Penner & Associates - Mexico Law Firm and Business Consulting for Mexico

For professional assistance & information on legal & business matters regarding Mexico and Latin America, please contact:

Please contact us at our Mexico offices located at:
Apartado Postal No. 9
San Miguel de Allende, Guanajuato, Mexico
TEL. US.: (800) 856-5709
Local Phone (415) 152-3648

e-mail E-MAIL


At our Phoenix or Mexico Offices
P.O. Box 42773
Phoenix, Arizona 85080
Tel: (623) 242-7442

e-mail E-MAIL

Montecito no. 38 Piso 37 Oficina 37
Edificio World Trade Center
Colonia Napolis C.P. 03810
Mexico, Distrito Federal

Tel: (55)5351-0438





Choose one or more:

Agency for Real Estate in Mexico , Agrarian and Other ( Ejidos , Ranching and Farming , Forestry , Colonization Districts , Other Rural Private Land ) , Appraisers , Calculator for Mortgages , Condominiums , Commercial and Industrial Property , Construction Loans , Escrow - Formally Unknown , Introduction , Links , Mexico Realty Offerings in the U.S. , Mortgage Lenders , Notary Publics , Permits, Filings & Calvo Clause ( Permits, Public Registry of Property , Additional Filings , Calvo Clause ) , Publications Available , Residential Property , Residential VS. Business Property Classification For Foreign Investment, Restricted Zone , Sonoran Real Estate Agent Law , Settlement Company , Subdivisions , Time Share in Mexico , Title Diagram , Title Insurance , Title Insurers , Title to Real Estate ( Direct Title , Trust Title , Corporate Direct Title) , Title vs. Contract , Transfer Costs , Values Set on Real Estate.




SEE REAL ESTATE ISSUES IN ARIZONA LEGISLATION (Through the Arizona Department of Real Estate)


TERMS and CONDITIONS for title closing on Prop. lot with new house

Historical overview of the laws on land in Mexico



Agency for Real Estate in Mexico: In Mexico, there is no requirement for persons acting as agents or brokers of real estate to be licensed as such or to have received education in the subject matter of real estate (*). As well, there is no recovery fund for real estate agent,broker deals that went bad. In other words, anyone can call themselves a real estate agent or real estate broker.

There is a term in Spanish "Corredor", which loosely translated could be interpreted as "broker". In Mexico, however that term refers to commerce in general ( as in "Corredor Público" ) and not real estate specifically. The "Corredor Público" in Mexico is licensed and registered as such to intervene in commerce transaction of goods to give it certain formality and has nothing to do specifically with real estate.

*There is a voluntary registry of real estate agents with PROFECO in Mexico City. This office is Mexico's Department of Consumer Protection ("Protección al Consumidor") and it's normal duties are to enforce Mexico's Consumer Protection Law. Most real estate agents are not registered there nor do they even need the registry.

There is a real estate agent / broker organization in Mexico known by the letters AMPI ("Asociación Mexicana de Profesionales Inmobiliarios"), which is also voluntary. It has general members' meetings annually where several hundred meet to discuss topics of common interest. Here, they do strive to further their education.

There was an attempt by myself (Vernon Penner) to set up a real estate agent licensing and education mechanism in the state of Sonora in Mexico (and hopefully later elsewhere in Mexico) to provide protection to the consumer public and regularize the sometimes seemingly uncontrolled attitudes of some agents. After bringing it to the attention of the Legal Committee of the Arizona Mexico Commission, there was also an attempt by the committee to present it to the Sonoran legislature (having stopped at the committee level), but now it just sits on the sideline and people have forgotten about it. There appears to be no interest in this subject matter by the Sonoran legislature or the Sonoran agents.



Agrarian ("Ejidos", Ranching /Farming , Forestry, Other)

"Ejidos". Public agrarian land can be dedicated by the Mexican government for use by agrarian communities known as "Ejidos" which are created by federal law and Presidential Decree. Here a agrarian community is created and given the use and possession (not ownership) of certain land. This land is divided into communal (held in common by the members of the "ejido") or "parcelas" (parcels) which are held by individuals (members of the "ejido") for their personal farming use.

The traditional sole purpose of this "ejido" land is farming (mostly)or ranching (very little). It is not to be sold or encumbered in favor of non-members (especially foreigners) for use as an industrial, commercial or residential site.

In recent years, the "ejidos" have been losing political importance and as such, the Federal Mexican Government has seen fit to permit the dis-incorporation of "ejidos" via a dis-incorporation process through the Federal Agrarian Attorney Generalship (approved in a law dated 1992). At the end of the process the "ejido" members are the owners of their parcels, which they can then encumber, lease, sell or mortgage.

