Property Title in Mexico

How Title Works in Mexico

If you’re familiar with how property title works in the US, there are many similarities and a few key differences. Rather than a title company or closing attorney, a notary public (notario publico) prepares the transfer. This government-appointed, highly-trained lawyer researches deeds related to your property along with other state-provided documentation. The notario determines to whom the title belongs and prepares the proper paperwork to enable a successful real estate transfer.

Throughout this process the notario publico will identify:

• Other ownership claims on the property
• Liens on the property (a mortgage, for instance)
• Improper or erroneous historical documentation of title transfer
• Other outstanding debts against property
• Easements related to the property (situations where others have limited rights to use
• the property)
• Restrictive covenants (i.e. homeowners association rules)
• Encumbrances (i.e. unpaid property taxes, debts related to home improvements–any
• Outstanding debts that could become the buyer’s responsibility upon transfer of title.)

Complications related to these subjects could delay or invalidate your ability to purchase a particular property in Mexico.

You should note that a public notary is representative of the state and not an advocate for the buyer. Therefore, it’s best for buyers to enlist an attorney from a Mexican law firm throughout the purchasing process. This attorney will perform a separate title search to determine the chain of ownership; discover any liens, claims, or other defects that could complicate the sale process; and devise a path forward for a potential buyer. Also, if you happen to be dealing with a nefarious real estate agent, seller, or developer, a lawyer will be able to sniff these out before you get too deep in the transaction process. Essentially, they’ll help you handle surprising situations while supporting you through the process of purchasing your Mexican home.

Also, if you are seeking a mortgage your lender will likely initiate a title search to ensure that their investment in the property is sound. Keep in mind that until you pay off your mortgage your lender will hold title over your property.

Assuming that the title is clean, you can move forward with purchasing residential property in Mexico. Once you’ve completed the transfer of property title and the sale has gone through, it’s imperative that you gain possession of the original title deed from either the notary or your lawyer. This is a certificate of registry within the Public Registry of Properties. It confirms your property has been registered with the right authorities and that you hold title to it.

How Does the Fideicomiso Affect Title?

This is an important question considering that foreigners aren’t technically allowed to own land within 50 km of the Mexican coastline or 100 km of Mexico’s borders. Fortunately, the fideicomiso provides a loophole that enables foreign buyers to enjoy all rights of property ownership. You can purchase real estate in the “Restricted Zone” through a trust with a Mexican bank, of which you are the beneficiary. As the trustee, the bank technically holds the title while you retain all the property rights you’d expect. You can renovate, sell, and enjoy all other rights of property ownership that a conventional buyer would.

Purchasing on Ejido Land

Your lawyer will help you determine if the home you want to buy is on ejido land–land that is actually communally owned by a large group of citizens. Roughly 40% of Mexico’s land is actually part of an ejido. If your potential home rests on this land you will be able to gain possession of the home, but because the property is technically communal you will not hold legal title over it.

Ejido property can be “regularized” to become non-ejido land, but this process is complex, lengthy, and expensive. Therefore, most purchase these homes on what are known as Agrarian terms. There will be no Title Deed that transfers ownership rights. Rather, you will obtain a Transfer of Rights (Cesión de Derechos) and a Record of Possession (Constancia de Posesion) to signify your relationship to the property.

People often live happily on ejido property. Understand, however, that since the land doesn’t fall under your legal title there are limits to how you can use it. For instance, you will likely struggle to insure the home, won’t be able to use it as collateral, and disputes related to the property will be heard by Agrarian, rather than Civil, courts.

Most properties that appeal to foreigners don’t fall within ejidos. But, if you’re the kind of person who likes something off the beaten path, your ideal location might have this unusual quirk. Work with a lawyer to determine how to move forward with purchasing this property or use their expertise to help make sure you don’t fall in love with a property to which you cannot gain legal title.

Do I Need Title Insurance For a Home in Mexico?

Title insurance–insurance that protects the buyer/lender from any claims against the property or hidden title issues–is such an ingrained aspect of the American home-buying process that many buyers south of the border take it for granted. Perhaps this is a reason that, recently, title insurance has found a stronger foothold in the Mexican real estate market. Despite this trend, Mexican lawyers and real estate agents will often tell you that title insurance is unnecessary. Your own legal counsel is there to ensure that all transactions are legitimate and lasting for you while the notary public are there for clerical reasons, not necessarily to protect your interests.

If you have any specific questions about your own real estate journey–especially if that journey is taking you through Mexico–contact Far Homes. We’d love to provide you with even more specific information on finding your own pocket of paradise in Mexico.