Can Americans and Canadians own property in Mexico

Thinking of buying property in Mexico?  See a list and get answers to some FAQ below.

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Thinking of buying property in Mexico?  Here are answers to some FAQ below.

Can I Own Property in Rocky Point Mexico?

Yes, Absolutely

Can Americans and Canadians Own Property in Mexico?

Yes, Americans and Canadians can own property along the border and waterways through a Mexican Real Estate Bank Trust (Fidecomisco).  Within the interior of Mexico, Americans and Canadians can own direct title to property in Mexico

Are Agents required to be licensed in Mexico?

In the State of Sonora, Mexico all Real Estate agents must be licensed through the department of Economy. Licensing class and renewal classes are offered by AMPI #51 in Rocky Point every year and through AMPI Hermosillo four times a year online on weekennd. Kyle Wood and his team at Playa Sonora Realty are fully licensed in the State of Sonora Real and Kyle is a AMPI #51 certified Broker for Playa Sonora Realty SA de CV. He is also the Vice President of Ethics for AMPI #51 in Puerto Peñasco.

If I buy property in Mexico, will I own the title?

Title to property along waterways and borders (called the Restricted Zone) is held in a Mexican Real Estate Bank Trust (Fideicomiso) with the owner named as beneficiary.

Is title insurance required and available?

Yes, title insurance can be purchased from several title companies including Secure title Latin America. However, title insurance is not required. A majority of our clients do not purchase title insurance due to the many exclusions and cost.

What is a Fideicomesio – Real Estate Bank Trust?

Simply put, the fideicomiso is a long-term irrevocable real estate bank trust. A Mexican fiduciary bank (Legal Entity) holds the title(deed) to the property and cedes the rights to the beneficiary to own, occupy, remodel, sell, lease, rent, give away or leave to your heirs. A Mexican Bank is typically the Trustee (usually owned by a multi-national bank) of the trust, the trust then holds the deed to the property for the owner's benefit. The trust is administered for the benefit of the “owner” (the beneficiary) according to the trust document 

Why do we need a Fideicomesio?

The Mexican Constitution prohibits non-Mexican Citizens from owning title to property along waterway and borders which is called the Restricted Zone.  Recognizing the importance of foreign investment, the Mexican legislature passed the foreign investment act in 1972 and revised in 1993 which allows non-Mexican Citizens to own title to property in the restricted zone through a Mexican Real Estate Bank Trust (Fideicomesio). 

What is the Restricted Zone? 

The Mexican restricted zone is classified as 50 kilometers (31 miles) from any waterway or 100 kilometers (62 miles) from any international border.  Within this restricted zone, the Article 27 of the Mexican Constitution specifically prohibits non Mexican nationals from holding direct title to property.  Foreigners however can hold indirect title through a Bank Trust.  The bank is the trustee of the property, the buyer is the beneficiary.  The trust conveys rights to the beneficiary including the right to use, purchase, sell, generate income, modify, and gift to heirs. Some of the trustee banks include Santander, BBVA Bancomer and Banorte, and Scotia Bank. I’ve include a map of restricted zone for the State of Sonora, Mexico.  The entire peninsula of Baja is also in the restricted zone.  

What is the process for purchasing property in Mexico?

Submit an offer with a standard AMPI contract, negotiate the contract to purchase; when we have an agreed upon contract, open escrow with secure title to hold earnest funds and final closing funds.  We then enter our inspection and due diligence period. Our trusted pool of Mexican attorneys and Notarios will file the paperwork necessary to transfer the deed to the property which includes issuing a letter of instruction to the trustee bank executed by the seller authorizing transfer of beneficial rights of the trust to the buyer.  A certificate of no-lien will be obtained from the city registry trust. The notario will investigate and certify clean title (no title defects), the attorney will calculate the closing cost due by the buyer at close. The deed is registered with the public registry in Puerto Peñasco, Mexico.  The registration of the of the deed will take up to 6 month month, but possession is granted upon signing of the trust documents.  

What can I expect terms of closing costs?

Closing costs in Mexico are roughly 4-5% of total value of the property or purchase price due at close, which is paid by buyer. Fees that make up the total closing costs are: 

• 2% Transaction Tax
• Bank Trust Fees
• Attorney Fees
• Notario Fees
• Certificate of no Lien 
• Escrow Expenses
  Other – Foreign affair permit – paid outside escrow upfont.

EXAMPLE of Costs:

$10,000 dollar lot - 11% or $1,100 closing costs

$400,000 home - 4% or $16,000 closing costs

How long can I expect the closing process to take?

The closing process will take approximately 60-90  days if the existing trust and paperwork is in good order.  

Can I open a Mexican Bank Account?

Yes, you can open a Mexican Bank account to transact Mexican Pesos and U.S. Dollars with a Temporary or Permanent Residency, an RFC# (Mexican tax id), US Passport, and US SSN.

Can I rent out my property for income?

Yes, you can rent your property and receive income. This is considered work in Mexico, so you must possess a resident card, RFC, and pay Mexican income tax on a monthly basis

For foreigners working in Mexico, you are required to have an RFC#, (which is the equivalent of an SSN# in the US). This applies to any kind of business activity, including rent collection or serving on an HOA board. As of Jan 2022 all citizens and residents with a resident card must obtain an RFC.  A Mexican accountant or immigration specialist can help you obtain the RFC. Or ask one of our licensed agents for assistance.

How do I obtain a resident card and RFC. We highly recommend using an immigration service to determine which type of card best meets your needs and assist with all the nuances and cut through the “red tape” involved. The process start with scheduling an appointment with the Mexican consulate in the city in which you live

One other consideration regarding rentals - if you do not use a rental management company, you are responsible for knowing the landlord/tenant laws of Mexico.

What documents are necessary for me to provide 

 Buyer and Seller understand that certain information is required by law to be reported to SAT (Mexican IRS) when closing a Real Estate Transaction. The following documentation must be provided by both buyer and seller

• Color Copy of Passport
• Color Copy of Driver’s License
• Social Security Number – for US Citizen
• RFC number for Perminate Resident of Mexico or Mexican Citizens (Constancia de situacion fiscal not more than 3 months prior to closing date)
• If Married – Copy of Marriage Certificate
• Birth Certificates 
• Divorce decree – if applicable.
• Most current electric bill showing current address not more than 3 month old