Buying a property in Mexico may seem like the perfect way to acquire that amazing vacation home you have always dreamed about. However, buying in Mexico is much different from buying here in the United States. In fact, Mexico currently has heavy restrictions on some of the prime property that many Americans might consider buying for their vacation homes.
For almost a century, foreigners have been prohibited from holding the title to property within 100 kilometers (62 miles) of international borders or 50 kilometers (31 miles) of the coastline. You can circumvent these restrictions by partnering with a Mexican bank that will hold the title in a trust on your behalf. Unfortunately, many people are very uncomfortable with this arrangement, which has caused lower foreign investment in Mexico than might be possible otherwise.
The Mexican government is considering relaxing the restrictions placed on foreigners, but Mexicans worry that the foreign investment could harm the opportunities for Mexican citizens to buy these properties. Legislation is currently stalled within the government as opposing parties make their arguments.
If you decide that buying property in Mexico is right for you despite these restrictions, it is important that you protect yourself as much as possible. One way is to make sure all documents are prepared in English. If documents written in Spanish are your only options, hire a professional translator to explain the documents to you in full, as they will understand the subtleties that a low-cost translation service may not. Do not use free services like Google Translate that could cause errors in one of the largest purchases you may make in your life. The savings are not worth the risk.
Make sure to inspect the property very carefully or hire someone else to do so for you. In Mexico, sellers are not obligated to warn you about negative items that could affect the value of the property, while sellers in the United States must do so. Do your homework or you might overpay for a property that has significant problems.
Title insurance is not required in Mexico, but unless you can afford to lose your entire investment, you should strongly consider buying it. Mexican real estate agents and sellers may try to convince you that the expense is unnecessary, but why take such a huge risk in an area you are unfamiliar with, on one of the largest purchases you may ever make? Instead, hire a U.S.-based title insurance company that does business regularly with properties in Mexico. The extra peace of mind you get should easily exceed the price of the insurance.
You may want to consider using an escrow agent based in the U.S. for your transaction. It is important that you feel comfortable when dealing with such a large amount of money. Often your title insurance company can provide an escrow company that you can work with, but research them, just as you would in any other business.
Finally, just like in the US, make sure to pay your taxes. If you do not remit your taxes as required, the Mexican version of the IRS can put a lien on your property or foreclose on it. Educate yourself about the taxes you will owe. Ignorance is not a defense for disobeying laws or not paying taxes and you do not want to learn this lesson the hard way.