Buying land in Mexico, explained properly

Can foreigners own land here?

Yes. Foreigners have bought and owned property in Mexico for decades, and they own a large share of the homes and lots along this coast. The complication, and the reason this guide exists, is a clause in Article 27 of the Mexican Constitution that reserves the land within 100 kilometers of the borders and 50 kilometers of the coastline for Mexican nationals. This is called the restricted zone, and every town we work in sits inside it.

Since 1973, and more clearly since the Foreign Investment Law of 1993, the solution for foreigners has been a bank trust called a fideicomiso. A Mexican bank holds the legal title; you hold every right that matters. It is routine, it is secure, and the banks have administered hundreds of thousands of them. Outside the restricted zone, in Guadalajara say, you would simply take title in your own name. Here, you use the trust, or in some cases a Mexican company.

The risks foreign buyers actually run into here are not about the fideicomiso. They are about what is being bought: whether the land has a registered title at all, whether the seller is the person on that title, where the boundaries really are and whether the road and the water are legal. That is what the rest of this guide is about.

The fideicomiso

A fideicomiso is a trust agreement between you (the beneficiary), a Mexican bank authorized to act as trustee (the fiduciario), and the seller. The bank holds the title to the property in trust for you. The trust deed grants you the right to use, occupy, build on, rent, sell, mortgage and bequeath the property, and instructs the bank to act only on your instructions. The bank has no economic interest in the land and cannot sell it, borrow against it or lose it in its own insolvency.

Key facts

• Term: 50 years, renewable for further 50-year periods on request. The trust also passes to whoever buys from you, usually by assignment of your beneficiary rights, which is quicker than setting up a new one.
• Permit: the bank applies to the Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores, SRE) for a permit to establish the trust. This is a formality for residential use and usually takes a few weeks.
• Substitute beneficiaries: you name heirs in the trust deed. On your death they step into your rights without a Mexican probate process, which is one of the quiet advantages of the structure.
• Cost: expect roughly US$1,500 to US$3,000 to establish the trust, including the SRE permit and the bank's acceptance fee, and an annual trustee fee of around US$500 to US$800. Each bank publishes its own schedule; we will show you current quotes from the two or three banks we work with most.
• Reporting: if you are a US taxpayer, your accountant will usually treat a fideicomiso as a foreign trust or a disregarded grantor trust. Ask them before you buy; the paperwork is modest but it exists.

Listings on this site marked “fideicomiso in place” are already held in a trust by the current owner. You can take over that trust by assignment or have the bank set up a fresh one in your name; your notario will advise which is cheaper and faster.

Buying through a Mexican company

A Mexican corporation (commonly an S.A. de C.V. or S. de R.L. de C.V.) can own restricted-zone land directly, even when the company is wholly owned by foreigners, provided the land is used for non-residential purposes. That makes a company the normal vehicle for a hotel, a rental business run as a business, a subdivision or a commercial lot in town. It is the wrong vehicle for a personal home or a lot you intend to build your own house on.

A company brings obligations that a trust does not: incorporation with a notario, a tax registration (RFC), a Mexican accountant filing monthly and annual returns, and corporate books to keep. Budget a few thousand dollars to set up and roughly US$1,500 to US$3,000 a year in accounting even when the company does very little. If your plan is a development parcel or a multi-unit rental project, we will introduce you to accountants who set these up every month. If your plan is a house, use a fideicomiso.

Titled land versus ejido land

This is the section that matters most. Much of the land around Sayulita, San Pancho and the other villages was, within living memory, ejido land: communal agrarian land granted to a village after the Revolution and held collectively by its members, the ejidatarios. Ejido land is not private property. It cannot be sold to anyone outside the ejido, it cannot be held in a fideicomiso, and a notario cannot issue a deed for it.

Since 1992 an ejido has been able to convert parcels to private property through a process that ends in dominio pleno (full ownership) and the issue of a private title registered at the Public Registry of Property. A great deal of land here has gone through that process, which is why there is a market at all. Some has not, and some is somewhere in between, with a parcel certificate from the agrarian registry but no private title yet.

What you will be offered, and what it means

• Escritura pública, registered at the Registro Público de la Propiedad: a real title to private property. This is what “titled” means on our listings, and it is the only thing we recommend a foreign buyer purchase.
• Fideicomiso in place: the land is titled and already held in a trust by a foreign owner. Equally good; see above.
• Título de propiedad or certificado parcelario from the Registro Agrario Nacional, no escritura: the parcel is on its way to private property but has not arrived. It can be worth pursuing with proper legal advice and a price that reflects the risk and the time, but a foreigner cannot hold it in a trust until the dominio pleno is complete.
• Cesión de derechos (assignment of rights), a private contract, a “carta de posesión”: you are buying someone's claim, not a title. We do not list these and we do not recommend buying them, however attractive the price or how long the seller's family has farmed it.

Every listing on this site states its title status, and we have read the title document before listing. For any lot that interests you we will give you the escritura, the lien certificate and the registry folio so your notario can verify them independently.

