Foreigners can indeed buy a house or land in Mexico. On the coast and near the border it is done through a bank trust. We explain the legal framework, the steps, documents, timelines, and real costs of the process.
Yes, a foreigner can own a house, an apartment, or a plot of land in Mexico. The belief that "foreigners cannot own property" is a myth: what exists is a special rule for the areas near the coast and the borders, where the purchase is made through a bank trust (fideicomiso). Outside those areas, a foreigner can acquire property directly. This guide explains the legal framework, the step-by-step process, the documents, the timelines, and the real costs.
The legal framework: why the restricted zone exists
Article 27 of the Constitution establishes that, as a general rule, foreigners cannot acquire direct ownership of land and water within a strip called the restricted zone: 100 kilometers along the borders and 50 kilometers along the beaches. This historical restriction seeks to protect the territory in regions considered strategic.
The Foreign Investment Law (Ley de Inversión Extranjera) opened up the modern solution: although a foreigner cannot hold direct title within the restricted zone, they can acquire the rights to use and enjoy the property through a trust established at an authorized Mexican banking institution. Outside the restricted zone, a foreigner can buy in direct ownership by signing the agreement provided for in Article 27 (known as the Calvo clause), by which they agree to be considered as a national with respect to that property.
What exactly is a trust?
It is a three-party contract. The trustee bank appears as the titleholder before the Public Registry of Property; the foreign buyer is the beneficiary and retains all economic rights: to live in the property, rent it, remodel it, sell it, and bequeath it. The bank cannot dispose of the property; it only administers it following your instructions. The trust term is up to 50 years and is renewable for equal periods.
Residential use and commercial use
- Residential use (to live in or rent as a home): the trust is used in the name of the foreign individual.
- Non-residential or commercial use: it is advisable to form a Mexican company with a foreigner admission clause; that company can indeed acquire direct ownership within the restricted zone for non-residential purposes.
Step by step to buy with a trust
- 1. Verify the property. Ask the seller for the title, a certificate of no encumbrances from the Public Registry, and the property-tax and water bills paid up to date. Confirm that there are no debts or disputes.
- 2. Sign the purchase agreement or promise to purchase. It sets the price, form of payment, and timelines; it is usually accompanied by a deposit as a guarantee.
- 3. The bank requests the permit from the SRE. A permit from the Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores, SRE) is required to establish the trust.
- 4. Establishment of the trust. The bank draws up the trust contract designating the buyer as beneficiary and, very importantly, a substitute beneficiary for inheritance purposes.
- 5. Deed execution before a notary public. The notary formalizes the transaction, calculates and withholds the taxes, and orders the registration in the Public Registry of Property.
Documents you will need
- A valid passport (and, where applicable, a resident card).
- Proof of address.
- Tax details; it is advisable to obtain your RFC (federal taxpayer ID) from the SAT.
- Documentation for the property: title, certificate of no encumbrances, appraisal, and property tax paid up to date.
Approximate timeframes and costs
The complete process usually takes between 4 and 10 weeks, depending on how fast the bank and the SRE are. Consider these costs, which vary according to the state and the value of the property:
- The SRE permit and the trust set-up fee.
- The annual fee charged by the trustee bank for administering the trust.
- The Real Estate Acquisition Tax (ISABI/ISAI), which is state or municipal and usually ranges between 2% and 5% of the value.
- Notary fees, registration duties, and the appraisal.
Common mistakes you should avoid
- Buying "on a handshake" or with a private contract without a deed. Without a deed before a notary and registration in the Public Registry, your right is not enforceable against third parties.
- Entrusting the payment to a third party without guarantees. Use escrow accounts or payments through the notary.
- Not designating a substitute beneficiary in the trust, which complicates inheritance.
- Ignoring the property's legal regime (ejido land, for example): ejido land has its own rules and cannot always be freely sold.
Can I sell or transfer it later?
Yes. As the beneficiary, you retain the right to sell the property at any time. If the buyer is Mexican, the property can leave the trust and be deeded directly; if the buyer is another foreigner, the beneficiary can be replaced through an assignment of rights under the trust, which is usually quicker. You can also rent out the property and receive the income directly, with the tax obligations that this entails.
Buying outside the restricted zone
If the property is outside the 100 kilometers from the border and the 50 kilometers from the coast, you do not need a trust: you can acquire in direct ownership by signing before a notary the agreement provided for in Article 27 of the Constitution. Even so, it is advisable to verify the title with the same care and to comply with the tax and registration procedures.
Conclusion
Buying in Mexico as a foreigner is perfectly legal and common, especially in beach destinations. The key is to use the correct instrument—a trust in the restricted zone or a direct purchase outside it—and to rely on a notary public and a real estate lawyer holding a cédula profesional (professional license) to verify the title and protect your investment.
Notice: This content is general legal information and does not constitute legal advice, nor does it replace consulting a lawyer holding a cédula profesional. Every case is different and laws change; before making decisions, consult a lawyer who can review your particular situation.