Category Archives: general information




Mexico is a wonderful and very beautiful country.  If you  enjoy your visit you may begin to think about acquiring a bit of our paradise.  We have mountains, lakes, rivers, forests, deserts and seashore in Mexico.  We also have history, ancient cultures, handcrafts, folklore and many other wonderful things to share.


Buying property in ANY country can be stressful.  A property purchase in Mexico can be just as safe and secure as in the U.S. or Canada… IF it is done correctly!


Here are some guidelines for success in a real estate acquisition in Mexico:


  1. Be sure the agent you select to represent you is a member of AMPI, the Mexican National Real Estate Association. Ask for references, check them out. Be satisfied the person representing you is experienced in Mexican transactions.


  1. Insist that the person representing you, represent ONLY you, the buyer, and not also the seller unless you understand, agree to and sign an agency disclosure agreement.


  1. Consider only the purchase of PRIVATE property. Ejidal property is often offered at a far lower price but it cannot legally be sold or promised to be sold until it becomes private property.


  1. Be certain that you and your agent are dealing ONLY with the owner of record or his or her legitimate power of attorney. Insist upon receiving a copy of the seller’s deed as a condition of your offer.  If you  and /or your agent don’t understand Spanish, get it translated.


  1. . Avoid costly and time consuming litigation, insist upon including a binding arbitration  clause in your contracts with the seller and other parties involved.


  1. Get a title investigation and buy title insurance for the full amount of your purchase price. While the initial search may seem expensive for some areas, the title policy transfers risk to the insurance company, and minimizes yours as the buyer.


  1. Think carefully about how you acquire title in order to avoid or minimize probate and transfer costs in the future.
  2. Closing costs may run from 13% to 20% of the cost of a $50,000. dll. property! The multimillion dollar property will be about 3.5% of purchase price.  Certain costs are fixed regardless of value.  Be sure to budget for closing costs and get a full estimate in writing from the company supervising your transfer.


  1. The major portion of your payment for the property should be withheld or held in escrow until the deed has been signed by the seller and, if applicable, the bank trustee (if a fideicomiso).


  1. INSIST upon receiving a registered title document for your property. If the seller is financing the property, sign a document protecting his interests in the event of your default.  Be SURE you know the amount which is declared in your deed and understand the tax implications of same.


  1. Use an experienced neutral third party to supervise the transfer of title to you. 


Rules2.articles. Copyright2003 2015. All rights reserved by Consultores Phoenix, S.C., and The Settlement Companyâ

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Active Living, Assisted Living in Mexico



Is this a niche market that can help the Mexican real estate market come back?


By Linda Jones Neil



With millions of baby boomers reaching retirement age every day, the market for a lovely place to live with the security and services required is growing exponentially.


Many baby boomers no longer want the five bedroom home and quarter to half acre home in the suburbs.   Nor does the luxurious and prestigious home on the beach seem as attractive as it once was.  Too much work!   Too much upkeep! And too much money!  Today’s couple reaching retirement age is looking for an interesting and inviting place to live that promises outstanding value and something different!


Many are coming to recognize that Mexico with its lower cost of living, culture and tradition for caring, with outstanding medical services, may be the new place for Americans and Canadians looking for retirement.   Perhaps Mexico will no longer be just a vacation in an exotic place!


When the crisis really hit the U.S., many of the buyers of Mexican vacation properties left the market.   Their investment funds came from the stock market, 401 Ks and home equity.   These sources obviously dried up and the resort and vacation market hit bottom.    Prices, however, have not necessarily come down in the resort areas since many sellers do not have bank loans on their properties and are in a position to hold on to their properties until that market returns.


These properties may not sell soon, however.   There seems to be a feeling among those who suffered reverses in their portfolios that this time they will look for quality, value and security rather than plunk down money on an emotional and perhaps exotic purchase.


There is a delayed demand – many of those who left the property market in 2007 and 2008 did so because they were suffering devastating losses in U.S. investments.  Now that those markets are beginning to recuperate, it seems that the home or condominium for vacations, rentals, active retirement will be more attractive if of high quality, easily accessible and not exceed 200,000. to 300,000. USD in price. Also very desirable is the development that integrates the Mexican culture into its overall concept. The home away from home of yesteryear, insulated from the Mexican culture, may not be quite as attractive as it used to be.


What may be sought after in this new market is the development that offers Active Living and Aging in Place.   In other words, independent living modules, either separate homes or condominiums within a secure community with many activities available either on site or in the community: such as biking, hiking, fitness, swimming, crafts classes, music activities.  These activities are geared to the mature active adult who has always wanted time to do these things and can live independently.   Within the same community, however, are medical facilities, and increased services available such as the preparation of meals, home visits and so forth.   Different packages of services are available to fit the variouef levels and requirements and can be purchased from a hospitality company operating the development.


These independent living units can either be purchased or leased.   The move to assisted living will focus on  a more institutional environment which features everything from meal preparation to intensive care.


Under consideration at present in the U.S. government, is an initiative to permit Medicare benefits to extend to care received in Mexico.   Since health care costs are substantially less in Mexico for the same level of care, both the U.S. government and the patients will benefit.


In all cases, the successful Active Living to Assisted Care development will require excellent access to health facilities, airports for quick access by loved ones, and outstanding communications systems in the community.   There are perhaps a dozen cities in interior Mexico which may fit the bill for this new focus on sales to the foreign market.


