you’d actually be buying a property in Mexico… BUT, somewhere along the line, some crazy ideas have happened, some discussions have been had, and now you’re considering it too?!

Let me break it down for ya: the process of buying a property in Mexico…

Step One: Research Locations

Popular Areas for expats buying property in Mexico:

Step Two: (kind of optional) Hire a real estate agent that is well-respected and knowledgeable in your chosen area.

We were fortunate enough to have made several local friends and contacts in our area to avoid having the need for a realtor. These people were already aware of several lots for sale in our neighbourhood and who owned them, so they could verbally pass on an offer, and once we agreed on price, all we had to do was meet at the lawyer’s office to discuss the rest.

However, do your research and ask around for a reputable realtor in your chosen area to show you available spots and ease the process of buying your property in Mexico.

Step Three: Start looking at properties

This is the fun part! You’re really serious about buying a property in Mexico now!

Things to consider:

• if it’s in a restricted zone (see below for explanation)
• if it’s an ejido (also explained below)
• local building regulations and zoning laws
• the area’s infrastructure and services like water, power, internet or cell service, health care and schools nearby
• local environmental risks like hurricanes, earthquakes, floods or fires
• distance to shops, restaurants and other things of importance to you (ie. swimmable beaches, gyms, yoga, golf…)

Step Four: Hire a real estate lawyer & Notario Publico (notary)

We were lucky enough to find both in one office, and they did the bulk of the work from this point forward. They spoke fluent English and were extremely patient when answering our dozens of questions, making us feel secure and confident in the process.

Step Five: Do an inspection of the land/structures and verify property lines

Our lawyer did this ensuring that everything was in order for us to make the formal offer. You can request the clave catastral, which is a unique ID number for the property, and take it to the Public Registry of Property or local city hall and ask for records yourself.

Step Six: Make an offer

When doing this, consider closing costs that will be added on in the end. These include notary and lawyer fees, transfer fees, realtor fees, usually totaling 4-6%.

Step Seven: Sign Purchase Agreement

**if purchasing ejido land, some extra steps come in here (see what ejido land means below)

Once agreed on price, sign the Contrato de Compraventa, or the purchase agreement. In our area this was also referred to as the “soft close”. At this time a payment of 10% is given as a deposit.

Step Eight: Due Diligence

After this soft close, you have 90 days to do your due diligence and organize the transfer of remaining funds owed.

Due diligence is usually performed by your lawyer, and includes:

• Busqueda de Titulos de Propiedad, a title search to make sure the title is clear and accurate, verify who owns it, make sure property taxes are paid up; ensure there are not outstanding liens or debts on the property or any legal issues
• Check the Cadastral Survey – the boundaries of the property
• Order the bank to do an appraisal on the property -then sent to federal government for approval
• if buying ejido, go through first right of refusal process (30 days)
• Create a Fideicomiso with the bank in your name, if needed – this is required when buying properties in restricted areas or you can establish a corporation to purchase your property through

• Optional: open an escrow account for transferring funds into to be held until transaction is complete

Last Steps: Finalize the transaction and wait for your deed to come

Finalizing the transaction, which we called the “hard close” is where you sign the escritura (deed) and transfer the rest of the funds.

Note: if you are unable to attend your hard close appointment to sign, you can appoint a Power of Attorney to sign on your behalf. Your legal office may have someone on staff that can do this, or you can assign a friend or someone else you know who will be in the area at the time of closing.

Once the transaction is complete, the notary will register the new deed with the Public Registry of Property, and you will wait for your own copy of the deed to come in (this can take several months or longer in some areas).

Finally: it’s time to celebrate buying a property in Mexico!

What is this “restricted zone” you speak of?

For foreigners, there are restricted areas which include any property that is within 50km from the ocean shoreline, or 100km from an international border. In these areas, you require a fideicomiso, a trust, to purchase the property through.

What’s an ejido?

An ejido is a parcel of land that was given out to peasants and communities after the Mexican revolution to grow crops and raise livestock on. This was done to sort of even the playing field for small-scale farmers going up against large estates or plantations that were built before the revolution.

Today, many of the parcels have never been used, and have been held onto for over 100 years by the original owners’ families and beneficiaries. These parcels are now able to go through a privatization process (giving up their ejido status) and be sold.

This is a pretty interesting and significant piece of history in Mexico, and I think I’ll write more on the ejido distribution process in another blog article one day soon! Stay tuned…

What’s the deal with the Fideicomiso?

A Fideicomiso is a bank trust. The bank holds the deed to the property, but you maintain all the rights to it. In other words: the bank owns the property, and you are the beneficiary of the trust. You have all legal rights. You can sell it, rent it, build and live on it, pass it on to a loved one…

The fideicomiso last 50 years, and then can be renewed or else it will expire. They will ask you to assign a beneficiary to it and it costs about $500-$1000 to set up, and there is a yearly bank fee for it (also about $500-1000 depending on the cost of the property).

An alternative option to fideicomiso: a corporation.

If you’ll be buying more than one property in Mexico, you could consider establishing a corporation. The corporation itself is Mexican, but 100% owned by you, the foreigner. The corporation owns the property/properties. You can also buy cars, boats and other things through it. It takes about 45 days to set one up, and costs around $1500 US. There are other things to consider: you have to have two other people owning the corporation with you, and you must keep an accountant in Mexico to maintain the books, even if you don’t make an income.

How is payment done?

Most commonly, a wire transfer is used for the final transaction, but we choose to use Wise for smaller international transfers (under 10K) as it saves us money on fees and exchange rates.

Escrow Accounts are common as well, if the seller agrees to it. This is an account you transfer the payment into, and it holds the funds until the transaction is complete on both ends. The buyer is in charge of setting it up, and covering the related costs (about $700-1000). This is apparently more common for new builds/pre-construction agreements, and not frequently used for vacant land or single family homes. It is new to Mexico, and not always warmly welcomed. In our discussions with locals, they hold pride in their word and a good handshake, and the suggestion of escrow is felt somewhat disrespectful and cold. However, to each their own, and when transferring large sums of money internationally, a piece of mind is often needed to make the process as least stressful as possible.

Where we decided to buy:

During our second winter here in Baja California Sur, we knew we wanted to keep coming back. We had toured all around this particular state more than once, and found our community of like-minded families and friends in a little surf town called Los Cerritos. We love the small town feel of El Pescadero, the farming community adjacent to it, where we do the bulk of our shopping.

The area checked all our boxes in that it had everything we needed within a 15 minute drive, it’s an hour from an international airport (and fantastic golf). It has several great options for schools, excellent food, and an amazing swimmable beach where we can continue to try and surf, and catch the most epic sunsets every single night. It’s also a starting point for a million different incredible day trips you can do. Most of all, it’s kind, welcoming, safe, and just feels like home.

Click this link to read our other blog article on life in Cerritos:

If you weren’t already, are you considering buying a property in Mexico now?!

Stay itchy,

Ash.