Learn About Buying Property in México

Buying freehold property in México is secure and established. Foreigners are able to buy freehold property directly in most parts of México; however under Mexican law border and coastal property purchases by foreigners are executed by the holding of a Trust or ‘Fideicomiso’.

This is a tool to secure foreign ownership and is administered by an independent bank of the purchaser’s choice, on behalf of the beneficiary (the owner). The beneficiary has the full rights of ownership, as with a directly acquired property, including selling, borrowing money on, letting or bequeathing the property. Should the purchaser wish to sell, the new owner simply takes over as the trust beneficiary.

BUYING AND BUILDING YOUR TROPICAL DREAM HOME IN MEXICO WITH THE HELP OF LAGOS DEL K’IIN HAS NEVER BEEN EASIER!

1.  BUILDING YOUR DREAM HOME AT LAGOS DEL K’IIN

Purchasing your dream home at the Lagos Del K’iin Resort is a straight forward process. It is simply a matter of going through the following steps:

1. Select your lot in the phase and zone appropriate to where and when you want to build.
2. Sign the reservation sales agreement and pay the deposit.
3. Receive and agree the terms of the option contract and attachments.
4. Sign the option contract and exchange contracts.
5. Pay the monies due.
6. Completion! Congratulations you are the new owner of a Lagos Del K’iin lot.
7. At the appropriate time, appoint a Mexican based lawyer and then take title of the land.
8. At the appropriate time, choose a property from the selection offered (or your own design) or swap your lot for one in a later zone.
9. Enter into a property build contract with the developer.
10. Take ownership of your new Lagos Del K’iin home.

2. LEGAL PURCHASE INFORMATION

The idea of this section is to give some more background information about the straight forward buying process to enable you to quickly become a member of the Lagos Del K’iin community.

Selecting your lot
By using our unique Lot Locator tool on the website either on your own or with your agent you can decide on which lot is most suitable for your requirements. The resort will be constructed in phases each with its own zones and this is all shown clearly on the website. The latest timetable is shown below which shows the earliest date for construction but as with projects of this nature there may be some changes. You will be kept informed of any such events.

The Reservation Agreement and deposit
This is just to get the ball rolling! Please note this fee is payable directly to the selling agent or Lagos Del K’iin whichever is appropriate and it is 90% refundable in the event of the purchaser not taking things through or 100% refundable in the event of the client exchanging for another lot. The Reservation Agreement reserves the chosen lot for up to 21 days during which time two copies of the Option Contract will be forwarded for signature.

The Option Contract
On receipt of the Option Contract this should be carefully checked to ensure all the details are correct. The attachments should also be fully studied and understood. A lot plan highlighting the exact location of your lot will be included. The “restrictive covenants” essentially ensure that the resort is maintained at a high standard and residents behave in a neighbourly manner and do not act in any way to cause nuisance or disturbance. When you are happy with the details on the Contract and the information in the attachments the two copies of the contracts should be initialled on each page and signed on the final page. They should then be returned to the appropriate developer office (as advised) for formal execution. One copy will then be returned and one retained. Exchange has now taken place.

Paying the monies due
Appropriate bank details for receipt of payment will be forwarded.

Completion
On completion you have the right of ownership to your chosen lot. You will be sent a unique Contract number which will verify completion.

Taking title
At an appropriate time according to the purchaser’s build requirements there is a need to formally take title of the land owned. It is at this stage that an experienced Mexican based lawyer should be retained to work closely with the developer’s legal representative to go through the straight forward but bureaucratic processes of obtaining title. Obviously some fees are incurred at this stage. These are detailed later. There is no need for the purchaser to be present at any stage in this procedure as power of attorney can be vested in the lawyer.

Condominium Internal Regulations
The Condominium Regulations for all apartment owners are now available for download here.

Building a property
When full title has been obtained the purchaser can choose a house design from the range offered by Lagos Del K’iin or come up with a modified layout or even their own design subject to approval. The current price per square meter will be advised. A range of finishes and fittings will be available to choose from, some of which will be standard and some which will incur a premium. Minor modifications to finishes etc can be decided upon as variations at a later stage. Once the design has been decided upon the two parties enter into a Build Contract.

Property Build Contract with the developer
It should be pointed out that a Build Contract could have been entered into at the Option Contract stage dependent on the desired timescale.
The Build Contract will agree the specification, build price, construction time and payment schedule.

Take ownership of your new Lagos Del K’iin home
On completion of your home you are free to enjoy the Lagos Del K’iin lifestyle with your friends and family.

3. THE LEGAL PROCESS IN GREATER DEPTH

Selecting your lot
Lot Locator uniquely enables purchasers to select their desired lot in a real time environment.