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Active Living, 2009-2014 Copyright Consultores Phoenix, S.C. Reproduction prohibited without permission




            Linda Neil, CIPS, SRES, RSPS, TRC, PIC, ePRO, is the founder of the settlement company â.  It is the first company in Mexico dedicated to counseling buyers and sellers and to supervising the closings and registrations of real estate for non-Mexicans.  The company supervises the transfer of titles, provides due diligence and legal services for buyers and sellers, as required, for properties and corporations holding real estate located anywhere in Mexico. The Settlement Company specializes in the Virtual Closing®     


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Can a Real Estate Agent Represent Both Sides?


DUAL AGENCY and The Real Estate Agent –


Can it be possible?.


by Linda Neil


In real estate the party that represents a buyer and or a seller in the purchase or sale of a property, is called an agent.  In Mexico as in other countries of the world, the agent has a duty to treat his principal in an ethical and professional manner.  The Mercantile Code, Articles 273 to 308 outline the obligations involved in representing the interests of the client.      Both law and custom make it very difficult for the conscientious agent to represent BOTH buyer and seller since the buyer wants to buy the property for the lowest price possible and the seller is looking for the greatest amount of money he can get for his property.


With this in mind, how can the conscientious agent honestly represent both parties?  Almost anyone will agree; there is a conflict of interest when anyone tries to fairly represent both sides of a transaction.


No matter how much the agent needs or wants the money that will come from a FULL commission, it is better to call in a colleague to represent one side or the other.  That way both share in the commission, both principals are honestly and fairly served and the agent will have clients who will recommend his or her services to other friends and acquaintances


It ends up being win-win for everyone!


To reinforce the relationship with buyer or seller clients it is important to understand and discuss this with the client; outline the responsibilities of the buyer’s agent, the obligations of the seller’s agent and how to handle the important issues such as money where price is being negotiated.  A confirmation of the relationship should be signed with the buyer or seller client.


Not only does this confirm the essentials of the fiduciary relationship, but also the clients, knowing that an agent is working EXCLUSIVELY for them, and not the other side, will be much more likely to remain loyal to his/her agent.


And what are the obligations and responsibilities?  Simply put, the SELLER’S AGENT has the obligation to counsel his seller as to fair and reasonable selling price, as to the importance of disclosure of defects in the property, as well as to offer the property to the widest audience possible.  The purpose of this, of course, is to obtain the highest price possible for the property.


The BUYER’S AGENT should assist the client in locating the best property possible which will meet buyer’s requirements.  Once located, the property should be inspected as to suitability for the purpose intended and the most attractive price and terms possible negotiated for the acquisition of the property.


In all cases, the agent must treat all parties with honesty and fairness.


Forms confirming agency relationships are available by contacting the author at the address below.

Copyright,2010-2014   Consultores Phoenix, S.C. Reproduction prohibited without permission.


about the author:

LINDA JONES NEIL has been designated as an Accredited Buyer’s Representative (ABR) by the National Association of Realtors® (USA). She is also the founder of The Settlement Company®, which specializes in real estate transfers and escrows, specializing in the Virtual Closing®. Licensed as a California real estate broker, Ms. Neil has pursued her profession in Mexico for over thirty years. Her skills in negotiating contracts between parties from three distinct cultures have placed her services in demand as a consultant and for speaking engagements on Mexican law and customs in Mexico, the United States and Canada. She has been widely published on the subject of real property in Mexico. Memberships; FIABCI, AMPI and NAR.  Linda  is a former  member of the National Advisory Council of AMPI and served as NAR Presidential Liaison to Mexico, 2011-2014.



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Renting a Property in Mexico

LIVING  IN A RENTAL HOME IN MEXICO…taking the big step by small measures!

by linda jones neil


Oftentimes it makes sense for newcomers to an area to rent a home prior to making a purchase.   This provides an opportunity to explore, to learn the neighborhoods, and then begin to understand the personality of the city or town before making a leap to a purchase and a more permanent commitment.


Everyday more and more foreigners, people from the U.S., Canada, Asia and Europe, have found Mexico to be an ideal location for healthy retirement.  Others have come to Mexico as a result of job transfers.  Others still, taking advantage of electronic and wireless communications, seek out delightful areas in which to live and work from their in-home offices and studios.


There are many areas in Mexico that offer opportunities for rentals and for retirement or vacation living:   Mazatlan, Puerto Vallarta, Manzanillo, Zihuatanejo and La Paz, Todos Santos, Los Cabos and the East Cape on the Baja Peninsula offer wonderful options on the seashore, as do Merida and the Riviera Maya on the Yucatan Peninsula.  Ajijic, Chapala and San Miguel de Allende are well established retirement areas with many rentals available.   Morelia, capital of the state of Michoacan, with its international airport and many cultural festivals is fast gaining importance as a retirement mecca.


In some areas, many homes or apartments may not be available for rent.  Fewer still may be fully furnished and ready for the international visitor.. It is not always the landlord’s custom to maintain the property.  A house may require fixing up, a refrigerator, a stove, basic furniture and lots of paint.   Nonetheless this can also be a fun experience for the couple who wants to learn about the area!   Rental terms can be from a few days  to indefinite, depending upon the owners.


Some of the questions to ask when looking for that special rental house or condominium are:

  1. What is the length of time the property is available for rental? (Some owners wish to rent only part of the year)
  2. What utilities are included in the rent? (Electricity, water, internet, cable?)
  3. What type of air-conditioning system/heating system does the property have
  4. Is telephone service available? Is cable service available?


  1. Is the water service reliable?


It is always a good idea to have a rental contract, in English, if you do not understand Spanish, which outlines the term of the agreement, the security deposit and conditions of its return, amount to be paid, extras, if any, and so forth.   This contact should be prepared by a rental management company.


It makes sense to contact a rental agency to assist in the search and to assist you with the details.   The professional agency will know the landlord and the time available for the rental, will be able to provide a history of repairs, and potential issues with the property.  It will also be able to help you locate the RIGHT house to meet your requirements..

