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About Mexico
Officially United Mexican States, republic (1995 est. pop. 93,986,000), 753,665 sq mi (1,952,500 sq km), S North America. It borders on the United States in the north, on the Gulf of Mexico (including its arm, the Bay of Campeche) and the Caribbean Sea in the  east, on Belize and Guatemala in the southeast, and on the Pacific Ocean in the south and west. Mexico is divided into 31 states and the Federal District, which includes most of the country's capital and largest city, Mexico City.
Land
Most of Mexico is highland or mountainous and less than 15% of the land is arable; about 25% of the country is forested. Most of the Yucatán peninsula and the Isthmus of Tehuantepec in the southeast is lowland, and there are low-lying strips of land along the  Gulf of Mexico, the Pacific Ocean, and the Gulf of California
In the south the deserts yield to the broad, shallow lakes of a region, comprising the Valley of Mexico, known as the Anáhuac and famous for its rich cultural heritage. South of the Anáhuac, which includes Mexico City, is a chain of extinct volcanoes, including Citlaltépetl , or Orizaba (18,700 ft/5,700 m, the highest point in Mexico), Popocatépetl , and Iztaccihuatl . To the south are jumbled masses of mountains and the Sierra Madre del Sur.
People
The great majority of the population are of mixed Spanish and indigenous descent and speak Spanish, the official language, as their first language. Various Mayan dialects are also spoken. Since 1920 the population of Mexico has had a very high rate of growth, almost entirely the result of natural increase; from 1940 to 1990 the population grew from 19.6 million to 81.1 million.
*Columbia Encyclopedia, Sixth Edition, Copyright (c) 2003.
Buying Property in Mexico
Due to the large amount of foreigners coming to Mexico and buying Mexico Real Estate for Sale we have put together this document to guide you as a foreigner through the restrictions and limitations of purchasing and selling Mexican Property. This rich country has 6,000 miles of breath taking coastline; Mexico is very tempting for interested foreigners. However, before purchasing it is crucial that you keep in mind the technical and legal matters at hand.
Understand The Work of Notario Publico
A Notario is an attorney appointed by the governor of the state in which he is licensed. The position of the Notario is held with very high esteem and they have responsibilities under the Mexican law. Only a Notario has the right to register and record real estate transactions and are responsible for the registration of deeds at the State and local government. They also collect taxes for the Federal, State and Local Government, which is a large part of the closing cost, addressed in rule # 2. The Notario ensures proper transfer of all documents and will draw up and review all of the closing documents including deeds, trust, and registration papers. In addition, other work done by the Notario include powers of attorney, the formation of corporations, writing of wills, and the well-known notary stamp and seal on numerous legal documents. The Notario also guarantees that the property and the transfer of ownership is done in a manner similar to a U.S. title company because the Notario verifies on the date of deed transfer that back taxes have been paid on the property and that there are no liens or encumbrances against the property.
Understand “The Closing Process and The Closing Cost”
It is going to take between 30-60 days to complete the closing process. Commonly, the buyer pays for the closing costs as well as transfer or acquisition tax. In many closings, it is not necessary for the buyer to be present for the closing. The closing costs are paid on the value of the property purchased. Most Notarios require that you pay for ½ of the estimated closing cost when they start your paperwork and the final payment at closing. An Estimate may be requested from any Notario and varies marginally in the cost of the closing from one Notario to another. Closing costs are as follows: Fees for the tax certificate, Transfer tax (I.S.A.I.) of 2% in the State of Jalisco ( the percentage varies from one state to another) plus a fixed amount according to a scale based on the appraised value of the property, this goes to the Mexican government. A registration fee of .05% of assessed value of the property. Average of $2,500 USD for notary fees. title search fees, property appraisal, and miscellaneous office expenses.
Total closing costs varies from State to State because each State sets the amount of taxes. The average in the State of Jalisco for closing residential properties range from 3.2 to 5.5 % of sales price. Commercial property for new construction may be as high as 8 % because the I.V.A. Tax (a 15% sales Tax) may be included in your closing cost.
