The Ultimate Guide to Buying Property in Yucatan as an Expat

Are you looking for a peaceful and inexpensive retirement in the Yucatan state? Yucatan is known for its rich Mayan ruins, cultural heritage, stunning landscapes, and affordable living costs, making it an ideal destination for retirees seeking tranquility and adventure. The state offers a variety of beautiful properties, from colonial homes in vibrant cities to serene beachfront villas.

Before embarking on this exciting journey, it is crucial to understand the key steps involved in buying a home in this beautiful region. These steps will ensure that your investment is secure and that you can enjoy your new home without any unexpected issues. Start by researching the area and identifying properties that suit your preferences and budget.

Once you've identified a property that captures your heart, it's essential to understand the legal requirements for foreign ownership in Mexico. For properties located within 50 kilometers of the coast or 100 kilometers of a border, you will need to acquire a bank trust, known as a "Fideicomiso." This involves a Mexican bank holding the property's title on your behalf to comply with national regulations.

You will frequently hear the term “Fideicomiso,” which translates to “Bank Trust” in English. This legal instrument is central to various discussions about property ownership in Mexico, particularly for foreign investors. It provides a pathway for foreigners to own property within restricted zones, such as coastal and border areas. In this document, we will examine the complexities and details of the “Fideicomiso,” providing you with all the information and elements for you to buy your dream home in Mexico.

These areas were safeguarded to ensure national security and sovereignty. The Mexican government aimed to protect these strategically important regions from foreign influence and control. This constitutional provision was part of a broader effort to maintain national integrity and security in the face of potential external threats.

However, as Mexico's economy grew and the demand for foreign investment in real estate increased, the government sought ways to accommodate foreign ownership while still maintaining constitutional protections. This led to the introduction of the “Fideicomiso” system in 1973, a mechanism that allows foreigners to acquire beneficial rights to property within the restricted zones without directly owning the land title. The bank trust system thus balances the need for foreign investment with the imperative of safeguarding national interests.

Before I continue explaining how the “Fideicomiso” works, it is important for you to know that this is a secure way to buy a property as a foreigner. There is a process and costs involved in the creation of the “Fideicomiso,” but in the end, having control, security, and long-term ownership will bring you peace of mind, knowing you have made the right decision. This assurance allows you to continue with your retirement plans confidently.

Additionally, a permit from the Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores) will be required to officially register the property deed. The bank begins by requesting a permit from the Ministry of Foreign Affairs in Mexico City. This step is essential to ensure that your purchase complies with Mexican regulations regarding foreign ownership.

Once the permit is granted, it will be valid for 50 years and can be renewed for as long as you or your heirs wish. This long-term validity is a significant benefit, providing stability and continuity for generations to come.

To ensure a smooth transaction, it is highly advisable to engage an attorney who specializes in real estate. This legal expert will handle all documentation required for purchasing a property, coordinating the Fideicomiso process with the bank, including conducting a thorough title search to confirm that the property is free from liens or encumbrances. They will also verify that the plot measurements align with the plans registered at the city hall, ensuring that everything is in order and compliant with local regulations. This due diligence is crucial to safeguard your investment and provide peace of mind.

In Mexico, instead of having title companies like in the US and Canada, the role of ensuring legal security and the veracity of legal acts falls to the Notary Public. The Notary Public is responsible for guaranteeing that all relevant laws and regulations are complied with during the property transaction process. Their expertise provides an additional layer of assurance for both the buyer and the seller, ensuring that the transfer of property is conducted legally and transparently.

Your attorney will provide the permit he processed with the Ministry of Foreign Affairs, together with all documents showing the property is clear of any issues, and proceed to closing. At closing, you will meet the Notary Public, Bank representative, and you will sign two documents: one will be the “Fideicomiso”, and the second document will be your deed of trust.

When you have signed all documents, your attorney and their team will ensure that the paperwork is sent to the Public Registry of Property and Commerce. They will handle the registration of the property in your name and the bank trust and take care of paying any state taxes involved in the transaction.

Several property taxes are involved in each real estate transaction, including fees for the creation and setting up of a Fideicomiso. The Notary Public’s team will provide a detailed breakdown of each tax and legal fee. Two major taxes are the Real Estate Acquisition Tax, which is a state tax. The percentage of this tax depends on the location of the property as determined by the local county.

Once all documents are signed, the bank representative will inform you of the timeline for processing your deed and Fideicomiso. You will be advised when these important documents will be ready for you. In the meantime, your keys will be waiting, allowing you to move into your new home and start enjoying the peaceful and vibrant life that Yucatan has to offer.

What happens if you are buying a property with a “Fideicomiso” in place?

This is great news!

When the property you want to purchase has an existing “Fideicomiso,” you will pay only for the rights to be transferred to you.

You will not pay to get a new permit from the Ministry of Foreign Affairs in Mexico City.

As a result, the associated fees are typically lower, and the overall process moves more swiftly, since you bypass the step of obtaining a new permit from the Ministry of Foreign Affairs. This streamlines your closing, helping you settle into your new home in less time and with fewer expenses.