. Copyright, 2010-2014, Consultores Phoenix, S.C. Reproduction prohibited without permission.



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Author Linda Jones Neil is the founder of The Settlement Company®, the first escrow company in Mexico, which is dedicated to processing the trusts and title transfers of Mexican real estate for foreign buyers and sellers for properties located ANYWHERE in Mexico. Ms. Neil is also licensed as a Real Estate Broker in California, is an Accredited Buyer Representative through NAR, and has over thirty five years of hands on experience in all aspects of Mexican real estate.  She holds membership in AMPI, NAR and FIABCI and PROFECO Certificate 00063/96.

 E-Mail;  and website:


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Tax Obligations for Foreigners in Mexico


DEATH and TAXES…..both are inevitable!

By Linda Jones Neil


Whether a property owner or just the occasional visitor on a beautiful beach in Mexico, everyone pays taxes, natives and foreigners.   Some of the taxes are hidden and others are not.   The purpose of this article is to touch on some of the important taxes levied and paid in Mexico.


WHO COLLECTS TAXES:   The SAT (Servicio de Administracion Tributaria), also known as Hacienda, is the federal tax collector.   It collects all federal taxes such as the ISR (Income or Capital Gains) tax, the IVA (Added Value) tax, the IDE (Tax on Cash Deposits) and the IEPS (Special Tax on Production and Services).  Each state government has its own taxes such as the 2 to 3 percent tax on lodgings and tourism.   The municipal governments assess and levy taxes on real and personal properties.


IVA TAX:   This is the Value Added Tax which is charged on goods and services.   The only exemptions are medicines and food.   Often this tax is INCLUDED in the price of food served in a restaurant, legal services, and the items purchased in a department or clothing store.   The business owner and tax resident is obligated to file a monthly declaration with Hacienda and pay the tax on earnings.   Credited against this tax are IVA taxes paid on goods and services acquired.


There is no IVA tax on the sale of vacant land or on the sale of residential dwellings.   The tax is levied on all commercial construction when it is sold or transferred, at the rate of 16% of the value of construction.


IVA tax is charged on lodgings, hotel rooms and furnished homes which are rented.


The IVA tax is 16% throughout the entire country of Mexico.


IEPS TAX:  This is the Special Tax on Products and Services which was a new tax in 2010.  It will cover certain internet and cable TV services, alcohol, cigarettes, and gaming.


PROPERTY TAX;   This is a municipal tax with assessments on properties generally being made annually.   The tax can be paid in six installments (every two months) but probably should be paid in full within the first two months of the calendar year to obtain a discount.   Rates vary from area to area but are often far lower than U.S. or Canadian property taxes.


ISR TAX;   Literally the Tax on Rents has been described as both an income tax and a capital gains tax.   It is complex and a subject of confusion.


ON INCOME.   Any income generated from sources within Mexico, is taxable.   From business or salary, the rates are variable depending upon the amount of income received.


ON THE SALE OF A PRIMARY RESIDENCE    No primary residence is exempt from tax UNLESS the taxpayer has resided in the home for the previous five years.   Proof of residency is in the form of taxpayer identification number (RFC), voter’s registration with the property address, bank statements and utility bills.  Foreigners must establish permanent residency in order to obtain their RFC documents..

For those who have sold or transferred a primary residence within the past five years and have not declared an exemption previously, an exemption of up to  700 UDIs or approximately 3,500,000. Mexican pesos, is available.

This applies to nationals and to those foreigners who have established a tax residency in Mexico (obtained their tax identification numbers) and make declarations on world wide income.   They must also provide documents that the property being transferred is a primary residence.



No exemptions are permitted.


The tax on non-exempted transactions is 35% of the difference between the value declared in the deed and the value of the new sale, less allowable deductions or 25% of the entire amount of the transaction, whichever is less.   It is very important when acquiring property to insist upon having the full amount of the sale declared in the deed, in order to avoid overpaying taxes upon sale.


Enforcement on the ISR tax on transfers is the obligation of the Notary Public formalizing the transfer.  He has the obligation to enter the seller’s name and data on the internet and to check status of prior transfers.


ON RENTAL INCOME:   There are several ways to calculate tax on rental income:

  1. The blind deduction of 35% of total income, without deductions with tax of 35% paid on the remaining amount;
  2. A 30% tax on income, less allowable deductions which include property tax, maintenance, interest on loans for construction expenses, insurance, salaries of employees and commissions paid to rental agents and property managers..
  3. A 25% tax on the gross income, no deductions.


Hacienda is paying more attention to internet advertising and is beginning to inquire into the income of those who are renting their homes.   It makes sense to become legal since penalties for non-compliance can be considerable.   Methods one and two above require the RFC (taxpayer identification number) which can be challenging for a foreigner to obtain.   Method three outlined above does not require residency or official status.


IDE TAX   This is a Tax on Cash deposited into banks.   In the year 2009, it was applicable on any combination of deposits made in a month totaling 25,000.00 pesos, or more.   Tax was 2% of the excess.   This tax has now been eliminated but banks receiving cash deposits of over $15,000. pesos in any one month or certain credit card payments are required to report this to SAT.  This requirement is thought to discourage the informal economy (the street vendors).


STATE HOSPITALITY TAX.   This is charged by hotels and on furnished short-term rentals.   Money generated from this tax is used for promotion of tourism in the state and varies from state to state but is generally two to three percent of the per night cost of lodging.


It is important to understand the difference between Tax Resident and Non-resident for tax purposes.


The Tax Resident is the person, citizen or non-citizen, who has acquired his Federal Taxpayer Identification Number and who files and declares taxes in Mexico on his world-wide income.   Any party receiving income from Mexican sources, such as from rental or from the sale of real properties, or from business activities, is required to file.  No distinction is made between citizens of Mexico and non-citizens as to tax rates.


