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Real Estate in Mexico

         State of Nuevo Leon, Mexico     

México Bienes Raíces

Translator

Purchasing Real Estate in Mexico has changed dramatically over the past few years for non-Mexican nationals. In 1994, the federal government of Mexico liberalized ownership provisions of all properties within the constitutionally protected area known as the prohibited zone.

The restricted area

Because the Mexican Constitution prohibits foreigners from purchasing or owning real estate within 100 kilometers (60 miles) along all natural borders or 50 kilometers (30 miles) along all coastlines, a new, safe method of holding Title was created. This new instrument allows ownership through a Mexican Property Trust called a Fideicomiso.

Fideicomiso or Mexican Property Trust

Title to all real estate in the prohibited zone being acquired by foreign purchasers can only be vested and recorded in one or two ways: 

In a Mexican Bank Trust (fideicomiso) for all residentially declared property. Through the Ministry of Foreign Affairs, the Federal Government can authorize a trust institution to act as trustees in acquiring real estate whose beneficiaries are foreigners.

In a Mexican Corporation for all non-residential real estate. 

Fideicomiso is a trust agreement (initial term of 50 years) much like an estate trust, giving you all the rights of ownership. The Bank (of your choice) acts as the Trustee and you are the Beneficiary of the Trust with the right to use, occupy and possess the property, including the right to improve it and sell it. The buyer acquires all the benefits of a direct owner, including the ability to lease, or transfer the right of the property to a third party or pre-appointed beneficiary. The trustee bank does not hold a fideicomiso as an asset of the bank. On average you can obtain your Trust within sixty days. 

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The first step is to get your Trust established

At the end of the initial term, the beneficiary has the following options: Assuming there is no change in the Mexican Government's present policy, the trust agreement might be renewed for an additional period of more than fifty years. In case the authorities fail to grant such an extension, the trust will have to be terminated by selling the property. The beneficiary's interests will be adequately protected. The beneficiary can at any time during the term of the trust agreement or at its termination, arrange for the sale of the property to any person legally qualified to purchase the real estate.

There is no gray area concerning foreign acquisition in the restricted zone of Mexico. It should be noted that Mexican Banks, acting as trustee for a foreign buyer in a fideicomiso, make no warranty or guarantee of the title to the property in the trust nor do they provide any restriction in the event of a title defect. 

Legal Title

The transfer of real Estate is administered by Federal, State and Local laws. A Buyer should always ask the Seller for a copy of the public deed (Escritura Publica) vesting title to the Real Estate along with a copy of the Lien Certificate (Certificado de Libertad de Gravamen) on the property that should indicate the owner of record, surface area and classification of property type, legal description, and whether there are any liens or encumbrances filed of record against the property. Buyer can also request a certificate of no tax liability (Certificado de no Adeudo) from the local authority.

Title Search

The Public Notary in Mexico (Notario Publico) is responsible for the title search in Mexican transactions. However, the notary typically only examines the current deed and a current lien certificate, resulting in the possibility of a short or incomplete title history of the property. It is recommended to consult a Mexican Counsel and a U.S. Title Company to provide an opinion on the status of title. 

Title Insurance

It is highly recommended to purchase a Title Insurance. U.S. Title insurance is available for properties in Mexico purchased by U.S. Citizens.  

Stewart Title Insurance Company    Fidelity National Financial     First American Title Insurance

Real Estate Contracts

Most real estate transactions in Mexico will have at least two contracts: first, an offer and acceptance (oferta) and/or a promissory agreement (contrato de promesa); and, second, a purchase & sales agreement (contrato de compraventa). Real Estate contracts in Mexico must be recorded before a notary public and, to be binding on third parties, they must be filed with the public registry of property. Once there is a written acceptance to the offer, it is recommended that the Buyer's Attorney draw up the sales contract or promissory agreement. Buyer should insist that his attorney assume this responsibility.

Escrow & Earnest Money Agreements

Foreign buyer should always exercise caution and use common sense when it comes to his or her money. Before releasing funds to a Seller, be sure you received your trust first. A U.S. bonded Title company can provide escrow services with individual interest-bearing money market account. 

