Mexican Real Estate Law: What You Need to Know Before Buying Property
Mexico’s booming property market is attracting foreign investors, retirees, and vacation home buyers from around the world. From beachfront condos to inland estates and commercial developments, the country offers wide-ranging opportunities. However, navigating Mexican real estate law is essential to ensure a safe, legal, and profitable property transaction.
Understanding the legal system, property ownership options for foreigners, and the roles of key players in the real estate process can help you avoid costly mistakes and protect your investment.
Can Foreigners Own Real Estate in Mexico?
Yes, foreigners can own real estate in Mexico—but with some restrictions. Mexican real estate law allows international buyers to purchase property, but when it comes to land near the coast or borders, extra precautions are required.
According to the Mexican Constitution:
Foreigners cannot directly own property within the “Restricted Zone,” which includes:
50 km (31 miles) from any coastline
100 km (62 miles) from any international border
However, Mexico has established legal structures that make it completely possible—and safe—for foreigners to own property in these zones.
The Fideicomiso: A Property Trust for Foreigners
To overcome constitutional restrictions, Mexico uses a trust system known as a Fideicomiso. This is a bank-managed real estate trust that gives the foreign buyer all the rights of ownership.
Key features include:
A Mexican bank holds the legal title to the property
The foreign buyer is the sole beneficiary and controls the property
The trust is valid for 50 years, renewable indefinitely
The buyer can sell, lease, or transfer the property as desired
This system is fully recognized under Mexican real estate law and is commonly used in popular coastal regions like Cancun, Cabo San Lucas, Puerto Vallarta, and the Riviera Maya.
Ejido Land and Property Rights
Another critical concept under Mexican real estate law is the distinction between Ejido land and privately owned land.
Ejido land is communal agricultural land granted to communities.
It cannot be legally sold until it has been converted into private property through a process called regularization.
Buying Ejido land without full legal conversion is extremely risky and often leads to disputes or legal loss of the property.
Foreigners should never purchase Ejido land unless a Mexican real estate attorney confirms its legal status and title.
The Role of the Notario Público
Unlike in many countries, the Notario Público in Mexico plays a much larger role in property transactions. They are not simply notaries but are licensed attorneys appointed by the government to oversee legal acts.
The Notario will:
Review all documents for accuracy and legality
Draft the Escritura Pública (public deed)
Ensure that the title is clean and lien-free
File the transaction with the Public Registry of Property
Collect and file taxes and fees
Real estate transactions in Mexico are not considered legally binding unless registered by a Notario Público.
Real Estate Taxes and Fees
Foreigners buying property in Mexico must understand the full cost of acquisition, which goes beyond the purchase price.
Typical taxes and fees include:
Acquisition Tax (ISAI): 1.5%–2.5% of the purchase price
Notary Fees: Variable, often around 1%
Registration Fees: Paid to the Public Registry
Bank Trust Fees: Setup and annual maintenance (for Fideicomiso)
Legal Fees: If hiring a real estate attorney (highly recommended)
Title Insurance: Optional, but provides protection against fraud
Overall, closing costs generally amount to 5%–8% of the property value.
Title Insurance and Legal Due Diligence
While title insurance is not mandatory under Mexican law, it is highly recommended—especially for foreign buyers. Title insurance protects against:
Fraudulent sellers
Improper documentation
Unknown debts or encumbrances
Legal challenges to ownership
A local real estate lawyer in Mexico can conduct a full due diligence investigation, checking the chain of title, confirming zoning, and verifying permits.
Buying Property Through a Mexican Corporation
For those looking to invest in multiple properties or operate rental businesses, Mexican real estate law allows foreigners to own land through a Mexican corporation.
Advantages include:
Full ownership of property, even within restricted zones
Ability to run a business legally
No need for a Fideicomiso
Tax benefits for commercial activities
This structure is ideal for vacation rental investors, hotel owners, or developers.
Inheriting and Selling Property in Mexico
Real estate in Mexico can be legally inherited or transferred. If you own property through a Fideicomiso, you can name beneficiaries who inherit the trust upon your death. If you own property through a Mexican corporation, shares can be passed down to heirs.
When selling property in Mexico:
You must pay capital gains tax (ISR) unless you qualify for an exemption
Legal documentation and registration through a Notario are required
You may need an RFC (Mexican tax ID) to handle the transaction
Working with a tax professional or lawyer will help ensure compliance.
Common Legal Mistakes to Avoid
Buying without legal representation
Failing to confirm land title or zoning
Misunderstanding Ejido vs. private land
Not registering the transaction
Relying only on verbal agreements or informal contracts
Following Mexican real estate law carefully ensures your property is protected and your investment secure.
Final Thoughts
Mexico’s real estate market is vibrant and full of potential—but only for those who understand the rules. Whether you’re purchasing a dream home, starting a business, or investing in rental property, having a solid grasp of Mexican real estate law is non-negotiable.
Working with a licensed Notario, hiring a local real estate attorney, and conducting thorough due diligence are the keys to a smooth and legal real estate purchase in Mexico.