Tax authorities in the U.S., Canada and Mexico are working together and share information. Everyday there is more cooperation between the countries due to tax treaties. It is no longer possible to own a property in one country, enjoy income from that property, and not report it in BOTH the country where the property is located, and the country where the owner lives.  Failure to comply means the owner is subject to double taxation and heavy penalties when the omission to file and declare is discovered.


Now REALITY!!  DIGITAL FISCAL INVOICES.   Taxpayers must use invoices produced by Hacienda (SAT) on internet.   Hopefully this will simplify the “factura” situation which at present is challenging for the tax payer attempting to obtain receipts for deductible items. .


This is an overview of the tax situation in Mexico and may vary in individual cases.  For additional information and consultations, please contact the author.

Copyright 2014. Consultores Phoenix, S.C. Reproduction prohibited without permission.


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about the author:

LINDA NEIL is the founder of The Settlement Company, which specializes in real estate transfers, escrows,and consultations.  Just added as a new service, Settlement will now prepare monthly tax declarations on rental properties, file them and perform additional essential landlord accounting services.


For reprints of this article or for further information on tax paying services, please contact The Settlement Company® E-mail is, and website:


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The Bank Trust (Fideicomiso) Explained





Article 27 of the Constitution of the Republic of Mexico prohibits foreign ownership of real property located within 30 miles of any coastline or 60 miles of either border. This is referred to as the restricted  zone.


In 1973, recognizing that many Americans would enjoy the rights of ownership, and bring needed dollars to the country, President Echeverria approved the bank trust, fideicomiso, form of ownership which is available to non-Mexicans.  This regulation was further expanded in the Foreign Investment Law of 1989.


Properties located within the prohibited zone, which includes the entire Baja Peninsula, may be acquired by a foreigner through a Mexican bank trust naming the buyer of the property as the beneficiary of the trust.  Naked title is placed in the name of the bank selected by the buyer, as his trustee.  The bank administers the property according to the instructions of the buyer/beneficiary.  The buyer/beneficiary has full ownership rights: he may build on the property, tear down existing buildings, modify them, rent, lease or sell at anytime conforming only to the general laws of the country established for all persons.


The term of the trust is fifty years and can be renewed for additional fifty year periods, after which it must be transferred to “one entitled to hold property” in Mexico. In other words, title to the property may rest in one beneficiary indefinitely, provided that it is renewed within the terms established by the law.


The procedure for establishing the fideicomiso, the bank trust, is as follows: a permit must be obtained from the Secretary of Foreign Relations which includes a description of the property to be placed in trust, the use for which it is intended, and personal data on each of the beneficiaries.  Once granted the bank draws up the trust document which is recorded in the municipality where the property is located.


The costs for the permit to establish and register the bank trust are currently about $1,500. US and annual administration fees are generally $350.00 to $500.00 per annum.  There are additional closing costs, however, and it is wise to request a written estimate prior to beginning the transfer process.


copyright, 2003,-2014, Consultores Phoenix, S.C. Reproduction prohibited without permission.



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Mexican Company? or Mexican Bank Trust?

A Mexican company?        Or FIDEICOMISO, the Mexican bank trust?


Which Works Best for  Buying Mexican property? 


                                                                                                   By Linda Jones Neil



Article 27 of the Mexican constitution requires that any foreigner buying residential property in the restricted zone (an area 50 kilometers wide along the coastlines and 100 kilometers along the borders) must acquire the rights in the property through a Mexican bank trust, known as a fideicomiso.


Pursuant to the Foreign Investment Law of 1994, any company established in Mexico ; is considered as Mexican even if all the shareholders are foreigners.    This applies to corporations, limited liability companies and partnerships..


Thus, many think that by establishing the Mexican company, a Mexican bank trust (fideicomiso) can be avoided.   It can be, but it is important to consider other aspects before making a final decision as to how to title your Mexican property.


The Mexican corporation, limited liability company, or partnership, should be established if the primary objective is business; whether it is to open and run a business, to hold properties for rental, or to achieve another type of money making goal.


The fiscal responsibility for the Mexican company involves filing monthly and annual tax declarations.   Also an annual report must be filed with the Secretary of the Economy if any foreigners are shareholders or partners in the company.


The benefits:   the administrator of the company may be able to obtain permission from the Immigration Department to work in the business activities of the company


The negatives:  the Mexican company will cost $2,000. to $3,000. USD to establish and to register in the public records..   Any properties which will be held by the company require a permit from the foreign relations department and must be necessary to the operation of the company.


Once established, the cost to maintain the company can be $100. USD, or more, per month to pay an accountant for handling the books and filing the declarations.   There will also be additional charges for the annual declaration before tax authorities and before the Secretary of the Economy.


If the business activities and projected income will support this type of expense then a Mexican company makes sense.


If however, the goal is to acquire and enjoy a vacation or retirement home, renting it occasionally when the owner is not using it, it may be far simpler to place the property title in trust (fideicomiso).


If the property being purchased is for personal use, if it is residential property, then it must be held in the Mexican bank trust (the fideicomiso).   Not only will it be less expensive in the long run but also it may also be simpler to sell should the owner wish to do so.   Bank fees range from 350. to 550.USD per year, far less than the operations and maintenance expenses of a Mexican company.   Should you choose to rent your property when you are not using it, this too is permitted and can be simpler than the mandatory monthly declaration required for the Mexican company.


Mexico is an incredible land and rich in many aspects.    It does make sense to keep life simple and enjoy the properties acquired, not to become entangled in compliance with tax laws.