Notario Publico

In Mexico, all real estate transactions and the legal conveyance of any type of property involve the participation of a Notario Publico. Appointed by the governor of the state and the executive branch of the federal government for a particular state, notarios are attorneys who must pass extensive examinations in order to receive lifetime appointments.

Closing

Prior to the closing, the Notario will examine documents of the selling party to ensure their accuracy and legitimacy; verifying title; searching the public records to determine the status of seller's title to the property and the existence of liens against the property. The Notario is also responsible for the collection and payment of all applicable property taxes and government transfer taxes.

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Buying Tips

- Determine if the seller has legal ownership of the property and if it can be transferred legally.

- Hire Mexican counsel of a title insurance company to search the ownership status back to the sovereign.

- Have your legal counsel review the buy/sell agreement, which usually determines the transaction's terms and conditions. If financing, be sure to make provisions to allow for the loan application process.

- Arrange for a title company to handle the escrow of funds.

- Obtain a property ownership insurance policy to protect against recording errors, liens, encroachments, taxes, fraud, misrepresentation, and other ownership issues.

- If the property is a condominium, examine the documents creating the condominium by-laws defining the owner's rights, obligations and restrictions.

Buyers should consult U.S. and/or Mexican counsel regarding real estate transactions

Useful Link:  National Law Center for Inter-American Free Trade

GLOSARIO de BIENES RAICES

GLOSSARY of REAL ESTATE

ESPAÑOL

ENGLISH

ENGLISH 

ESPAÑOL

Abogado Attorney Acceleration clause Cláusula que permite la cancelación anticipada
Abogado de bienes raíces Real estate attorney Adjustable-rate mortgage (ARM) Hipoteca con tasa de interés ajustable
A corto plazo Short-term Adjustment interval Intervalo de ajuste
A largo plazo Long-term Affidavit Declaración jurada
Acuerdo Agreement Affordable housing Viviendas a precios razonables
Acreedor Creditor Agent Apoderado
Acreedor hipotecario Mortgagee Alimony Pensión alimenticia
Acuerdo comercial Business, deal Allowable debt pyts Pagos de deuda permitidos
Acuerdo de venta Agreement of sale Annual percentage rate (APR) Tasa Porcentual Anual
Agencia de informes de crédito para el consumidor Consumer credit reporting agency Appraisal Avaluo, Tasación
Agente de bienes raíces Real estate agent Appraisal contingency Contingencia de tasación
Agente del comprador Buyer's Agent Appraisal report Informe de tasación
Agente de préstamos Loan officer Appraiser Tasador
Agente de ventas Selling agent Asking price Precio inicial

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Agente hipotecario Mortgage broker Assume a loan Tomar un préstamo
Agente listador Listing agent Assume a mortgage Tomar una hipoteca
Ahorros Savings Attorney Abogado
Aislación Insulation Average payment Pago promedio
Alquilar  Rent  Beneficiary Fideicomisarios
Alquiler con opción a compra Lease with purchase option Borrower Prestatario
Amortización Amortization Broker Corredor
Análisis comparativo de mercado (CMA, siglas en inglés) Comparative market analysis (CMA) Back-end ratio Porcentaje por reembolso anticipado
Análisis crediticio Credit analysis Balloon loan Préstamo reembolsable al vencimiento
Anualidad Annuity Bank account Cuenta bancaria
Aplazamiento de ganancias de capital Capital gains deferment Biweekly-payment mortgage Hipoteca con pagos quincenales
Apoderado Agent Borrower Prestatario
Apoyo infantil Child support Borrowing power Poder de préstamo
Apreciar (el valor) Appreciate (in value) Budget Presupuesto

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Área Area Building code regulations Reglamentaciones de los códigos de construcción
Arras Deposit, down pyt Building inspection services Servicios de inspección de construcción
Arrendador, Locador Landlord, Lessor Buy down Reducción de la tasa de interés por pago adicional
Arrendamient  Lease Buyer Comprador
Arrendamiento Tenancy

