Owning property in Mexico
Foreign nationals often have questions about what’s legally possible when it comes to owning property in Mexico. The short answer: YOU CAN. Even in the constitutionally restricted coastal and border zones, foreign buyers can gain full ownership rights through a legal structure called a Fideicomiso.
According to Article 27 of the Mexican Constitution, foreigners cannot directly own property within 100 kilometers (62 miles) of international borders or 50 kilometers (31 miles) of the coast. This restriction wasoriginally designed to protect Mexico’s territorial integrity. However, since 1973, Mexico has permitted non Mexican citizens to purchase property in the Restricted Zone through a Fideicomiso, or bank trust.
The ‘Fideicomiso’ Trusts
A Fideicomiso is a renewable 50-year trust established with a Mexican bank of your choice.
- The bank acts as the trustee, holding legal title to the property.
- The foreign buyer becomes the beneficiary of the trust, with full rights of ownership.
- The property is the subject of the trust, and the buyer maintains control over it.
- The trustor or fideicomitente is the seller/current owner of the property.
As the beneficiary, you enjoy all the rights and privileges of ownership. This includes the ability to:
- Use, occupy, or lease the property;
- Improve or remodel the property (in accordance with local regulations);
- Transfer the title to heirs or sell the property to another qualified buyer.
Fideicomisos are safe, legal, and renewable for additional 50-year periods. Property held in trust can be sold to another foreigner, transferred to a Mexican national, or inherited by beneficiaries without probate (all sales and changes must be notiarzed and approved by Meixcan authorites).
But, most importantly, the bank (trustee) doesn’t own the property—it simply manages the trust and ensures your rights are protected under Mexican law.
Alternatively, foreigners can acquire non-residential property (commercial, tourist, or industrial use) through a Mexican corporation, and will be subject to an additional 16% VAT on the improved (building) value of the property.
The Buying Process
I. Making an offer
The process begins when a buyer submits a formal written offer through their real estate agent. This offer outlines the proposed price, terms, and any contingencies. Once the seller accepts, both parties move forward with a Promissory Agreement.
II. Signing the Purchase-Sale Agreement
Once the offer is accepted, the buyer and seller sign a legally binding Purchase-Sale Agreement outlining the closing timeline, purchase price, payment schedule, and any penalties for withdrawal. At this stage, the buyer typically deposits 10% into a third-party escrow account for security and legal protection—never directly to the agents or seller.
III. Setting Up an Escrow Account
To protect your funds, all payments—including the 10% deposit—should be made through a licensed escrow account. Several escrow companies are available, including TLA Services, a U.S.-registered company based in Texas specializing in international real estate. They offer secure, transparent fund management and are experienced in cross-border transactions. Reputable Mexico-based escrow providers are also available; we can share that information upon request. Escrow fees are typically paid by the buyer. Funds are held securely until closing and released to the seller upon signing of the final deed.
IV. Notary Review
All real estate transactions in Mexico must be reviewed and certified by a Notario Público—a government-appointed attorney, not to be confused with a U.S. notary. The Notary prepares and registers the official deed (escritura pública), ensures the legal transfer of ownership, and confirms that all taxes are paid. They are also responsible for verifying clear title, obtaining certificates from the Public Registry, and confirming the property’s tax and utility status.
v. Final Payment and Closing
Roughly one week before closing, the buyer sends the remaining balance into the escrow account. On the agreed closing date, funds are released to the seller after all documents are signed in the presence of the Notary. The deed (escritura) is then registered with the local Public Registry, and the property is formally transferred. The exchange rate used to convert foreign currency into pesos is finalized on the day the funds are disbursed from escrow—typically the day of closing.
VI. Closing Costs and Taxes
Buyers in Puerto Vallarta should budget approximately 3-5% of the property’s purchase price to cover closing costs. These expenses generally include the transfer or acquisition tax, which ranges from 1–4% of the appraised tax value of the property (not necessarily the sales price), as well as Notary fees, escrow service fees, and any applicable bank trust (Fideicomiso) setup or renewal costs for foreign buyers purchasing in the restricted zone. Additional optional costs may include title insurance and homeowner’s insurance, which are recommended for added security and protection. On the seller’s side, costs typically include real estate agent commissions and any capital gains taxes due at closing. These amounts can vary based on factors such as property value, ownership duration, and the seller’s residency status.
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