Copyright 2010 -2014   Consultores Phoenix, S.C. Reproduction prohibited without permission.


about the author

LINDA NEIL  is  the founder of The Settlement Company®, which has many years of experience in real estate transfers and escrows, and specializes in the Virtual Closing®. Licensed as a California real estate broker, Ms. Neil has pursued her profession in Mexico for more than thirty years. Her skills in negotiating contracts between parties from three distinct cultures have placed her services in demand as a consultant and for speaking engagements on Mexican law and customs in Mexico, the United States and Canada. She has been widely published on the subject of real property in Mexico. Memberships; FIABCI, AMPI and NAR.  Linda  is a former  member of the National Advisory Council of The Mexican Association of Real Estate Professionals (AMPI) and has served as AMPI Coordinator for the state  of Baja California Sur.  Additionally she is a co-founder of Global Mexico Real Estate Institute, dedicated to providing professional education for real estate agents.

            For reprints or further information, please contact

The Settlement Company®: in Mexico:

E-mail,  website:

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How Secure is Your Investment in Mexican Property?



by Linda Jones Neil


All too often citizens of the United States, Canada and other countries ASSUME that property purchases are carried out automatically in Mexico in a manner similar to that of their native countries.  The first law of property purchase in Mexico is DON’T ASSUME anything!  Purchasing property is NOT the same as in other parts of the world.

             Would you purchase a property in your hometown which is not registered in the local public registry or land titles office?

             Would you hand a complete stranger, without an office or an established business entity, a check for perhaps hundreds of thousands of dollars to pay for a property?

             Why do so many foreigners do this when they purchase in Mexico?  Many do not realize that Mexico has a complex and complete legal system and a court system that is as well organized as any that exists in the United States, Canada or Europe.  It is essential that you have an idea of how the system works and what to expect when considering a purchase of property in Mexico.

Don’t leave your brains at the border!

Article 27 of the Mexican constitution prohibits ownership by a foreign individual or business entity of real property (real estate) within the  “restricted”  zone which is an strip of land approximately 30 miles from any coastline and 60 miles from any border.  Recognizing the demand by foreigners for ownership of property and recognizing the importance of making desirable properties available to foreigners for potential positive impact on the economy, the Mexican government implemented a series of Foreign Investment Laws beginning in 1973.  The law was modified in 1989 and again in December 1993, to incorporate the provisions of the NAFTA treaty passed in late 1993.

For those who are acquiring property for residential usage, the law requires that title to the property in the restricted zone be transferred to a Mexican bank, as trustee, in the establishment of a trust (fideicomiso) in which the foreigner is the beneficiary.  The bank is the titleholder of the real property and the foreigner is the owner of the rights of usage of the property.  The bank owns the real property rights and the beneficiary owns the personal rights of usage.  Ownership of these personal rights is evidenced through a deed prepared by a Mexican Notary Public and signed by a representative of the trustee bank.

Currently the term for a trust is fifty years.  The Foreign Investment Law of 1989 provides for renewal by filing an application.  Multiple renewals are permitted under the law.  By requesting extensions every fifty years, a property may be controlled by a family or business entity for generations.

For those foreign individuals or companies buying property in the interior of the country, not in the restricted zone, no bank trust is required but authorization from the Secretary of Foreign Relations must be obtained and ownership must be registered in the National Foreign Investment Registry located in Mexico City, as well as in the municipality where the property is located.


AVOID TAXES AND EXTRA COSTS, LEAVE THE DEED IN THE SELLER’S NAME: This is wrong!  Until the buyer is formally named as the owner in fee simple or in the bank trust in a public document before a Mexican Notary Public, title to the rights in the property remain with the persons named in the previous property deed.  Their signatures are required to transfer title. If the buyer fails to obtain his or her own deed he/she will be required to obtain the titleholder’s signature before a sale and transfer to another buyer.  This can be costly, frustrating, dangerous and time consuming.



The purchase/sale document signed by buyer and seller is generally legally valid between the parties to a transaction.  It most likely contains the description of the property, the price to be paid to the seller, and any other special terms and conditions.  It WILL NOT, however, provide valid notice to third parties unless it is recorded in the Public Registry Office of the municipality in which the property is located.  Mexico’s land registry system functions in much the same manner as the Public Registry offices in Podunk, North Dakota, Los Angeles, California, Ottawa, Canada or places in between.


Many foreigners purchasing property in Mexico do not understand the importance of registration of their interest in property.  They believe that it should be left in the name of the property developer, in the Master Trust, or in the name of the previous holder of title.  What if the developer goes bankrupt?  What if the corporation and its principals, disappear?  Who then owns the property?  Who can sign as the representative of the property?  What happens if an unscrupulous seller sells the property to someone else? While title is in the name of the seller, it is HIS/HER asset; she may mortgage it, he may sell it again, it may be attached in satisfaction of a judgment, she may die without a will.

             Unless the deed for the rights of the beneficiary has been recorded, there may not be a remedy for the purchaser who neglected to obtain a registered deed…his or her  interest and investment, may be lost.

             To obtain the deed an appraisal, a property tax certificate, and a no-liens certificate must be obtained.  Notarized bank instructions must also be obtained if property is in the “restricted “ zone. Seller’s capital gains tax and Buyer’s acquisition tax must be paid.  The deed transferring rights to the buyer must be registered and stamped by both the tax office and the public registry.  If this process is not complete, the buyer is not fully protected.  The buyer’s ultimate protection is registration in the Public Registry office record, NOT the Notary Public or the trustee bank!