Buyer's Agent

Agente del comprador
Arrendatario Tenant-Lessee Buying power Poder de compra
Asesor financiero Financial advisor Cap Tope
Asesor impositivo Tax consultant Case Caso
Asesoría en materia crediticia Credit counseling Cash reserve Reserva de efectivo
Asignar Allocate Cash; Cash on hand Efectivo en mano
Asociación de Ahorro y Préstamo Savings and Loan Association Certificate Certification
Asociación Nacional de Agentes de Bienes Raíces (REALTORS®) National Association of REALTORS® (NAR) Checking account Cuenta corriente
Asunción Assumption Claim Cuenta corriente
Aval Guarantee Clear title Reclamo

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Avaluo Appraisal Closing Título limpio. Firma de escritura de compraventa
Aviso Notice Closing costs Cierre
Aviso de incumplimiento en el pago Notice of default Closing date Costos de cierre
Balance Balance Closing the sale Fecha del cierre
Baldio Uncultivated Co-applicant Cosolicitante
Bancarrota Bankruptcy Co-borrower Coprestatario
Banco comercial Commercial bank Co-debtor Codeudor
Bancos hipotecarios Mortgage bank Commitment Compromiso
Banquero hipotecario Mortgage banker Community group Grupo comunitario
Beneficiaro Beneficiary Community Home Buyer's Program (CHBP) Programa Comunitario para Compradores de Vivienda
Beneficios del seguro social Social Security benefits Community Home Improvement Mortgage Loan® (CHIML) Préstamo Hipotecario para Mejoras de Viviendas en Comunidades
Beneficios impositivos Tax benefits Community Land Trust Mortgage Loan Préstamo Hipotecario para Fideicomiso Inmobiliario Comunitario
Bienes Assets Condominium fee Costos de condominio
Bienes Raices Real Estate    

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Búsqueda de títulos de propiedad Title search Conservation Conservación
Caja de ahorros Savings Bank Construction loan Préstamo para construcción
Calefacción Heating Consumer Consumidor
Calificación crediticia Credit rating Consumer credit bureau Oficina de crédito para el consumidor
Calificación previa Prequalification Consumer credit reporting agency Agencia de informes de crédito para el consumidor
Calle Street Contingency Contingencia
Cancelacion de Credito Release Contingency clause of sale Cláusula de contingencia de venta
Cañerías Plumbing Conventional mortgage loan Préstamo hipotecario convencional
Capital Principal sum Cooling system Sistema de enfriamiento
Capital e interés Principal and interest (P&I) Copy Escritura sent to Registry Testimonio
Capital en la propiedad Equity Corporation Sociedad
Capital; Interés; Impuestos y Seguro Principal, Interest, Taxes, and Insurance (PITI) Cosigner Testimonio
Características Features; Characteristics Cost Costo

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Carta de compromiso Commitment letter Depreciation Depreciación
Cargas Charges Costs; Expenses; Fees (can be used interchangeably) Costos; Gastos; Honorarios (pueden utilizarse indistintamente)
Carta de compromiso Commitment letter Counteroffer Contraoferta
Carta de intencion Offer to Purchase Coverage (See also insurance coverage) Contraoferta
Catastro  Cadaster, Cadastre  Credit history Cobertura (ver también cobertura de seguro)
Certificado de Libertad de Gravamen Lien Certificate Credit rating Historial crediticio
Certificado de no Adeudo Certificate of no Tax liability Credit record Calificación crediticia
Certification Certificate Credit report Trayectoria crediticia
Cesion Exchange (real esta.) Credit union Informe de crédito
Cesionario Grantee Current monthly expenses Cooperativa de crédito
Cierre Closing, Settlement Customer education group Gastos mensuales actuales
Cierre de la venta Closing the sale Debt  
Cierre de Plica  Escrow closing Debtor Cofirmante
Ciudad central Central city Debt ratio Porcentaje de deuda

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Cláusula de contingencia de venta Contingency clause of sale Deed Grupo de educación al consumidor
Cláusula de pago anticipado Prepayment clause Deed in lieu of foreclosure Escritura de propiedad inmobiliaria en lugar de ejecución hipotecaria
Cláusula que permite la cancelación anticipada Acceleration clause Deed of Trust Escritura de propiedad inmobiliaria
Cobertura Coverage Default Incumplimiento en el pago
Cobertura de seguro Insurance coverage Deferred payment Pago diferido
Codeudor Co-debtor Default Incumplimiento en el pago
Cofirmante Cofirmante Deferred payment Pago diferido
Colateral Collateral Delinquency Mora en el pago
Comisión Commission Delinquent payment Pago atrasado
Compañía aseguradora de hipotecas Mortgage insurance company Deposit Escritura de Fideicomiso
Compañía de títulos de propiedad Title company Disability payments Pagos por discapacidad
Compañías de depósito en garantía Escrow companies Discharge in bankruptcy Eliminación de deuda por bancarrota
Compañías de financiación Finance companies Discount points Puntos de descuento

