HOW REAL ESTATE TRANSACTIONS IN MEXICO DIFFER FROM THE US
Because of the similarities of real estate transactions in general, it is easy to assume that the basic terms and principles which are familiar in the United States also hold true in Mexico. Much of the paperwork is similar, if not exactly the same, as that used in the US. Although, there are many aspects of Mexican real estate transactions that are identical to procedures carried out in the United States, there are many aspects that are completely different.

The buyer must retain professionals to assist in the transaction and since Mexico has yet to regulate real estate transactions, some research and due diligence is inevitable, just as purchasing property in any location requires research, planning and preparation. Currently there is nothing similar to a Real Estate Commissioner or a Department of Real Estate in Mexico. Some states are beginning to look at some kind of real estate legislation, but it might be some time before this is a reality. The American Embassy and the American consulates in Mexico are good places to start when trying to determine if a real estate company is reputable. Some of the real estate companies have established quite a reputation for themselves at some of the Consulates. It seems almost inevitable that the property sector in Mexico will be regulated fairly soon, with pressure from the US authorities who are keen to arrange protection for a number of their nationals who have interests in the area. Mexico tends to follow the US in most cases, as they depend heavily on trade and employment opportunities. The North American Free Trade Agreement (NAFTA) and significant changes in Mexican laws enacted in the early 1990s have made safely owning property along Mexico's coast a reality. Today, more than 1.5 million Americans own real estate in Mexico.

There are several aspects of Mexican law that deal specifically with real estate investments by foreigners that are worth reviewing. Legally, only a licensed Mexican attorney can and should provide advice on the law. No part of what you read here should be misconstrued as legal advice. However, I am told that Americans and other foreigners may obtain direct ownership of property in the interior of Mexico. However, under Mexican law, foreigners cannot own property outright within the restricted zone -- for which there is a simple solution. For example, the Mexican Constitution prohibits direct ownership of real estate by foreigners in what has come to be known as the "restricted zone." The restricted zone encompasses all land located within 100 kilometers (about 62 miles) of any Mexican border, and 50 kilometers (about 31 miles) of any Mexican coastline. In order to permit foreign investment in these areas, the Mexican government created the "fideicomiso," similar to a US family trust (not a lease), but in this case a Mexican bank must be designated as the trustee and, as such, has title to the property and is the owner of record. The bank, as trustee, buys the property for the foreigner, and has a fiduciary obligation to follow instructions given by the beneficiary. Furthermore, it seems that under Mexican Law, the bank, as trustee, has a fiduciary obligation to respect the rights of the beneficiary. The beneficiary can develop and use the property to his liking and benefit, within the provisions of the law. As the beneficiary of the trust, you obtain all the rights of ownership while the bank holds title to the property. You are allowed to use, lease, sell, will, improve or encumber your property. A new trust is established for 50 years and is easily renewable.