             When property is sold with a down payment and the balance to be paid over a term of years, many sellers prefer to hold title to the rights in their name and transfer title to their rights only upon receipt of payment in full.  Meanwhile, however, the seller may die, may disappear, may go bankrupt… again risky situations for the buyer.  The prudent buyer will insist upon a transfer of title and registration of a mortgage or pledge in which he gives his rights in the property as security for payment of the remaining purchase price.

In the event of default by the buyer, the seller must conduct a proceeding similar to a judicial foreclosure in the United States and Canada.  It is as troublesome as a foreclosure in any country in the world but not notably more problematical.  The registered title and recorded pledge or mortgage provides the buyer a greater comfort level in his investment.  The lender also enjoys protection in having his loan recorded and will have an established legal proceeding to follow in the event of default by the buyer.

copyright, April 2003 – 2014  Consultores Phoenix, S.C.,   reproduction prohibited without permission

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            This article was provided by The Settlement Company®.  It is the first escrow company in Mexico and is dedicated to processing the trusts and title transfers of Mexican real estate for foreign buyers and sellers for properties located ANYWHERE in Mexico.  The company frequently sponsors seminars on the various aspects of real estate ownership in Mexico and holds membership in AMPI, NAR and FIABCI and received PROFECO Certificate 00063/96 based upon demonstration of qualifications and business practices of its chief executives. The Settlement Company handles transfers on properties located throughout Mexico, makes annual property tax and bank payments and provides title search and title insurance on properties located throughout the country.

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Purchase Your Dream Home in Mexico. The Basics!


by Linda Jones Neil


Mexico is an exciting place to live for  those who are retiring,  for those who are working from home on a computer link with their company, for those who are looking for a vacation home or an outstanding investment… above all, for those who dream of a better quality of life!


Home… the word represents security and comfort for the majority.  All too often the word, when used in conjunction with a purchase of property in Mexico creates stress, worry and, at times has been associated with financial loss.  This needn’t be the case.  Procedures in searching titles and transferring property are similar to those of the United States and Canada.  The buyer of a house, condominium or lot in Mexico must ask the same questions, and should receive answers similar to those received when buying a property elsewhere.




In considering the purchase of something so important as a home it is necessary to have the right people representing the buyer and his interests.  This can be accomplished by first selecting the general area where you think you’d like to live. A review of the local newspaper or telephone directory will give a listing of the real estate companies in the area.  Through NAFTA agreements, the Association of Mexican Real Estate Professionals (AMPI), is now affiliated with the U.S. National Association of Realtors (NAR), the Canadian Real Estate Association (CREA), and the International Real Estate Association (FIABCI).  These important national real estate  organizations are working to achieve standardization of  real estate practices and procedures throughout the world.  The company you select to represent you in your Mexican property purchase should be a member of AMPI.  Not only is the AMPI member company required to operate under a higher standard of care, and to adhere to a code of ethics, but also it may have access to an increasing number of the properties available for sale through computerized data bases.

Once the area is selected and a list of the AMPI companies operating there has been obtained  – interview the owners and operators of the companies.  Ask for references, ask for a professional resume.  Interview carefully the persons that most impress you.  The person you select should be familiar with area, with basic real estate principles… and should impress you with his or her honesty and drive to find what YOU are looking for. Once you have found the person you feel comfortable with, stick with him or her and let him do his job.  The sales person who knows you aren’t  shopping around will generally work harder to find exactly  what you are looking for. Remember, it is your money and your commitment.  Do not be pressured by someone who is charming but who does not listen carefully enough to understand YOUR special needs.




Once you have selected the right community, an agent with whom you feel comfortable, AND a possible property, check out the neighborhood.  Is it new?  Is it old?  What will it look like in ten years?  Are highways or other development projects planned for the future?  Where are schools, churches, shopping facilities? Are there homeowner fees for maintenance of common areas?  If so, how much are they and when are they paid?  Are all the utilities in and paid for?  What does the developer have left to do? What building restrictions are there?  Are there covenants and conditions registered for the usage of the land?

In many parts of Mexico there is no enforcement of a master plan or building codes.  This can affect the changing face of the neighborhood you have selected.







Closing Costs will range from 4% to 30% (yes, 30%!) of the total cost of your property. The higher the price of the property, the lower the percentage of total costs for closing. This is because certain expenses for permits and certificates are fixed, regardless of the value of the property.  Costs of transfer include title search, transfer taxes, bank fees, government permits and notary fees.  Your seller may assist in some of these; especially those related to title search and insurance. Be sure to get a written estimate so that you will not have unwelcome surprises at the date of transfer of title! While your real estate agent may know the procedure, his or her specialty is to identify the correct property for you and to negotiate advantageous terms for the purchase.  The technicalities of the transfer; negotiations for permits, registrations and so forth are generally more objectively and thoroughly handled by a neutral third party who does not have a financial interest in the transaction.



Does your seller have a registered title to the property?  Many foreign buyers, in order to avoid the closing costs, or through ignorance, have paid for their property, taken possession of it, and have never obtained a registered title! Ask for a copy of your Seller’s title documents and reserve the right to examine them prior to the release of any part of your payment.  If they are in Spanish have them translated and, if in doubt consult with an independent third party about their probable validity.  It should be added that if the seller has never acquired title to the property he is selling, it can often be remedied.  The  buyer should be aware of this condition, however, and be certain that the person who accepts his offer is truly the holder of the title.  Additionally, he should make arrangements for the additional costs, if any, involved in this double transfer.



Payment of the purchase price is not enough.  In order to have a valid ownership interest in the property which you are buying it is necessary to have the title recorded.  This puts the rest of the world on notice that the property is yours.  If you are a foreign person purchasing property in many parts of Mexico, including the entire Baja peninsula, the property will transfer not to your name but to the name of a Mexican bank as trustee for your interests.  The Mexican constitution prohibits direct ownership of real property by foreigners in the “restricted zone”, a strip of land thirty miles wide along its seacoasts and sixty miles wide along its borders with the United States and Guatemala/Belize, as well as the entire Baja peninsula.  This is the reason for the bank trust, the “fideicomiso”, which has been established under the guidelines of the Mexican government so that foreigners may be protected in their property acquisitions.

