Everything you need to know about trusts and the legal framework for safely acquiring beachfront properties in Mexico.
Buying property in Mexico as a foreigner is completely legal and very common, especially in Puerto Vallarta and the Riviera Nayarit. However, the process is different from buying in the United States or Canada. Understanding how it works before you make an offer is the best way to protect your investment. Here is a practical overview based on my 25 years of helping international buyers.
The restricted zone and the bank trust (fideicomiso)
Mexico's constitution designates a "restricted zone" that includes land within 50 kilometers of the coastline and 100 kilometers of the borders. Foreign individuals cannot hold direct title to residential property in this zone, which includes all of Puerto Vallarta and the Riviera Nayarit. Instead, they purchase through a fideicomiso, a bank trust.
In a fideicomiso, a Mexican bank holds title on your behalf, and you are the beneficiary with full rights to use, rent, improve, sell or pass the property on to your heirs. The trust is granted for 50 years and can be renewed. It is a secure, well-established structure used by thousands of foreign owners.
Other ownership options
Buyers who plan to use the property mainly as a business (for example, a rental operation) sometimes purchase through a Mexican corporation. This option has its own accounting and tax obligations, so it should only be chosen with guidance from a qualified accountant and attorney.
Key steps in a typical purchase
- Offer and promissory agreement. Once your offer is accepted, a purchase agreement outlines the price, deposit, closing date and conditions.
- Due diligence. Your legal team verifies the title, confirms there are no liens or debts, checks property taxes and water bills, and for condos confirms HOA fees are current. For pre-construction, it is essential to review the developer's permits, land ownership and construction license.
- Permit and trust setup. The bank and the Ministry of Foreign Affairs process the permit and trust documents.
- Closing before a notary. In Mexico, a public notary (notario público) is a highly trained attorney appointed by the state who formalizes the transfer, calculates taxes and registers the deed.
Closing costs and taxes
Buyers should plan for closing costs that include the property acquisition tax, notary fees, appraisal, registration, and the bank's trust setup and annual fees. The exact amount depends on the municipality and the property price, so ask for a written estimate early in the process. Annual property taxes (predial) in Mexico are generally very modest compared to North America.
How to avoid common risks
- Work with a certified, experienced real estate professional and an independent attorney.
- Never send deposits to personal accounts; use escrow or the developer's verified business account.
- For pre-sales, confirm the developer's track record and delivery history.
- Make sure the purchase price is correctly declared on the deed to avoid problems when you sell.
- Keep copies of all receipts and documents for future capital gains calculations.
Buy with confidence
With the right team, buying in Mexico can be a smooth and rewarding experience. I provide comprehensive legal support for every transaction, from the first offer to the final signing. If you would like a step-by-step walkthrough for your specific situation, I am here to help.
Questions about buying in Mexico? Contact me at +52 322 150 6869 or rocio@rocionavarealestate.com.
This article is for general information only and is not legal or tax advice. Please consult a qualified attorney and accountant for your specific situation.