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Compañías hipotecarias Mortgage companies Discretionary expenses Gastos discrecionales
Compra Purchase Down payment Pago inicial
Comprador  Buyer Due date Fecha de vencimiento
Compromiso  Commitment Earnest money deposit Depósito de garantía
Condición Condition Earnings Ganancias
Condominio Condominium Easement Servidumbre
Contador Accountant Effective rate Tasa efectiva
Contingencia Contingency Energy conservation Conservación de energía
Contingencia de tasación Appraisal contingency Equal Credit Opportunity Act (ECOA) Ley de Igualdad de Oportunidades de Crédito
Contraoferta Counteroffer Equity Capital en la propiedad
Contrato de Compraventa P&S Agreement Equity loan Préstamo hipotecario sobre el capital en la propiedad
Contratista Contractor Escrow Deposito
Contrato Contract Escrow closing Plazo 
Contrato de Promesa Promissory Agreement Escrow companies Compañías de depósito en garantía
Convenio Agreement, Covenant Escrow deposit account Cuenta de depósito en garantía

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Convertible; Conversión Convertible; Conversion Exchange (real est) Plica 
Coprestatario Co-borrower Expenses Cierre de Plica
Cooperativa (Co-op) Cooperative (Co-op) Fair Credit Reporting Act Ley de Equidad de Informes de Crédito
Corporación Federal de Seguros de Depósitos FDIC Fair Housing Act Ley de Equidad de Vivienda
Corredor Broker Family Familia
Cosolicitante Co-applicant Fannie Mae Fannie Mae
Costo de iniciación de un préstamo Loan origination fee Farm Finca
Costos de cierre Closing costs Features; Characteristics Características
Costos de registro Recording fees Federal Deposit Insurance Corporation (FDIC) Corporación Federal de Seguros de Depósitos
Costos de transferencia Transfer fees Federal Housing Administration loan (FHA loan) Préstamo de la Administración Federal de Vivienda (préstamo de FHA)
Cotizar Quote Fees Honorarios
Cuenta bancaria Bank account Finance companies Compañías de financiación
Cuenta corriente Checking account Financial advisor Asesor financiero

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Cuenta de ahorros Savings account Financing terms Condiciones de financiación
Cuenta de depósito en garantía Escrow deposit account First mortgage Primera hipoteca
Declaración de impuestos Tax return First-time home buyer Comprador de vivienda por primera vez
Declaración de veracidad en un préstamo Truth-In-Lending Statement Fixed expenses Gastos de hipoteca
Declaración jurada Affidavit Fixed interest rate Tasa de interés fija
Deducción Deduction Fixed-rate mortgage Hipoteca con tasa de interés fija
Deducible Deductible Flood insurance Seguro contra inundaciones
Depósito  Deposit Forbearance Tolerancia
Depósito condicionales  Earnest money deposits Foreclosure Ejecución hipotecaria
Depreciación Depreciation Foundations Fundaciones
Derechos de Propiedad Right of ownership Front-end ratio Proporción entre el pago mensual de la hipoteca y el ingreso bruto mensual
Deuda Debt Furniture Muebles
Deuda de cuota Installment debt Gift letter Carta de obsequio

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Deudor Debtor Government-insured loans Préstamos asegurados por el gobierno
Deudor hipotecario Mortgagor Grace period Período de grac
Dinero Money Graduated-payment mortgage Hipoteca con pago graduado
Divulgación Disclosure Grant Subsidio
Donación Donation Grantee Cesionario
Dueño de una propiedad Property owner Grantor Otorgante
    Guarantor Fiador
Duración del proceso de trámite Processing time Hazard insurance Seguro por riesgos
Efectivo en mano Cash; Cash on hand Heating Calefacción
Emprestito Loan