Whether you are purchasing in a zone requiring a bank trust or in an area where title can be taken directly into your name, it is necessary that this transfer take place and your interest registered as soon as possible after the successful  conclusion of the negotiations to purchase your dream property.  Until this transfer takes place you are vulnerable:  the seller may die, the heirs may be unwilling to recognize your rights in the property, you may become involved in a lengthy and expensive probate proceeding.  Meanwhile, your interest may not be recognized by the authorities should you wish to obtain a building permit, by the bank should you wish to borrow money and use the property as collateral or as part of your assets; by the courts should a third party also claim an interest in the land, or, very importantly, should you later decide to sell it.

The prudent buyer of real estate in the United States or Canada would not consider leaving his title “in limbo” in either of those two countries; one should not do so in Mexico either.

The foreigner purchasing real estate in Mexico is buying personal, not real property if the acquisition is on the Baja Peninsula, within thirty miles of any coastline on the mainland, or within sixty miles of any border.  The acquisition is personal property.


How does personal vs. real affect the foreigner who acquires property under a Mexican bank trust?  The effect is negligible.  Instead of using the words; “transfer of title” one should more properly say “transfer of trust rights”, or, “assignment of trust rights”.  In practical terms the beneficiary has full control of the property.  He may direct the trustee bank to 1.- lease the property, 2.- mortgage the property, or 3.- sell the property.  The foreign owner enjoys full rights of usage and may do anything to the property permitted under Mexican law.  He enjoys the same rights of dominion as any Mexican citizen who has direct title to the property. He may construct a building, tear it down or modify it in compliance only with the local zoning and planning ordinances or, if applicable, the homeowner’s condominium regime.


A permit to acquire the rights in the property must be obtained from the Secretary of Foreign Relations and the terms of the permit form a part of the deed. Currently, the term for a trust is fifty years. Multiple renewals are permitted under the law.  By requesting extensions each fifty years a property may be controlled by a family or business entity for generations.




A word of caution for those who are considering the purchase of a condominium or a lot in a subdivision.  Just as in other countries, the unit, or lot must be legally described and an individual property tax number issued.  This individual property must be registered in both the Property Tax Office and in the Public Registry of Property.  Often, a developer will spend time and energy on promoting the sale of the properties prior to completing the establishment of the Condominium Regime.  Until this is completed, legal title to an individual unit or lot cannot be granted since there is nothing to describe!  Be sure to investigate the status of the condominium regime prior to completing the offer to purchase!




The purchase/sale document signed by buyer and seller is generally legally valid between the parties to the transaction.  It most likely contains the description of the property, the price to be paid to the seller, and any other special terms and conditions.  It may be drawn up by the parties, their agent(s), or by a third party.  It should be considered as an interim contract, however.  Until the final deed is drafted by and signed before a Mexican Notary Public and duly registered, the transfer WILL NOT provide valid notice to third parties.  This final deed must be recorded in the Public Registry Office of the municipality in which the property is located.  Mexico’s land registry system functions in much the same manner as those in the United States or Canada.

Unless the deed for the rights of the beneficiary has been recorded, there may not be a remedy for the purchaser who neglected to obtain a registered deed… his interest, his investment, may be lost.

When a foreigner is acquiring residential property for which a bank trust is required, the purchaser should receive a deed which has been signed by the bank trustee before a Mexican Notary Public.  This will name the beneficiaries and substitute beneficiaries of the trust in accordance with the purchaser’s instructions.  A full description of the property must be included, seller’s capital gains taxes paid and buyer’s acquisition tax paid.  These receipts should be included in the deed document which may consist of eight or ten pages, or more.  The final page of the document should bear the stamp of the Public Registry, together with Book and Page numbers and the date on which it was recorded.  If this stamp is not on the document, the transaction has not been completed, the buyer is not fully protected.



Until recently, most homes and condominiums were for sale for all cash or financed by the seller.  With the advent of NAFTA however, several mortgage companies have entered the Los Cabos and Cancun, Riviera Maya marketplaces and offer long-term financing for qualified buyers.  If you are considering financing your purchase, and are buying in a location where financing is offered, it makes sense to investigate the terms and plans available, select the company of your choice and make lender approval a condition for the purchase.


If the seller will be financing your purchase, request that title be transferred to you and a pledge guarantee contract executed guaranteeing payment.  Traditionally, sellers have preferred to hold title to the rights in their name and transfer title to the rights only upon receipt of payment in full from the buyer.  Meanwhile, however, the seller may die, may disappear, may go bankrupt…  a risky situation for the buyer.  The prudent buyer will insist upon a transfer of title and registration of a mortgage or pledge in which he gives his rights in the property as security for payment of the remaining purchase price. In the event of default by the buyer, the seller must conduct a proceeding similar to a judicial foreclosure in the United States and Canada.  It is troublesome, as is any foreclosure in any country in the world but not notably more problematical.  The registered title and recorded pledge or mortgage provide the buyer a greater comfort level in his investment.  The lender also enjoys protection in having his loan recorded and will have an established legal proceeding to follow in the event of default by the buyer.



Mexican law says that taxes must be paid on the higher of the following:  purchase price OR appraised value.  Since many appraisals are lower than the actual selling price your taxes will be considerably lower if the appraisal value is declared.  Payment on this basis has taken place for many years in many parts of the country.  It is, however, illegal.  Should you choose to pay your costs based upon this basis, please be aware that: 1. it is violation of the law and 2. your tax base will be low for declaration of value in the property when you sell it.  Furthermore, if you are financing your property through an institutional lender, full value must be declared.