Understanding “The Restricted Zone”
In Article 27 of the Mexican Constitution it clearly states, “Foreigners cannot own property within (100) Kilometers from the Border and (50) Kilometers from the coastline”. This is called the Restricted Zone. However, in the 70’s the Mexican Foreign Investment Law created THREE OPTIONS that help foreigners that want to purchase property in “The Restricted Zone”.
1. A Mexican Corporation 2. Foreign Corporation or LLC. 3. A Mexican Bank Trust (Fideicomiso)
A CORPORATION
If you wish to purchase property through a Mexican corporation, it may be 100% owned by foreigners. A provision in the by-laws of your corporation must state that the shareholders must accept and will be subject to Mexican laws. You cannot live by the laws of your own country. The property is registered with Foreign Affairs Registry. Other foreign corporation ownership is also available.
FIDEICOMISO. (An Irrevocable Bank trust)
Foreigners and nationals can establish the trust created by a Mexican bank. The bank accepts the fiduciary responsibilities of a Trustee. The Fideicomiso allows you to purchase anywhere in Mexico including the restricted zone.
The Notario at the request of the buyer requests that a bank of your choice act as a trustee on your behalf. The bank then will receive a permit to acquire the chosen property in trust. The trust is irrevocable is established for a maximum of 50 years then it may be renewed for another 50 years. You are the beneficiary of the trust and have all the benefits of direct ownership. This includes the option to sell, remodel, lease, mortgage, or transfer the rights to a pre-appointed heir or another third party. The trust may also include language to by-pass the probate court with joint ownership to transfer with the rights of survivorship. You do have the absolute right to transfer the title to another party at anytime. Responsibilities of the trustee to the buyer include; exact fulfillment of the trust. Mexican Law also states the trustee will assume full technical, legal and administrative supervision. It usually costs approximately $2,500 USD to set up a trust, the permit from the Foreign Affair Ministry, registration and first annual payment. There is also an annual maintenance fee for the trust of $500 to $550 USD. You will pay the yearly fees directly to your bank.
Understanding Your Property Taxes
Your property taxes may to be low compared to States like Texas (3%) per year Example: In Texas a $500,000.00 US dollar residential property is $15,000 US dollars per year. In Puerto Vallarta Example: a $500,000.00 US dollar residential property is $400 US dollars per year. The assessed rate is set by each state the same as in the U.S. The range is .04 -2 percent. In the State of Jalisco the rate of .08% of the assessed property value which is determined when the sale is made. Compare that to what you are paying in your home State and you will see another advantage to owing property and retiring in Mexico. Not to mention lower cost for medicine (25 cents on the dollar), medical care, insurance (car and health), food (fresh fruit and vegetables), very low water bills, no cost for trash pickup and clean air to breathe (basic essentials).
Understanding Financing
Interest rates in Mexico are higher compared to U.S. and Canadian rates so most transactions are made in cash. However, we have banks and lenders that offer mortgages and consider beach front properties as a very good collateral for their portfolios. Some developers do offer financing. We also have U.S. lenders that have money available for U.S. and Canadian citizens. Contact us for more information about current interest rates and required down payments.
Escrow Services and Title Insurance
Unless you are buying new construction or pre construction from a well established developer we recommend that you open an escrow account with First American Title Insurance Company Caribbean/Latin America Division 13450 W. Sunrise Boulevard, Suite 300 Sunrise, FL 33323 Phone-(954) 839-2900 Toll-Free- (877) 641-6767 Fax (954) 838-9228 Email gladys@firstam.com The fees are about $550.00 USD and well worth the cost to keep your money secure until the deed is in your name. Title insurance is available.
Choose a Real Estate Company you know and Trust - RE/MAX Sites Marina and Liz Garzino as your buyer's representative.
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