preview

The Benefits Of Real Property In Mexico

Better Essays
Canadians and North Americans are buying more property in Mexico than ever before. This is partly because the Mexican government has been making it much easier. In 1973 the Mexican government changed their foreign investment law to allow non-Mexican nationals to buy real estate anywhere in Mexico except the Restricted Zone (which is located within 31 miles from the coastline and 62 miles from its borders). In 1993 the law was amended to allow foreigners to buy real property in the Restricted Zone by using a Fideicomiso which is a trust agreement established with a Mexican bank. The bank acts on behalf of the foreign buyer holding the title to the real property, becoming the trustee. The bank then, as trustee, has a fiduciary responsibility…show more content…
Some estimates say as low as 7% on a small loan amount or as high as 18% with larger loans from private lenders. Credit scores can also have an impact like they do here in the United States. Paying all cash upfront is simple, easy, and the norm in the past but financing is becoming more available.
Seller financing is very popular and works basically the same as it does here in the United States. But there is also another type of seller financing called: Reserve of Domain. It is typically used if the buyer has all the money to purchase the property, but it is tied up in assets and isn’t liquefiable at the time of sale. One example would be if the foreign buyer has the money in an IRA and is only permitted to withdraw a small portion without being penalized. The Reserve of Domain is easier and cheaper to set up than an ordinary mortgage. The buyer pays the seller most of the sales price for the property. Then the buyer and the seller enter an agreement regarding the payment of the remainder of the sales price. The deed is then put in ‘Reserve” by a Notario Publico. When the buyer pays the seller the balance along with the interest that was agreed upon, the seller contacts the Notario Publico and signs off that he’s been paid. The Notario Publico then goes to the Public Registry of Property and lifts the Reserve from the deed.
Large international banks working in Mexico can offer mortgage loans and some can even help you with your Fideicomiso trust permit from the Ministry
Get Access