Many Canadians and North Americans are looking at the potential opportunities for investing in Mexico. Let us help you navigate through the pitfalls to having a positive and rewarding experience should you decide this is for you. We specialize in Puerto Vallarta and Bucerias real estate both as owners and active realtors.
Mexico real estate investment information for the global investor is summarized below by Bruce Woodworth, a California real estate broker and publisher of Pacific Coast Travel Info.
Mexico real estate laws and business practices differ substantially from those in the United States and Canada. Foreigners who purchase property in Mexico may find that property disputes with Mexican citizens may not be treated evenhandedly by the Mexico justice system. A foreigner has little, if no recourse at all without a properly drawn Mexico legal contract.
Buyer Beware: Be advised that there are no laws which regulate the sale or management of real estate in Mexico and abuses do exist. It is always prudent to ask for local references and obtain competitive bids for all services when possible.
The Mexican Constitution prohibits direct ownership by foreigners of real estate within 100 kilometers (about 62 miles) of any border, and within 50 kilometers (about 31 miles) of any coastline. In order to permit foreign investment in these areas, the Mexican government has created a trust mechanism (contrato de fideicomiso) in which a bank has title to the property, but a trust beneficiary enjoys the benefits of ownership. The Bank Trust Agreement (contrato de fideicomiso) allows for renewable long term leases that may be sold or enjoyed by your heirs.
A foreigner may be the sole and exclusive stockholder of a Mexican corporation which may hold fee simple title to non-residential property in the prohibited zone. There is a broad definition for "non-residential" property.
Buyer Beware: Mexico real estate prices that seem too good to be true are usually too good to be true! Many of these "bargains" are located on what is commonly referred to as "Ejido" or communal tracts of land. It is highly recommended that you consult with a Mexico attorney regarding Ejido land rights. Any agreement between the "Ejido" and a foreigner may be revoked or cancelled without cause, notice or recourse!!
Caution: Mexican law recognizes squatters' rights, and homeowners can spend thousands of dollars in legal fees and years of frustration in trying to remove squatters who occupy or rent their property. Always inspect the property and be certain that your property is not occupied by a Mexican citizen in any manner whatsoever. Anyone who occupies the property on behalf of the owner should be totally removed/gone from the property prior to closing. Warning: A Mexico citizen may simply refuse to pay rent and continue to occupy your rental property for a long, long time - maybe years.
American property owners in Mexico should exercise caution when hiring employees to serve in their homes or on vessels moored in Mexico. Several American property owners have faced lengthy lawsuits for failure to comply with Mexican labor laws regarding severance pay and social security benefits.
Caution: Exercise extreme caution when considering time-share investments and be aware of very aggressive tactics used by some time-share sales representatives. Buyers should be fully informed and take sufficient time to consider their decisions before signing time-share contracts, ideally after consulting an independent attorney. Mexican law allows time-share purchasers five days to cancel the contract for unconditional and full reimbursement. U.S. citizens should never sign a contract that includes clauses penalizing the buyer who cancels within five days.
A formal complaint against any merchant should be filed with PROFECO, Mexico's federal consumer protection agency. PROFECO has the power to mediate disputes, investigate consumer complaints, order hearings, levy fines and sanctions for not appearing at hearings, and do price-check inspections of merchants. All complaints by Americans are handled by PROFECO's English-speaking office in Mexico City at 011-52-55-5211-1723. You might also complain about the lack of an English translation for the PROFECO web site.
Following is the english portion found on that website:-------------------------------------------------------------
Attention to Foreigners
Profeco is part of the administrative branch of the federal government of the United States of Mexico. This Institution strengthen the citizen's power and enforce the law to achieve an equity on the consumption relations.
The Department to attention for foreigners gives assistance on solving controversies arisen between people who do not live in Mexico, foreigners or Mexican citizens living outside the country, and acquire any product or service from a Mexican supplier and are not satisfied with it.
This is a totally free service and does not require the presence of the consumer during the mediation procedure.
Complaints can be submitted in any Profeco office in the Country, Embassy, Consulate or any other Mexican Official Representation overseas.
You must submit the following information to suit a formal complaint:
- A brief letter (1 page maximum and, preferably, typed) stating the following: supplier's name and address, description of the facts that origin your complaint, date of purchase, cost of the good or service, amount you are claiming, your name and signature.
- Copy of your ID (Passport or Driver´s License)
- Copy of your contract or invoice payment
- Copy of your bills, credit slips or receipts as evidence of your payments
- Copy of all the documents available to support the complaint.
Our address is: Av. José Vasconcelos No. 208, 6° Piso, Col. Condesa, México D.F. C.P. 06140.
