Understanding Mexico Property Law: A Complete Guide for Foreign Buyers
Buying property in Mexico has become increasingly popular among international investors, retirees, and vacation home seekers. From beachfront condos to colonial homes and large investment parcels, Mexico offers affordable and attractive real estate options. However, before diving into the market, it’s essential to understand Mexico property law and how it affects foreign ownership.
Whether you’re planning to buy a second home or make a long-term investment, knowing the legal landscape will help you avoid risks and ensure a secure transaction.
Can Foreigners Own Property in Mexico?
Yes, foreigners can legally purchase property in Mexico. However, Mexico property law imposes certain restrictions, especially when it comes to land near the coast or borders.
According to the Mexican Constitution, foreigners cannot directly own land within the Restricted Zone, defined as:
Within 50 kilometers (31 miles) of any coastline
Within 100 kilometers (62 miles) of any international border
But don’t worry—there’s a legal solution.
The Fideicomiso System: Trust-Based Ownership
To navigate this constitutional restriction, Mexico introduced the Fideicomiso system, a type of real estate trust. Here’s how it works:
A Mexican bank acts as a trustee and holds the property title.
The foreign buyer is the beneficiary of the trust, with full control over the property.
The trust is valid for 50 years and renewable indefinitely.
With a Fideicomiso, you can:
Sell the property
Lease it
Inherit it
Build or remodel
This structure allows foreigners to enjoy all rights of ownership while staying within the framework of Mexico property law.
Ejido Land vs. Private Property
One of the biggest legal risks in buying property in Mexico is mistakenly purchasing Ejido land.
Ejido land is communal farmland granted by the government to local communities.
It cannot be sold or owned by private parties unless it’s formally converted to private property through a legal process.
Foreigners should never buy Ejido land unless it’s been fully regularized and titled.
Always verify land status with a qualified Mexican real estate attorney before making any agreements.
Title Insurance and Due Diligence
Although not mandatory in Mexico, title insurance is highly recommended, especially for foreign buyers. It protects against:
Fraudulent or incorrect titles
Unknown liens or debts
Legal disputes over ownership
Due diligence should also include:
Checking the seller’s legal authority to sell
Ensuring there are no tax debts or liens
Reviewing zoning regulations
Confirming utilities and permits
Hiring a local property lawyer in Mexico is crucial to ensure that all documents and procedures align with national and state real estate laws.
Role of the Notario Público
Unlike in many countries, Notarios Públicos in Mexico are not just notaries—they are specially licensed attorneys appointed by the government.
A Notario will:
Review and validate the transaction
Prepare the Escritura Pública (public deed)
Register the sale with the local Public Registry
Calculate and collect taxes and fees
Under Mexico property law, a real estate transaction is not legally complete until it’s formalized by a Notario and recorded in the Public Registry.
Costs Involved in Buying Property in Mexico
Besides the purchase price, buyers must factor in closing costs, which typically include:
Transfer tax (1.5%–2.5%)
Notary fees
Bank trust setup/annual fees (if applicable)
Title insurance (optional but recommended)
Legal fees (attorney services)
Closing costs usually amount to 5%–8% of the property’s total value.
Can You Own Property in Your Own Name?
If the property is outside the Restricted Zone, foreigners can own property directly in their name, just like Mexican nationals.
Examples include:
Cities like Guadalajara, San Miguel de Allende, or Mexico City
Inland properties more than 50 km from the coast or 100 km from borders
For coastal properties or those within the restricted zone, the Fideicomiso or a Mexican corporation is the legal route.
Buying Through a Mexican Corporation
If you’re planning to develop or rent out property commercially, forming a Mexican corporation may be the better choice. Under Mexico property law, corporations—regardless of foreign ownership—can buy property in any location, including the restricted zone.
This option is ideal for:
Investors buying multiple properties
Vacation rental businesses
Commercial developers
You’ll need legal assistance to set up the corporation and ensure tax compliance.
Selling Your Property in Mexico
When you sell, you’ll be subject to capital gains tax, which can be minimized or exempted with proper documentation, especially if:
You’re a legal Mexican resident
The property was your primary residence
You hold official tax receipts and records
It’s best to work with an accountant or Mexican real estate lawyer to handle the sale and any applicable taxes.
Final Thoughts
Understanding Mexico property law is essential for any foreigner planning to invest in Mexican real estate. From trust ownership via Fideicomiso to verifying legal titles and closing with a Notario Público, the system can be complex—but also reliable when approached correctly.
Whether you’re buying a beachfront villa, a city condo, or commercial land, working with a trusted attorney and real estate professional will ensure your investment is secure and compliant with Mexican law.
Buying property in Mexico is not just possible—it’s a fantastic opportunity, as long as you follow the law and work with the right experts.