Buying Land in Mexico as a Foreigner
December 4, 2006 · Print This Article
Most people have heard that people from the U.S. can’t buy property in Mexico. This isn’t entirely true. In fact the only real regulations are on the near the border and coast. These areas are known as the “restricted zone”. The “restricted zone” is the area within 100 kilometers of any Mexican border and within 50 miles of any Mexican coastline.
Originally the “restricted zone” was created to protect Mexico from foreign invasion. The idea was to keep any foreigner from owning land that could be used to bring in troops and launch an attack on Mexico. This was written into the Mexican Constitution in article 27. The constitution was signed in 1917 and made a lot of changes to who could own property.
From briefly reading over this section of the Mexican constitution from 1917, it looks like it took a lot of land away from people. It changed the concept of land ownership to one where the government actually owns all the land and even though they sell it to individuals for use, the government can get it back if they want it. From what I’ve seen this doesn’t happen often and when it does it is similar to what happens in the U.S. when they put in a highway through an area that used to be private property–the government has to pay a reasonable price for the land.
Other than the “restricted zone” foreigners can own land subject to Mexican law. Just because you are a U.S. citizen doesn’t mean the land becomes U.S. property. It is treated just like a Mexican citizen owned it.
If you are looking to buy land in Mexico keep in mind that you real estate is not regulated in Mexico. There is no type of real estate license required. Anyone can sell real estate and there isn’t any type of code of ethics that they all agree with. You will want to work with someone trust worthy.
If you want to buy land in the “restricted zone” there are ways to do it. The Mexican government knows that selling the costal areas is a great way to bring in money not just for the sale of the property but for the local economy. Foreigners coming to Mexico and spending money are a great way for the country to profit financially. However since the law about the “restricted zone” is written into the constitution it would be very difficult to change.
The Mexican government came up with a work around. You can create a legal entity in Mexico and use it to buy the land. Since the land is owned by a Mexican entity, this fulfills the constitutional requirements. If this entity is a trust, a foreigner can be named as the beneficiary. The trust is administered by a Mexican bank which is obligated to act on the behalf of the beneficiary of the trust.
These types of trusts are called fideicomiso and last for 50 years. While the land is in the trust it can be sold, inherited, etc. In the last year of the trust, it can be renewed for an additional 50 years. This can go on indefinitely.
Legal transaction involving the property must be done through the Mexican bank that holds the trust because the bank actually holds the title to the property.
Many people think the trust is a type of lease because it lasts for 50 years. At one point I think the closest thing to owning Mexican coastal land was to lease it for 100 years. The current method of creating a trust seems to work around the lease situation and provide more control for the foreigner wanting to own land in the “restricted zone”.
It is also possible to create a Mexican corporation that is foreign owned and that corporation can buy land in the “restricted zone”. However the corporation can only by land that is not for residential use and there are other restrictions on what the land can be used for. It appears that if you created a corporation and bought a shop that had living quarters above it, you might be able to live in above your shop, but I’m not sure.
If you are looking to buy land in Mexico make sure you find someone who you can trust who can help you through the process. Law change and just because something is legal to do doesn’t mean it is the easiest way to go about purchasing property.