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Mariposa Estates Cozumel
Mariposa Estates, defined by the white border above, is close to Cozumel's beaches

 

Buying Property in Mexico

Purchasing real estate in a foreign country can be a daunting experience. But being well-informed takes away many of those anxieties. During the past 10+ years, the Mexican Caribbean–known locally at the Mayan Riviera–has generated a great deal of interest from citizens from the United States. Its proximity to the US (Houston and Miami are only a little over an hour away) and gorgeous beaches have piqued the interest of many to invest in a piece of paradise. Anchored by Cancun, Cozumel Island and Playa del Carmen, the entire Mexican state of Quintana Roo’s Caribbean coast of over 200 miles is rapidly being developed

 

What to know about buying in Mexico
Mexican real estate ownership is controlled on the state level. However, there are areas where the federal government becomes involved, especially in ecological protection, i.e. wetlands, and the federal zone, which encompasses a strip of coastal land twenty meters (66 feet) above the high tide level, where building activities, such as a pier, require special permits. Additionally, almost the entire state of Quintana Roo falls within what is commonly called the restricted zone, land located within 100 kilometers (62 miles) of the border or 50 kilometers (31 miles) along the coast.

In most cases,foreign individuals obtain ownership of real estate located within Mariposa Estates through a corporation. A commonly held myth is that the Mexicans want to maintain control of the best parts for themselves. In reality, the prohibition is based on strong historical grounds relating to the loss of half its territory and several invasions on the part of its neighbor to the north.

Though land tenancy tends to be comparable among the Mexican states, tracing land titles in Quintana Roo, because of its history, can be complicated. That is because prior to 1974 it was a Federal Territory; in 1974 it became a state,

However, because Quintana Roo was, until recently, an under-developed region, the Mexican government made it easy to create a foreign corporation for the purpose of acquiring real estate; this process is easier than in other states. Forming a corporation in Mexico is not difficult.

With the advent of closer economic ties between the US and Mexico, foreign purchase of real estate has become common practice in Mexico. Though excluded from freehold ownership within the restricted zone, foreigners can still enjoy the benefits of real estate ownership through a sociedad (Mexican corporation).

Mexican Corporation
Land ownership in Mariposa Estates is possible through the establishment of a sociedad (a Mexican corporation). A foreign corporation in Mexico requires two or more individual investors, none of whom must be Mexican, who control 100% of the corporation. There are, however, exceptions to this rule with regard to certain specific industries, such as the oil industry, radio and television and fisheries, where foreign participation is restricted. Through a corporation, foreign owners acquire the right of domain, in addition to possession and benefit. In other words, the foreign corporation owns the property with same rights as if it were a Mexican entity.

There are instances when forming a corporation is obligatory. For a foreigner to have a business in Mexico, they must establish a Mexican corporation. Foreign individuals, [in Spanish: personas fisicas], cannot operate a business in Mexico unless they are incorporated. If the property you wish to purchase is a business, i.e. hotel, apartment complex, retail space, etc. you must incorporate. Additionally, if the property lends itself to potential business activities, for example, a large tract of coastal land, the authorities will require incorporation. And within a specified period of time, the business must be up and running.

Continued–Incorporation provides many ownership rights, it also requires running a business and all the paper work that entails, such as tax reports and labor contracts.

There are other means of ownership, also, including the Prestranombre. It is wise to be extremely cautious if using the Prestanombre as this includes the involvement of a third party (Mexican citizen), who agrees to let you "borrow" their name to own property.

Legal Counsel
Before entering into any agreement, it is absolutely essential for the foreign party to be represented by competent legal counsel. In Mexico, the term notario, literally notary is assigned to those lawyers licensed to practice by the state government. There are relatively few notarios. Within a given office, there may be one notario and numerous lawyers working for him; not unlike the British system of barristers and solicitors. As there is no title insurance in Mexico, one of the most important duties of the notario is to check the public records to assure that there are no liens against the property. This process can be quite complex and is not for novices. In larger Mexican cities, the United States consular office can provide a list of notarios. Ask for references and seek out the advice of others who have gone through the process in the area you want to purchase property.

Fortunately, Mariposa Estates titles are all free and clear.

Financing is another area where Mexican real estate practices differ from the United States. It is extremely difficult to obtain a mortgage in Mexico and even if you could, the interest rates would likely be quite high. However, you do have several options. You can pay cash or finance the purchase through the mortgaging of another property you might have equity in, such as a second mortgage. Some US companies offer construction/permanent loans from $50,000 to $600,000 for single family detached homes. Fixed rate loans with monthly repayment terms up to 2 years are available for construction of homes in this area.

One additional caveat, if you do not speak fluent Spanish, by all means, work with people who are bilingual or find a translator. Several international real estate agencies have offices throughout Mexico and may be of help to you. Many of the problems that crop up are merely misunderstandings caused by poor communication between the parties. Good translators are worth their weight in gold.

In this brief space there is room for only a summary of some of the things to be aware of in purchasing real estate in Mexico. Let this be an introduction to further education down the road. And remember thousands of US or foreign citizens have purchased Mexican real estate and continue to enjoy the benefits of their investment.

Mexican Citizens
If you are a Mexican citizen you can, of course, own property in Mariposa Estates or anywhere in Mexico without a corporation. Upon completion of the sale, the title will go directly into your name.

Call Sherrie or Ron for details: 406-686-9169, toll free 866-564-4427

email sherrie@mexico-villas.com

   

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