Following is an example of some of the steps involved in obtaining a registered title.  The costs for same will vary with the property and a written estimate should always be obtained prior to initiating the process.


OFFICIAL APPRAISAL:.  The appraisal must be made by an appraiser who is usually an architect and who is recognized as a Perito Valuador, Official Appraiser, by the property tax authorities in the municipality where the property is located.  This is required prior to completing any transfer of title.  If an institutional lender is involved, a commercial appraisal may also be required.


FOREIGN RELATIONS PERMITS:  If the property you are purchasing is already in a trust (fideicomiso) you may either: request assignment of the rights to you, or may request a new trust for fifty years.  If a new trust, a permit from the Secretary of Foreign Relations is required.  Whether a new trust or an assignment of rights, the deed in the new buyer’s name must be registered in the National Foreign Investment Registry.  When considering a new trust or an assignment of rights, the factors to be considered are:  1. Remaining term of the existing trust – when will it need to be renewed?; and 2.-What are the annual bank fees under the existing trust?


If the permit has an unexpired term of less than fifteen or twenty years and/or the annual bank administration fees are more than $500.00 U.S. dlls., it probably makes sense to obtain the permit for a new fifty year trust with a bank offering more attractive fees.


NOTARY FEES –  The Mexican Notary Public is an attorney who has practiced his profession for at least five years and has been appointed by the governor of the state in which he is practicing.  His duties and obligations include; drafting of the deed, calculation of seller’s capital gains taxes and buyer’s acquisition taxes and to “give faith” to the validity of signatures.  The persons signing before him must prove they are who they say they are.  Because the responsibility and potential liability for the actions of the Mexican Notary Public are considerably higher than those of Notaries Public in the U.S. and Canada, the notary’s fees will also be substantially higher than those charged on the other side of the border.  These fees are based upon a rate schedule reviewed and approved annually by the College of Notaries Public and are tied to the amount declared in the property transfer.


I.V.A. – The Impuesto Sobre Valor Agregado (I.V.A.) is a value added tax which is charged on all services.  It is 16% of the value of services provided.  IVA taxes must be paid on services provided by the Notary, the appraiser and any other professionals whose services you use


BANK ADMINISTRATION FEES:  If title to your property is in a bank trust there will be annual fees for the administration of same.  Over the past few years there has been a substantial decrease in annual fees and it makes sense to shop around for the most favorable rate for the property being purchased if a new trust is contemplated.  If an assignment, new rates may possibly also be negotiated.  Traditionally, trustee banks have not sent annual statements.  It is important to request a statement from your trustee bank at least ninety days prior to the anniversary of the trust and pay on time to avoid penalties, or to contract with a company providing this payment service.


TITLE SEARCH AND INSURANCE:  A title search is always a worthwhile investment.  An investigation will generally indicate the registered owner, the chain of title, and will indicate liens, if any, against the property at the time of the investigation.


Title insurance, issued when the new deed is registered, guarantees the marketability of the property and is a requirement by most institutional lenders.   In the event there is a problem with title, the insurer is obligated to defend the owner’s rights in the property and/or indemnify the owner against financial loss.  Investment in a title policy puts the financial risk on the insurer, not the buyer who may not be able to defend the property as well as a major insurance company.


PROPERTY TAXES:  are a municipal tax and income benefits the municipality.  Typical rates for residential dwellings is 6.5 (pesos) per 1,000 and 13 per 1,000 for properties destined as rental units.  Vacant lots are rated at 26 per 1,000 with an increase of 2.6 per annum for each year there is no construction declared on the lot.  Maximum amount is 52 per 1,000.  Valuations for property tax purposes are generally made every two to three years or at the time of sale of a property. Property taxes must be brought current prior to transfer of the title.


ACQUISITION TAX:  The acquisition tax, or transfer tax, is generally paid by the buyer. It is currently 2% of the declared value of the property in most parts of the country.


CAPITAL GAINS TAXES:  A foreigner who sells property in Mexico is liable under special rules, much like the United States, for the payment of the I.S.I.R. (Impuesto Sobre la Renta) which is the Mexican equivalent of the Capital Gains tax.  Liability is either 25% of the declared value of the transaction or 35% of the gain, taking into consideration the length of time held, the improvements made, commissions paid and other allowable expenses.  The formula is complicated and the tax should be figured both ways and confirmed by the Notary Public who will be having the documents recorded and making the tax payments. This is a seller tax and title cannot transfer to the buyer under this tax has been paid.


SETTLEMENT FEES:  Attorneys and Notaries Public often oversee parts of the previously described required steps to a transfer.  The buyer, however, usually has to do certain of his own legwork and can certainly do so if he has a good command of the Spanish language.  Unless the buyer has a lot of time to spend on the activity, it may make sense to hire a company whose sole purpose is to supervise and coordinate the permits, tax payments and other myriad of details so necessary to obtain full legal right to the property being purchased.  Fees for these services will vary with the value of the property and the complexity of the situation.  It is important to always request a written estimate of all the expenses prior to beginning the transfer!

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Copyright, 2004-14, Consultores Phoenix, S.C. Reproduction prohibited without permission




            Linda Jones Neil is the founder of the settlement company â.  It is the first company in Mexico dedicated to counseling buyers and sellers and to supervising the closings and registrations of real estate for non-Mexicans.  The company provides title investigations, due diligence and legal services for buyers and sellers, as required, for properties and corporations holding real estate located anywhere in Mexico.         

For further information and references, please contact

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