Mexico is not like any other country, and that applies to legal and real estate matters as well.  Our experts give you the inside scoop on purchasing real estate in Mexico.

It would seem logical to think that purchasing real estate in Mexico is similar to doing so in any other country in the World.  However, the reality is, in fact, that real estate transactions in Mexico can be very surprising.

Although the acquisition process may be somewhat similar to transaction in other common law countries, there are some very important aspects that you must consider when acquiring real estate in Mexico.

Can foreigners acquire real estate in Mexico?
The most straightforward answer that we can give you is YES.  Based on article 27 of the Mexican Constitution and on the Foreign Investment laws in effect, foreigners may acquire real estate in Mexico, either through a bank trust (fideicomiso) or through a Mexican corporation, depending on the location of the property and its intended use.

In fact, property in this country is subject to private ownership, and it can be bought, sold, inherited, willed, devised, encumbered, donated, lost by prescription or obtained by eminent domain, same as in most other countries.

What's the difference?
Naturally, the difference lays in the historical roots of the country, which make the present conditions so different.  Yet the differences are more evident in family and civil matters or in private law than in business, commercial or government topics.

International investors often make the mistake of disregarding or minimizing social and legal differences.  One of the main reasons is the strong instinct to believe (to persuade oneself) that customs, practices, and values are, or at least should be, the same.

This instinct becomes stronger when you not only have the need, but also the urgency, to fulfill a lifetime dream, such as to retire near the ocean in warm weather and peaceful environment, or retreat to that piece of paradise every other weekend and during the holidays.  The enchantment that makes us ignore the differences is additionally propelled when the seller and his/her agent make you feel "at home", of course, only while they are selling the property.

Those differences are sometimes also looked over because of expectations to make "the best deal of my life" by selling some short time after the purchase, taking a succulent slice of capital gains from skyrocketing prices derived from the real estate boom.

Some inconveniences
To start, there is no legal or government requirement or official licensing for real estate agents.  No training or continuous education is required and, since they are not required to be bonded or insured, there is no specific code of ethics applicable or enforceable to those agents.  Anyone can call himself or herself a real estate agent, broker or realtor.

As for attorneys, there is no bonding or professional insurance available, (nor for notaries).  There is also no requirement for continuous legal education, mandatory bars or associations.  As a result, no official scrutiny or disciplinary sanctions can be imposed.  There are very limited resources for cases of legal malpractice, which can be exercised against only when fraud or gross negligence is clearly present.

In Mexico, like almost everywhere else, litigation procedures are slow.  Because of the way the Mexican procedural laws (federal and state) are structured, it is very difficult to prove anything that hasn't been put in writing.

Even though public notaries are the axis of almost every real estate transaction, they are not required to research the validity of the title beyond its color.  They are not responsible for misinterpretation, impersonation, incapacity of the parties, undisclosed lawsuits, heirs, or generic fraud. Although they are expected to give general advice to the parties, they not legally able to represent them.  Lawyers and notaries are supposed to be responsible for errors and omissions, but, since they are not bonded, a lengthy battle would be required to recover any damages.

With respect to closing real estate transactions, there are no licensed escrow agents.  The only alternative would be to open a conditional deposit in  a bank, which becomes rather expensive, clumsy and too complicated to keep up with the speed of your purchase transaction.

Finally, when the property sale is advertised or offered to the general public, the Mexican Federal Consumer Protection Agency doesn't have the power to settle disputes.  With their final statement you would be able to go to court, but again, that entails a long and tedious process.

Who can you trust?
Ideally, a prestigious expert in real estate law recommended or referred by your country's consulate offices should be reliable.  You can also build that trust by demanding feedback on the status of your transaction.  Another option is to have an attorney from your country of residence interview the consultant you want to hire abroad.

Important tasks
Your legal counsel should perform several tasks that may seem quite simple but, in reality, are everything but.  Although you may consider handling the process yourself, that would be a terrible mistake.  After all, it's not wise to "fight a battle in enemy territory."  It is wiser to make the extra effort and do things right the first time around and let your advisor handle the following responsibilities:

1. Verify if the description in the seller's title is accurate, when compared to the land itself and the copy filed in the property registry.  It is imperative to verify the seller's real identity!
   

2. Make sure there are no mistakes in the exact location of the property.  If there is a discrepancy, problems will arise sooner or later with the neighboring property owners, the state, the federal government or all of them together!
   

3. Verify the title chain.  Make sure that at least during the 10 years preceding your purchase date, all title transfer documentation was drafted by legal counsel.  It is important to consider the sacramental formalities of documents required in Mexican real estate matters. Title problems are the main cause of real estate litigation cases.  All of this can be avoided by simply acquiring insurance, as you would when you board an airplane to travel.  Luckily, title insurance is now available in Mexico, and it can give you peace of mind when completing your purchase.
   

4. Try to find out if all the requirements and empowerments were fulfilled/verified during the current owner's (seller) transaction, especially if the owner is a corporate entity.  Also, whether that transfer was allowed or if the company's representative (or the executor of a will or an estate) had the authority at the time.  Otherwise, his/her title may be declared null and you may end up with a title nightmare.
   

5. Physically verify whether there are any cables or power lines, pipelines, sewage ducts, rights of way, apparent paths made by people, vehicles or cattle, streams of water (even dried up), possible landslides, toxic materials buried, or flora and fauna officially protected, within the property.
   

6. Check if your parcel infringes areas prohibited or restricted by federal or state laws or regulations (like the beach).
   

7. Find out if there are any pending taxes or other governmental dues that are or may can become liens, and that there are no registered encumbrances or servitudes upon the property.

8. Obtain all permits, appraisals, certificates, letters of feasibility and tax receipts (or waivers) from the different entities.  With these documents, your counsel will be able to represent you when dealing with the developer, agent, notary, seller, or, if the transactions includes a "Restricted Zone", (100 kilometers along the country borders and 50 along its shores), with the bank, the Ministry of Foreign Affairs and the Foreign Investment Registry.
   

9. Draft or review the contracts and other documents you are required to sign.
   

10. Make sure the notary public sends a preliminary notice to the recorder immediately after purchase documents are executed, and that he/she later you new title.