For further information, do not hesitate to contact us at the following numbers: (+52) 55 5211-1723 (phone), (+52) 55 5211-2052 (fax), or e-mail us to extranjeros@profeco.gob.mx
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Mexico Real Estate & Business Transaction Guide
For Educational Purposes Only ~ Always Seek Professional Advice
1. All Mexico real estate and business transactions are processed by a local Notario Publico. A Mexico Notario Publico is a licensed attorney and among a select/privileged few that are licensed by the Mexico government to process and record property and business transactions, collect taxes and arbitrate disputes, among other permitted services. Buyer Beware: A Notario Publico performs his services without liability and does NOT represent either party (but will generally act in favor of Mexico land owners). If a dispute arises, everyone goes to their personal attorney for Mexico court resolution - a court which does not favor foreigners. Get it right the first time around!!
***Notario Publico fees are "flexible"!! Buyer Beware and always seek competitive bids from two or more Notarios when possible.
2. A foreigner's rights and recourse in Mexico are near nonexistent without an attorney written/approved purchase contract in Espanol/Spanish. Investors should hire competent Mexican legal counsel when contemplating any real estate investment.
*** Warning: An english translation of a Mexico legal document, however official it may appear to be, is not acceptable in a Mexico court of law.
3. It always helps to request some evidence that you are dealing with the land/property owner. A buyer should always ask the seller for a copy of the escritura - a Mexico land title - for possible evidence of ownership. While easy enough to forge, an inspection of the original escritura - before being copied for your own records - and inspection of owner identification (from acceptable government source) is always recommended.
4. Mexico real estate and business transactions may include documents as follows:
A. An offer and acceptance (oferta) and/or a promissory agreement (contrato de promesa). These are generally simple documents that outline the sales price and general purchase terms while providing a basis for the purchase/sales agreement.
B. A purchase/sales agreement (contrato de compraventa) should be drawn by a Mexico attorney acting on your behalf but is oftentimes drawn up by the local Notario. Buyer Beware: A Notario performs his duty without liability and does NOT represent either party (but will generally act in favor Mexico land owners). In case of a dispute, everyone goes to an attorney for Mexico court resolution - a court which does not favor foreigners. Get it right the first time around!!
C. A buyer should request a copy of the property lien certificate (certificado de libertad de gravamen). The lien certificate should indicate the owner of record, size, property classification, the legal description and whether there are any liens or encumbrances filed of record against the property. Prior to closing, there should always be a certificate of no tax liability (certificado de no aduedo) from the local taxing authority.
D. Your title may be in the form of:
* A real estate trust agreement (contrato de fideicomiso) for coastal property within the Restricted/Prohibited Zone - 100 kilometers (about 62 miles) of any border, and within 50 kilometers (about 31 miles) of any coastline.
* A reserve title agreement (contrato de compraventa con reserva de dominio).
* An assignment of real estate trust rights (contrato de cesion de derechos fideicomisarios).
5. All purchase funds should be placed in a neutral, third party escrow with specific instructions for disbursement of funds. **This can be tough when it is most always explained that you must give the owner a significant and non-refundable Cash deposit (5 - 50%)!! It is your money and your choice!! You may pay a local bank to act as trustee for the deposit funds and ultimate transfer of title or you may make arrangements with international title companies to handle the escrow.
6. A Notario Publico is responsible for the title search, title transfer, collection of taxes and recordation of the new title in Mexico transactions. The Notario Publico will generally examine the current deed and a current lien certificate resulting in the possibility of a short or incomplete title history of the property. Always obtain Mexico Title Insurance from a reputable international title insurance company. The Notario is not liable for defects in title and the Notario is certainly not liable for lack of disclosure from the seller.
7. It is always advisable for a buyer to retain professional real estate broker services for analysis of the many factors which can affect the value and security of your real estate investment.
8. It is strongly recommended that you consult a qualified attorney before investing in uncompleted developments of any kind. There is little or no recourse when a developer fails to complete a proposed project and it is not uncommon for projects to lack proper completion bonds, permits and licenses.
Michael and his wife Clara speak fluent Spanish and are knowledgeable about the Mexican real estate market and procedures. He and his daughter Elizabeth run Bienvenidos Real Estate and are affiliated with Lloyd Real Estate in Bucerias Nayarit. He also has a home there where he spends several months each year. His son-in-law Pablo Mejia builds luxury homes in the area with their flagship projects in Sayulita. For information about Puerto Vallarta real estate or Bucerias real estate
Contact Michael at mikem@remax-firstrealty.ca for consultation at no charge or call toll free from the US or Canada 1-888-243-1071 or visit our website at www.bienvenidosrealestate.com
Michael Murphy does not endorse and is not responsible for the content of external sites not connected directly with him. External links will open in a new window.
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