Due diligence checklist

The notario verifies title and liens as part of the closing. The rest is on you and your agent, and on this coast it is where good purchases are separated from bad ones. Before you sign a promissory agreement, we check, and you should see:

• Title: the escritura pública, the registry folio number and a current certificado de libertad de gravamen (lien certificate) showing no mortgages, liens or lawsuits.
• Seller identity and authority: the people on the title are the people selling, and if the owner is a company or an estate, whoever signs has the power to do so.
• Survey: a recent plano topográfico by a licensed surveyor, with the boundaries physically marked, and a walk of those boundaries with you. Fences on this coast have a habit of being in the wrong place.
• Taxes and services paid: predial (property tax) receipts and no-debt certificates for water where applicable.
• Land use: the municipal zoning (uso de suelo) and density rules for the lot, in writing from the municipality, so what you plan to build is what you are allowed to build.
• Access: a legal road or a registered right of way (servidumbre de paso) to a public road, not a track across a neighbor's land by goodwill.
• Water and power: whether municipal water reaches the street and the system has capacity, or whether the lot relies on a well (which needs a federal concession) or trucked water; where the nearest transformer is and what a connection costs.
• Environmental and federal constraints: the 20-meter federal zone on beachfront lots and whether a concession exists, any protected vegetation or watercourses, and flood lines in the rainy season.
• Ejido history: for any lot that was once ejido, the dominio pleno resolution and the first private title in the chain.
• Neighbors and disputes: we ask on the street. It is unscientific and it has saved clients more than once.

We also recommend hiring your own Mexican real estate lawyer, independent of the seller and of us, for a fixed fee. It is a modest cost on a purchase of this size.

The notario and the closing

A notario público in Mexico is not a notary in the North American sense. Notarios are experienced attorneys appointed by the state after an examination, and they are the only people who can formalize a transfer of real property. The notario drafts the deed, verifies the title and liens at the Public Registry, orders the official appraisal, calculates and withholds the taxes due, witnesses the signing, and records the new deed at the registry. Both parties sign in front of the notario; the moment of signing is the closing.

The buyer chooses and pays the notario. We will suggest two or three in Bahía de Banderas who work in English and handle fideicomisos daily, and you are free to choose anyone else. The notario also coordinates with the trustee bank, so the trust is created in the same deed that transfers the property.

The documents in order

1. Offer (oferta de compra): a short written offer with price, deposit, timeline and conditions. Not binding until accepted.
2. Promissory agreement (contrato de promesa de compraventa): the binding contract. It sets the price, the deposit, the due diligence conditions, the closing date and the penalties for either side walking away. Your deposit, commonly 10 percent, is paid at this stage.
3. Escrow: Mexico has no equivalent of a US title company holding funds, so most transactions on this coast use a third-party escrow service, typically US-based, that releases funds only at closing. Never wire a deposit or purchase funds directly to a seller.
4. Deed (escritura pública de compraventa): signed at the notario's office, with the fideicomiso created in the same instrument. Funds are released from escrow against the signed deed.
5. Registration: the notario records the deed at the Registro Público de la Propiedad, which can take one to three months. You receive the registered testimonio of your deed afterwards.

Closing costs and ongoing fees

Buyers on this coast typically spend between 4 and 8 percent of the purchase price on closing costs, with a fideicomiso and a modest price pushing you toward the top of that range because several fees are fixed. Sellers pay the brokerage commission and their own income tax on the gain. The table shows what the buyer pays and the ranges we see; your notario will give you a written estimate before you sign the promissory agreement.

What you pay every year

• Predial (property tax): low by North American standards, assessed on the cadastral value. For a residential lot here it is typically a few hundred US dollars a year, with a discount for paying early in the year.
• Fideicomiso annual fee: roughly US$500 to US$800, paid to the trustee bank.
• ZOFEMAT concession fee on beachfront lots that hold a federal-zone concession.
• HOA or maintenance fees in gated communities such as Punta Mita and some Litibú developments, which can be substantial; each listing states them.

When you sell

Mexico taxes the gain on sale (ISR). For land there is no primary-residence exemption, and the rate for a non-resident seller is calculated either on the gross price or on the net gain with deductions. The practical advice when you buy is to insist that the deed records the true price you paid and to keep every receipt for improvements, surveys and fees, because they form your cost basis later. Your notario will withhold the tax at closing when you sell.

Timeline

From an accepted offer to a signed deed, a land purchase with a fideicomiso usually takes 60 to 90 days. Faster is possible when the lot already sits in a trust and the file is complete; slower when a survey has to be commissioned or a lien cleared.

1. Week 1: offer, negotiation, acceptance. Promissory agreement drafted, escrow opened, deposit paid.
2. Weeks 2 to 5: due diligence. Title, liens, survey, land use, access, water and power verified; your lawyer reviews; notario begins the file and requests the appraisal.
3. Weeks 3 to 8: bank trust. The trustee bank applies for the SRE permit and prepares the trust agreement; you provide identification and a short questionnaire.
4. Weeks 8 to 12: closing. Balance of funds into escrow, deed signed at the notario (in person or by power of attorney), funds released, keys and possession.
5. After: registration at the Public Registry, usually one to three months, after which you receive the registered deed. Predial and water accounts transferred to your name.

Building after you buy

Most of our land buyers build within two years. The sequence is: an architect produces the project and checks it against the land use and density rules for the lot; a licensed director responsable de obra signs off on the structural and technical drawings; the municipality of Bahía de Banderas issues a construction license (licencia de construcción); and a builder, usually under a fixed-price or cost-plus contract, delivers in 12 to 20 months for a typical two- to four-bedroom home.

Construction costs on this coast vary widely with finishes and site difficulty, and steep or jungle lots cost more to build on than their price suggests. Ask three builders for a per-square-meter estimate on your actual lot before you buy it; we will arrange the visits. Budget separately for the connection to power, a water system (municipal connection, cistern or well), a septic system or biodigester where there is no sewer, retaining walls on sloped lots, and the road or driveway. These items catch buyers more often than the house does.

We stay involved after closing. We introduce you to architects, builders, surveyors and property managers who work in each town, and we tell you which ones we would not use. None of them pay us for the introduction.

Questions we hear every week