Can a foreigner own land in
Baja California Sur, Mexico?
( The answer is YES ! )
A Little History
In 1917 the Mexican Congress as a matter of national security, limited foreigners from owning property within 100 kilometers (62 Miles) of the borders, and 50 kilometers (31 Miles) from the coast, this was then included in Article 27 of the Constitution. This is referred to as the "Prohibited Zone" and includes all of the Baja Peninsula.
In 1973 President Echeverria, realizing that many Foreigners were more comfortable with the rights of ownership, and that they would bring needed dollars into the country, 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.
The Mechanics of a Bank Trust
Properties located within the "Prohibited Zone", which includes the entire Baja Peninsula, may be acquired by a foreigner through a Mexican Bank Trust (Fideicomiso) naming the buyer of the property as the beneficiary of the trust. Fee simple title is placed in the name of the bank selected by the buyer, as his trustee. The bank administers the property according to the instruction 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 any time conforming to the general laws of the country.
Real estate transactions in Mexico are "closed" by a Notario Publico, an official, highly respected government lawyer who acts as a neutral intermediary. The notary is responsible for formalization of the final real estate contract, collection of transfer and capital gains and recordation of the transfer with the Public Registry. There are several Notarios in the La Paz area to serve you. The notary is not your lawyer, however, and as with any investment, you may want to seek independent counsel.
From there, title passes to the designated Bank to be held in the Fideicomiso (Trust). There are specific Banks authorized by the Mexican government to hold the Real Estate Fideicomiso. The term of the Fideicomiso is fifty years and can be perpetually renewed. Title to the property may rest in one beneficiary indefinitely, provided that it is renewed within the terms established by the law. The Fideicomiso has provisions allowing you to pass the property to your heirs without probate.
Is Owning Property in Mexico a Safe Investment?
Unless a problem occurs because of fraud or misrepresentation, the Fideicomiso can not be compromised. Title insurance can provide the additional protection against these types of claims
Under the North American Free Trade Agreement, NAFTA, Mexico may not directly, or indirectly, expropriate property except for a public purpose. This is no different than the concept of “Eminent Domain” in the U.S. When it is necessary to expropriate land for public uses, fair market compensation must be paid.
Corporations, Leases, and Other Options
Property acquired for commercial use by foreigners may be owned without the need for a bank trust, provided that the property is held in a Mexican corporation. Depending on the type of business, it is often possible for a foreigner to own 100% of the Mexican corporation.
It is possible to rent or lease property, just as it is north of the border. If you are looking for a commercial space, a or a vacation rental, a rental or a lease may be the way to go.
There are many other methods that have been used to circumvent the laws over the years. You may hear of a variety of deals that seem too good to be true. They almost always are. The day of the infamous 99 year lease is gone. The bank trust and other secure methods of land ownership have rightfully taken its place.
The process doesn’t need to be confusing or intimidating. We have the experience and knowledge. All transactions are always handled professionally, ethically and with full disclosure. Give us a call. Let Sol y Mar Propiedades be your guide.