Owning Property in
Mexico
There is a lot of
misinformation about
holding property in
Mexico – we will try and
clear up some of the
misunderstandings.
Contrary to popular
belief, foreign citizens
can own property fee
simple in the interior
of Mexico. Land that
runs along Mexico’s
coasts and border areas
is a restricted area
that was established
under the Mexican
Constitution and extends
100 kilometers (about 62
miles) deep along the
coasts. Most of Baja is
included in this
restricted area. The
Rosarito Beach area
requires a Mexican Bank
Trust for a Foreigner to
enjoy owning a home in
“The Baja” as is the
case along any of
Mexico's costal areas.
The Mexican Bank
Trust
The Mexican Bank Trust
was created in the early
70’s to promote tourist
and retirement
investments along
popular coastlines by
Mexican President
Echeverria, which
authorized the 30-year
Bank Trust program. This
is the most secure
method to hold real
estate in Baja
California. Your Bank
Trust must be
established at an
authorized Mexican Bank
in their Trust
Department. In 1989
President Salinas
mandated the 30 year
Trust be extended for an
additional 30 years.
Then, December 27, 1993,
President Salinas
extended the Trusts from
30+30 year arrangement
to the new 50+50 year
time period. The
property you hold in a
Bank Trust is yours to
improve, build, sell,
leave to your estate,
etc. You’ll enjoy all
the same rights you have
in your U.S. fee simple
real estate via the Bank
Trust. Your Family Trust
in the USA can also be
the owner of the Bank
Trust if you so desire.
There are several
Subdivisions in the area
that were set up as a
Master Bank Trust by the
developers 30 years ago.
Two of those
subdivisions in the
Rosarito Beach area are
San Antonio Del Mar and
Las Gaviotas. They both
had the original 30-year
Trusts, which expired
March 2003. All the
owners requested their
new 50 + 50 Year Bank
Trusts and those new
Trusts have now been
issued. When you decide
to sell your home, in
all probability, another
foreign person will be
purchasing your Bank
Trust Rights. You will
write a letter of
instruction to the Bank
that will include your
new Buyer’s name and
beneficiaries. The new
Buyer can assume the
remaining years of the
Bank Trust or they can
apply for a new 50 + 50
year Bank Trust. It is
the Buyer’s choice. If
you sell your Trust
Rights to a Mexican
National, he has the
option to take title in
his name in the Trust or
remove the property from
the Trust and take title
in “Escritura” (Mexican
National form of
Ownership). Sometimes
the Mexican National
will opt to pay the
annual Trust fee and
stay within the Trust,
especially, if his most
likely buyer would be
another foreigner. The Mexican Land
Lease
Many people ask, “Can I
get a 99 year land
lease?” A land lease for
more than 10 years is
not legal and never has
been. Not the 10 + 10 +
10 year arrangement,
either. If you enter
into a 10 + 10 + 10
agreement with a Mexican
landowner and at the end
of the first 10 years
the landowner decides he
does not want to
recognize that second
ten-year lease you
thought you had, he does
not have to do so. You
have no recourse,
because you entered into
that agreement which was
designed to circumvent
Mexican Law, thereby
giving you no legal
status to use the
Mexican Court System in
such cases.
Property Taxes,
Trust Fees and
Homeowner’s Insurance
The annual property
taxes are so low that
when we tell buyers that
a home with a value of
$350,000 is $200.00 a
year, they think we’re
nuts! It’s true. There
is a one-time tax that
is paid at closing that
is an acquisition tax.
Your annual fees on a
$300,000 home would look
something like this:
Annual Bank Trust fee @
$550.00, Property Tax @
$200.00, Homeowners
insurance @ $350.00, and
HOA maintenance fees at
$150.00 a month for an
annual expense of $2,850
for the year.
How does a
Mexican Property
Purchase Closing Work?
The laws in Mexico
provide very well for
Foreign Buyers. The
system is clear and
there are a lot of
checks and balances that
are in place to protect
your real estate
investment. When an
offer is made and
accepted by all the
parties, then we set
about to obtain the
survey, current
appraisal, Letter of
Instruction from the
Seller to the Bank that
holds the Trust to place
in the new Buyer’s
names, which includes
naming their
beneficiaries. We open
the file with a Notary
or "Notario". A lien
waiver certificate is
required at closing, a
letter from the bank
stating the Bank trust
fees are current, the
property tax receipt for
the current year and a
letter from the Home
Owner’s Association that
all fees are current and
there are no pending
assessments either with
the Association or the
Federal Zone. The
Notario verifies the
“Chain of title” and
will not sign the
document until all the
required documents are
in order and are within
the required dates of no
longer than 6 months old
for the appraisal and
survey. Who is a "Notario"
in Mexico? A
Notary in Mexico is NOT
the same as a Notary in
the USA. The Mexican
Notaries are held in
high esteem and are the
only non-government
person who has the right
to use the Seal of
Mexico. All Notaries
must be Lawyers and in
order to qualify as a
Notary. Frequent
Continuing Education
courses are required for
all Notaries by the
Mexican Government.
There are only about 20
Notaries between Tijuana
and Rosarito Beach and
they must “sign off” on
every marriage, will,
real estate transaction,
etc. When you close a
transaction with a
Notary, the fees are
paid to his office and
after the Buyers and
Sellers sign and the
Seller is paid, then the
recording of your
documents are completed
by the Notary both in
the local municipality
and in Mexico City. The
Notary pays the
acquisition tax in the
Buyer’s behalf and when
your Trust Deed is
finished by the Notary,
all the documentation
that was required for
your closing is bound in
a legal size book for
your safe keeping
including the tax return
showing your taxes were
paid as required by law.
What happens to
my Bank Trust Property
if I die?
You list your
beneficiaries in the
Bank Trust document when
the Bank Trust is placed
in your name. Should
something happen to you,
your heirs will need to
take an official copy of
the USA death
certificate and have it
translated into Spanish.
You will then take those
two documents to the
Secretary of State from
your State and request
an Apostle which is an
internationally
recognized document that
the attached death
certificate is authentic
and will be recognized
by the bank to place the
Bank Trust in your
heir’s name. This fee is
$26.00 in California &
in Arizona it is $3.00.
You can also have a
Mexican Will
for other assets.
Is Title Insurance
Available in Mexico?
Yes! Pacifica at Real
del Mar is working with
Stewart Title Insurance
of Baja to provide Title
Insurance.