The Reservation Agreement and Deposit
Currently the Reservation Agreement Deposit is:
$3,000 for the purchase of condominiums and 600 sq m lots.
$5,000 for the 1,000 sq m lots.
$10,000 for the 2,000 sq m lots.
This is a 90% refundable deposit in the event of the transaction not being continued.
(10% being retained by the sales agent for abortive administrative costs)

The Option Contract 
This Contract, legally binding and enforceable in the Mexican and International Civil Courts affords greater flexibility and cost efficiencies if the intention is not to build on the site immediately.  An Option Contract gives the right to legal ownership of a lot of land without the need to take title of the freehold. This is often used in situations where investors are not planning to build on the site they own but may wish to sell on and take a profit. There is no need in this case to take full ownership title to the lot as they can sell their “option” without the time and cost of obtaining the freehold.

• The seller will sell and the buyer will buy the agreed lot free from charge, mortgage or debt (cash purchase).
• Freehold title must be transferred within 60 days at the request of either the buyer or the seller. 
• The use of the Option Contract defers any purchase tax and notary fees until such time as title is taken.
• The buyer agrees to build a property on each lot in the phase and zone allocated, or transfer their ownership of a lot to a later phase.
• The buyer agrees to the restrictive covenants, which are simply in place to ensure that the high resort standards are maintained and residents behave in a neighbourly manner.
• The buyer can assign or sell the Option to a third party, transfer or sell back to the seller or otherwise dispose of the Option with the consent of the seller which would not be unreasonably withheld.
• The buyer not wishing to build a property within the appropriate time frame for the phase and zone can agree to exchange for a lot in a later phase.

Taking title
It is at this stage in the purchase process that a Mexican lawyer needs to be engaged You will obviously wish to have a lawyer verify the issues involved but this guide should help to give a broader understanding of what needs to be agreed before you and your family can take ownership of your new home. There is a completely independent bilingual lawyer available who has intimate and detailed knowledge of all the legal processes involved in freehold land and property purchases in Lagos Del K’iin whether by a Mexican resident or a foreigner that we are happy to recommend. We recommend Mérida based Ernesto Arranaga of Inter Lex México contacto@interlexmexico.com or 52 (999) 9268817. Ernesto is independent, very efficient, knows the project well and has negotiated a very good rate for the setting up of the necessary Trust (Fideicomiso) autonomous of the purchase price with Scotiabank. The advantages of using this independent legal expert who will be directly contracted to you, and be responsible to you, is that he is an expert specializing solely in this kind of work and so is efficient and therefore cost effective. You are of course able to choose any lawyer you wish.

The Bank Trust or Fideicomiso
The Mexican Government actively promotes foreign investment in and ownership of property in their country. It is straight forward for foreign citizens to purchase freehold property in México. However, as the Mexican constitution says that no foreign person can personally own property which is within 100 km of the border or less than 50km from the coast they have had to establish new laws to make it possible for foreigners to own real estate in México, and to protect the buyer. A modification was made, known as the Law of Foreign Investment, which allows foreigners to acquire property in ‘the restricted zone’ by means of a Mexican trust called Fideicomiso, which is established by a Mexican bank. Your appointed lawyer will make all the necessary arrangements in this matter on your behalf.

Under the terms of the Fideicomiso the purchaser is the sole beneficiary of the Trust. You are the owner of the property which is held in trust by the bank. All the major banks offer this service and it is acknowledged as a straight forward procedure.

The parties involved are the trustor (the original owner), the trustee (the bank) and the beneficiary (the person benefiting from the trust).The Fideicomiso establishes the legal basis by which the bank holds legal title to the property in order to act on the foreigners behalf. This trust deed assures the foreign buyer of all rights and privileges of ownership. The Foreign Investment Law, a Constitutional amendment created in 1973 and amended again in 1994, allows the trust to be established for a term of 50 years and is renewable any time during its existence, forever. The Bank (trustee) holds the trust deed for the person who purchases the property (beneficiary). The property is not part of the bank’s assets and cannot be liened or attached for any other obligations. The purchaser is the beneficiary and has all rights of enjoyment of the property including the ability to remodel, lease, and mortgage, bequeath to heirs or sell the property at any time.

Total closing costs
These are approximately 4.5% to 5.5% of the purchase price broken down in the following way:

Fideicomiso set up
Permit for 50 years (renewable in perpetuity) 1,000 usd
One year annual fee in advance (inc. IVA – Value Added Tax-) 500 usd
Acceptance of the contract (inc. IVA) 500 usd
Registering of the contract 300 usd

Other buying costs
The following example is based on the purchase of a $200k usd house
Acquisition tax 2% of recorded value 4,000 usd
Appraisal fee 0.1% of recorded value 200 usd
Certificate of freedom from liens 15 usd
Certificate of no pre-existing tax liability 7.50 usd
Patent owners license 165 usd
Cadastral and architectural plan form 25 usd
Certificate of no pre-existing water rights 12 usd
Qualification rights 5 usd
1st and 2nd preventive notice 3 usd
Cadastral property change 26.50 usd
Issuing deed and expenses 56 usd
Rights of public deed 14 usdTotal tax, trust and general expenses $6,829.00 usd
Notary fees 0.85% of recorded value 1,700 usd
Mexican lawyer fees 1,200 usd
Legal review and supervision 696 usd

Total closing costs $10,425.00 US dollars
For a $500,000 house the percentage closing costs reduce to 4.5%