Ranching and Farming. Private agrarian land can be used for ranching and farming purposes and held and owned by Mexico's'' farmers and ranchers. In order for foreigners to participate in the ownership of this type land, a special type Mexican corporation is to be set up, in which they (foreigners) can own up to 49% of the "T" series stock.

There are land size limitations as follows:

1. Agricultural land owned by individuals can not normally exceed 100 hectares (247 acres) per individual of irrigated land. Agricultural land owned and used for cotton can not exceed 150 hectares ((371 acres) of irrigated land. There are other specialized types of crops, like coffee, bananas and fruit which may contain larger limits, but not exceed 300 hectares (741 acres) of irrigated land.

2. Ranching land owned by individuals (to rise livestock) can not normally exceed the amount of land necessary to support (produce/raise) a maximum of 500 head of large farm animals (like cows) or its' equivalent in smaller animals.

3. Where the land in question is not irrigated or does not have certain water abundance but must rely upon other means of watering, such as just rain fall, and it is located in more arid areas of Mexico, it is possible the land may qualify for larger sections in some cases.

Forestry. Private agrarian land can be used for forestry purposes and held and owned by Mexican individuals. In order for foreigners to participate in the ownership of this type land, a special type Mexican corporation is to be set up, in which they (foreigners) can own up to 49% of the "T" series stock. Individual forest property can any type of timberland with the understanding that there is a limit of size ownership here as well. The sum of hectares that can be owned by one Mexican individual is 800 hectares (1,977 acres).

Colonization Districts. Very little known on its legislation or concept. The Mexican government can, from time to time, set up colonization areas (similar to home steading in the U.S.) in order to promote the growing of human population in a given remote area. It is possible to hold and own land in this area, but there are special rules that govern it, in addition to all the other rules normally applicable to ownership.

Other Rural Private Land. Certain private non-agrarian rural land or non-agrarian forestry land, which due to its nature, may be acquired in larger limits by Mexican individuals and foreigners, provided that the other normal rules are not circumvented. Case at hand would be a desert ecological zone not good for ranching, farming or forestry, where it is placed in a long term irrevocable title transfer bank trust.



There is no formal licensing or education for appraisers in Mexico. Still the use of appraisers is an integral part of title transfer of real estate between the vast public in Mexico as well as for determining the value of real property for annual land tax purposes by the local governments.

Many years ago, it was more common to find independent appraisers, but in recent years most appraisers have become employees or otherwise affiliated with Mexican banking institutions.

To find an appraiser for Mexico, you can contact your local bank branch in Mexico or also, I am aware that there presently exist 2 appraisers in the Tucson, Arizona area that do appraisals on property in Mexico (to directly consult them for details and limits call Bruce Greenberg Tel: (520) 750-8200, Fax: (520) 750-8298; or Jaime E. Gibbons, CCIM Tel: (520) 624-9400, Fax: (520) 624-9200


Calculator for Mortgages: (Website) (Mortgage payments calculator)


Condominiums in Mexico: The several states of Mexico each have laws governing over real estate condominiums. In order to create a real estate condominium, one must comply with a certain process. Please refer to the Condominiums in Mexico section elsewhere in this website for more on this topic.


Commercial and Industrial Property:

Here the property is commercial/industrial due to its intended use. This can be because of its classification by government regulation (like zoning) or because of its use (like building a business or industrial plant on it). The end result is the same. The property is used as commercial or industrial, but not residential.

The land that is held by private parties for commercial or industrial use is subject to the federal, state and corresponding municipality (in which it is located) laws, regarding its use, holding, transfer and encumbering.

This land may exist inside the city limits or outside city limits, it may be "campestre" (countryside), suburban (without services or utilities) or urban (with services/utilities).

Regarding the acquisition of real property in the Restricted Zone by a Mexican company that has (or can have foreign nationality shareholders or partholders), they are required to perform an Additional Filing to that of the Public Registry of Property.

For further classification on how the regulations regarding foreign investment in Mexico view the difference between residential and commercial/industrial real estate, see RESIDENTIAL VS. BUSINESS PROPERTY CLASSIFICATION FOR FOREIGN INVESTMENT elsewhere on this page.


CONSTRUCTION LOANS: It has been brought to my attention that D.P. Consulting Services, Inc. can perhaps assist in seeking "commercial" construction loan financing for the U.S., Canada, Mexico, Central America, Caribbean and the Pacific Rim projects (They apparently do not do "residential") (Note: I am not personally aware of their activities but perhaps they may be worth a call if you are in the market for that or other related financial needs). Tel: (612) 529-4992, Fax: (612) 588-2492. E-Mail: Contact person: Vincent M. Fuller, Regional Director.

