Buying Property in Puerto Morelos
Buying Property in Puerto Morelos

Purchasing Property in Mexico: 10 Facts to do it with confidence

The process of purchasing property in a foreign country can be a little different than what you are used to. However, we are here to assist you every step of the way! Here are 10 facts that will help you to feel educated and confident about the process. Many of our American and Canadian buyers say that once you understand the process, it is not all that difficult.

1. It is legal for foreigners to own property in Mexico.

Your dream of owning a piece of paradise in the Caribbean is possible, and it is legal. You do not need residency to purchase one of our homes or condos. Although the Mexican constitution was originally written with restrictions on foreigners owning properties, the government has put amendments in place specifically to encourage foreign investment.

2. The Land Trust that makes ownership possible.

Originally, there was a restricted zone that was defined as property within 60 miles of any border or within 30 miles of any coastline, which includes the real estate in Puerto Morelos. To attract investors to Mexico, The government put in place something called a fideicomiso, which – although different from the process of buying property where you are from – is completely legal and binding.

It is basically a real estate trust. This is a provision put in place by the government of Mexico because it wants to encourage foreign investments. It is not a loophole in the system; it is a legal and binding arrangement.

This type of trust is similar to trusts used in the United States, but a Mexican bank must be designated as trustee. The trust ‘holds’ the property for the foreigner, and the bank follows instructions given by the foreigner who is the trust beneficiary. The trust beneficiary enjoys all the rights of ownership that a Mexican citizen would. It is NOT a lease; you have permanent control over your property to use, rent, sell, make improvements, and designate beneficiaries.

3. The Fideicomiso protects you.

Banks acting as trustees are federally approved to hold real estate trusts. And before they will assign a Fideicomiso to a property, or even work with a land developer, they perform a legal study to be sure you will not run into any issues regarding ownership or money owed later on. The banks charge an initial setup fee of approximately $2000 USD, and there is an annual fee of approximately $550 USD per year.

4. You have all the same rights as a property owner in your home country.

The Trust is a legal substitute for simple ownership. As Beneficiary, you have the right to sell your property without restriction. You may also transfer your rights to a third party or designate an heir. You have the same rights as a Mexican citizen when it comes to matters involving your property.

5. The title is yours, and your investment is secure.

These trusts are NOT considered part of the bank’s assets. If a bank were to merge or close, the trust must be transferred to another approved bank. Property owned in a trust is eligible for title insurance from several reputable companies. The very fact that these major companies are willing to insure properties held in trusts shows they are legitimate and secure.

6. The Mexican government cannot take your property.

Some people have been led to believe that the Mexican government can randomly seize property. This is false. Under the North American Free Trade Agreement (NAFTA) Mexico may not seize land except for a public purpose, such as building a road. If this were to happen, they would be required to pay the market price for the property. This is similar to laws in place in Canada and the United States. Since Selva Escondida is a gated community nestled in the jungle, this issue is very unlikely to arise.

7. Financing options.

At this time, there are no banks in Mexico that offer traditional mortgages for our properties, and we at Selva Escondida do not offer financing. For this reason, we offer several options: You can make an initial payment of 10% of the cost, and we will defer the remaining balance in monthly payments until the date of completion as scheduled in the contract. Others choose to pay cash upfront.

8. Closing costs and annual expenses.

The closing costs are approximately 8% of the purchase price of the property. You will also pay annual property taxes which are approximately 1% of the purchase price of the property.

9. Monthly expenses.

Monthly expenses are quite low in Selva Escondida. Our HOA fee is approximately $40 USD per month, water is about $10 USD per month, sewer and trash removal are included. Internet starts around $25 USD per month, and although electricity can vary by usage, some residents spend about $35 per month, even with air conditioning.

10. Many people have made the dream a reality.

We understand that much of this is new to you but be assured that you are not the first Americans or Canadians to pursue the dream of owning property near our beautiful Caribbean shores. There is a thriving ex-pat community in Puerto Morelos who were once just like you, wondering if it was possible. They learned the process and made it happen. You can too! And we are here to help you. If you have any additional questions, don’t hesitate to reach out! We can’t wait to hear from you.