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Mexico has long been regarded as one of the best places in the world to vacation, thanks to its vibrant, welcoming culture, spectacular geography, and stunning beach views.
For many people in Canada, buying property in Mexico is a long held dream for retirement, or simply as a location to enjoy family vacations. But few people realize that Mexican property can also provide an outstanding source of value as a real estate investment, and as an alternative financial vehicle during periods of volatility in the market.
So why aren’t more Canadians taking advantage of the opportunities to buy real estate in Mexico? Many people wrongly believe that Mexican real estate is beyond their reach, due to either financial or legal constraints. Thankfully, the truth is that buying property in Mexico is no more complex than a real estate transaction anywhere else.
All it takes is a bit of knowledge about the local real estate market, the right support from a qualified real estate agent, and the assistance of a global payment partner to ensure a simple, secure, and cost-effective real estate buying experience.
Read on below to learn more about the actual process of buying or selling Mexican real estate, and how Olympia Currency & Global Payments can help you facilitate the transaction by providing cross-border payment solutions for foreign real estate investments.
The reason why many people believe that purchasing a home in Mexico is beyond their reach stems from the longstanding false impression that foreigners cannot purchase highly desirable property in Mexico.
This belief stems from historical legacy because, from the early 1970s until the 1990s, foreigners were only allowed to purchase property in Mexico if it was not in a so-called “restricted zone.”
Restricted zones are defined as anywhere within 100 km of an international border or 50 km from the coast, so this legal situation made it impossible for foreigners to acquire real estate near top vacation destinations, such as Playa del Carmen, Cancun, and Puerto Vallarta.
Following the liberalization of Mexican real estate ownership laws in 1993, foreign nationals were permitted to buy property in Mexico within the restricted zone, as long as the real estate transaction was carried out through a bank trust, known as a fideicomiso.
For Canadians, the buying process for real estate in Mexico might seem complex, but it is not much more complicated than a local real estate purchase. The purchase process can be easily navigated with the help of your real estate agent, lawyer, and trusted global payments partner like Olympia Currency & Global Payments which has provided cross-border payment solutions for clients all over the world.
While some of the terminology surrounding the purchase process in Mexico might sound foreign, the process is quite similar to buying a house or land in Canada or the United States, and it involves similar stakeholders, including buyers, sellers, the attorney of each party, as well as a public notary and a trustee bank.
Mexican real estate sales whether for investment properties, for retirement, or for vacation homes involve the following steps:
After identifying a particularly desirable property, the initial offer (which is just like a “promise to purchase” agreement) is made, with the help of a real estate agent, to record all of the pertinent details of the proposed transaction in writing to avoid misunderstandings between parties.
The initial offer usually includes information such as the sale price, payment plans, deposit requirements, as well as all related timeframes and deadlines.
Once the initial offer has been accepted, the next step in the process is the establishment of a promissory sales agreement (known as the “contrato de promesa de compraventa”). Essentially, it is an extension of the initial offer, outlining the time frame agreed to by the buyer and seller and listing any conditions of the sale that were negotiated during the initial phase.
With the help of a notario publico (notary), real estate agent, and attorney, prospective buyers need to make sure that the property is properly registered and free of debts, liens, or encumbrances to ensure a seamless transaction and that the tax implications can be properly calculated.
Also, this is when buyers should obtain a permit from the Federal Ministry of Foreign Affairs and register with the Public Registry of Property and the National Registry of Foreign Investment in order to set up their fideicomiso, which allows them to purchase property in restricted zones.
At this time, it is also wise to set up a Mexican will, so that property heirs can be listed, as enforcing Canadian wills in Mexico can sometimes pose significant legal challenges and be very time consuming to settle.
A fideicomiso is a bank trust agreement that provides foreign nationals all the same property rights as Mexican citizens, allowing them to purchase property in restricted zones.
The fideicomiso is a legal arrangement whereby the trustee bank is technically the owner of the property, but the title holder of the fideicomiso retains all ownership and property rights.
These trust agreements, operating on 50-year terms, are both renewable and transferable, meaning that foreigners do not have to worry about losing control of their real estate acquisitions.
Mexican properties can be rented, leased, sold, or transferred to heirs, and it can never be sold or modified without the written permission of the title holder.
Once all the legal and payment infrastructure has been put in place, it is finally time to close the sale. During the delivery phase, buyers perform a final inspection to make sure that everything meets expectations. If everything is in order, this is when buyers will sign the delivery statement to confirm the official delivery date of your Mexican real estate so that the title can be transferred to your fideicomiso.
Following this closing paperwork, new owners receive a notice for the final closing costs, Mexico’s acquisition taxes and all other related fees. Once these payments have been sorted out, the local public registry issues the deed to the property.
Navigating the complex waters of buying and selling property across borders? Let Olympia Currency & Global Payments streamline the currency exchange process for you. Olympia can ensure secure, timely and cost-effective payment solutions for all your cross-border real estate needs.
That way, you can focus your energies on the important things, like enjoying the sun and sand south of the border!
Interested in learning more? Contact our team of experts today.