Foreign Ownership in Mexico

– Foreigners can safely buy property in Mexico and enjoy the full rights of ownership

Buying Real Estate in Mexico as a Foreigner

Buying property in México is quite different than buying in the USA. However, it can be done in a completely safe manner. The most important component in purchasing real estate in Mexico is a qualified, knowledgeable local real estate specialist from a reputable, recognizable company working in your best interest. They can guide you to a safely accessible property and guide you through the purchase process with the seller, lawyer, and notary.

It is a common misconception that only Mexicans can own real estate in México. There are two legal vehicles foreigners can use to own property in México safely:

1 – Fee Simple (Escritura) – for property not in the Restricted Zone (see below). If the property is in the Restricted Zone, it can be purchased by a corporation that is wholly owned by foreigners. The latter is more typically used with commercial property, but it has also been used for residential property.

2 – Bank Trust (Fidecomiso) – where the Bank becomes the trustee holding title and the buyer becomes the beneficiary of the trust. The buyer enjoys all of the same rights they would have in fee simple ownership: the rights to buy, sell, lease, use, bequeath, improve, transfer, and encumber. A Mexican Fidecomiso works much the same way as a family trust in the United States. This is the simplest, safest way for a foreigner to hold real property in coastal México. 

What is the Restricted Zone?

Article 72 of the 1917 Mexican Constitution defines the Restricted Zone as any property that lies within 100 kilometers (62 miles) of the border and 50 kilometers (31 miles) of the coast. This Zone was established to protect the sovereignty of México after the incursions by other countries in the 1800s. In 1973, the Foreign Investment Law was established to allow non-Mexicans to hold title in the Restricted Zone through a 30-year renewable bank trust. In 1993, the Foreign Investment Law was amended to allow bank trusts to be renewable for 50-year periods. Associated legislation was overhauled and tightened up.

The new legislation, in conjunction with the USMCA (United States-Mexico-Canada Agreement), created a stable and safe investment environment. These changes are, in part, propelling the current surge in investments in Mexican coastal real estate.

The Mexican government can NOT and does NOT Seize Foreigners’ Property.

There have been stories in the news that imply that the Mexican government can arbitrarily confiscate foreign-owned properties. In every case, the properties in dispute were lawfully owned by another party, and the courts were merely acting to return the property to the rightful owner (not the Mexican government). A qualified, local real estate professional can guide you past any potential risk in this area.

What protection does USMCA provide?

The USMCA (United States-Mexico-Canada Agreement) offers broad safeguards for foreign investors in Mexico, including rules for fair treatment, non-discrimination, and protection against expropriation with appropriate compensation. Nevertheless, it does not establish specific protections for individual real estate purchases, as these are regulated by Mexican law. To protect their investments, foreigners should adhere to Mexican legal requirements, such as utilizing a bank trust (fideicomiso) when buying property in restricted coastal and border areas.

Protections Provided by the USMCA

Key Safeguards for Foreign Investors in Mexico

• Fair and Equitable Treatment: Mexico is required by the USMCA to treat foreign investors fairly and equitably, ensuring complete protection and security in line with international norms.
• Non-Discrimination: Foreign investors must receive treatment that is at least as favorable as that given to Mexican investors under similar conditions.
• Protection Against Expropriation: Expropriation is allowed only for public purposes, must be carried out in a non-discriminatory manner, follow due process, and provide compensation at fair market value.
• Prohibition of Performance Requirements: The USMCA prevents Mexico from imposing certain obligations or requirements on investors regarding their performance.
• Investment Dispute Resolution: The agreement establishes an investor-state dispute settlement mechanism, offering a defined process for resolving conflicts between investors and the state.

Why is investing in Mexican real estate so popular these days?

Title Insurance

Buyers can now get title insurance through reputable US companies like First American Title. This has become available as a result of the Foreign Investment Law.

Value

Plush, Rivera-style, coastal homes in exclusive, secure, resort settings are priced in a range that is significantly more accessible than prices north of the border. The resort communities of Northern Baja are as luxurious and upscale as their cousins down south, with the added advantage of being driving distance from most of the southwest and less than 1 hour from the San Diego Airport.

Escrow

Given the quantity and popularity of quality pre-sale opportunities, the importance of dependable escrow services has become imperative. Escrow services have created another level of security for transactions. However, read escrow instructions carefully as they can vary significantly, and the release of funds is not always the same as in the US. When considering a pre-sale, make certain to ask the right questions:

• Certificate of no liens?
• Title insurance for the project?
• Can a Fidecomiso eventually be obtained, and what is the time frame?
• What are the details of the escrow programs?

Be an Informed Investor

Ejido land

Ejido land refers to a parcel of land allocated by the Mexican government specifically for agricultural or livestock purposes. These lands are deeded not to individuals, but to indigenous and communal groups within the country. Unlike private property, which is owned outright by individuals or entities, ejido land represents a form of land possession rather than true ownership—the government retains legal title to the land.

If you’re planning on purchasing Ejido Land, whether you’re a Mexican national or a foreign investor, we strongly recommend seeking competent legal advice before proceeding..

Lease Land and the 99-year lease

A land lease is not an ownership vehicle. Land leases can only be established for less than 10 years. There are no 10+10+10 legally binding agreements. There is no longer the legendary “99-Year Lease”. In fact, there really never was. Land leases are not an investment and involve nothing more than the right to use the land for a period of time. Any improvements remaining at the end of the lease will revert to the landowner.

Frequently Asked Questions About Foreign Ownership in Mexico (FAQ’s)