Another possible source for a construction - mortgage loans on real estate in Mexico (Collateral International, LLC) 
contact - Robin Reyes at: 
Corp. HQ is in Birmingham, AL
Founded 1933
They offer fixed rate financing with terms up to 20 years for purchases of
homes or condos in Mexico. We will loan up to 70% LTV.
They also offer a construction/permanent loan program for those interested in
purchasing a lot and building a home in Mexico.
Let then know if you need additional information
Best Regards



There is no formal escrow process or escrow company concept in Mexico as a general rule. The buyer and sell show up at the notary publics office to sign the title transfer document. When the seller signs, the buyer pays him. The notary normally does not handle the transactional money but does handle the costs money.


Introduction to Real Estate in Mexico:

All land in Mexico is in foundation originally owned by the Mexican Nation and thusly the Mexican Government, wherefore eminent domain exists in Mexico. The land is divided into public , social and private. The public land being owned exclusively by government, social being set aside for federal social programs and the private being owned by private or public parties ((individuals, created persons [like companies] and also government agencies when holding for non-governmental purpose)).

Public land is owned and held by the federal and Local government agencies and used exclusively for government service goals and purposes.

Social land is that which is set aside for use in federal programs setup exclusively to provide help and assistance to certain sectors of the Mexican population. The best known and most common is the agrarian community type known as an "ejido".

Private land can either be subject to the agrarian rules due to its location and classification or subject to the rules of private residential, industrial or commercial use.

There are limits on foreigners regarding which land they can own or how they will hold title, depending on its physical location or its intended use or both.




Foreign Investment Law Section. AMPI ("Asociación Mexicana de Profesionales Inmobiliarios")


Mexico Realty Offerings in the U.S.. When considering the possibility of listing or offering a specific parcel of land or structure located in Mexico to the public in the U.S., it is wise to first contact the Department of Real Estate in your state to see if there are any restrictions or what the liability might be if the sale goes bad or the property is not as offered.



There presently exist mortgage companies in the U.S. that will lend mortgage money on second home type houses in Mexico for U.S. residents. These companies come and go. I suggest you contact them to investigate whether they are still offering. This is a constantly changing list with some coming in and others going out of the business.



NOVA Home Loans (Contact Raymond Desmond) (Nova Financial Center, 6245 E. Broadway Boulevard, Suite 400 or Suite 200, Tucson, Arizona 85711) Tel: (520) 745-0050. mobile (520) 977-4000, toll free (800) 955-9125 ; ; (loan officer - Lisa Carzoli

Bank United 3200 Southwest Freeway , 27th Floor, Houston, Texas, 7707 (telecopier 713-543-7981) Contact Mary Johnson (713-543-3332) Maximum loan $500,000.00 US, Minimum loan $30,000.00 US. Contact them for interest rates, qualifying ratios, loan-to-value-Purchase transactions, Loan-to-Value-Refinance Transactions.

Metrociti Mortgage Corporation: Tel: (310) 575-3055

INTERMAC, International Mortgage Resources Corporation: Tel: (800) 727-3037 or (281) 298-6481 or e-mail

WE NO LONGER HAVE WORKING NO'S FOR Marilyn King (Phoenix tel: 602/ 922-1817 , 809-7136) has informed me of the possibility that she may be able to acquire "loans for business or real estate properties in Mexico or helpers for people with disabilities."

( 14607 San Pedro, Suite 202, San Antonio, Texas, 78232, Tel: (210) 490-1130, Fax; (210) 490-1169, u.s. toll free (800) 370-1130, email (Note: I am not personally aware of their activities but perhaps they may be worth a call if you are in the market for that or other related financial needs). It appears to be an affiliate of Collateral Mortgage Inc.

Another possible source for a mortgage loan on real estate in Mexico (Collateral International, LLC) 
contact - Robin Reyes at: 
Corp. HQ is in Birmingham, AL
Founded 1933
They offer fixed rate financing with terms up to 20 years for purchases of
homes or condos in Mexico. We will loan up to 70% LTV.
They also offer a construction/permanent loan program for those interested in
purchasing a lot and building a home in Mexico.
Let then know if you need additional information
Best Regards


Mr. Penner,

I came across your website and would like to have our company included.

What steps would we need to take?  We are a mortgage company that is a

lender on properties in Mexico.

  Also, I noticed that you have a PAMPHLET ON THE "A B C's OF REAL ESTATE


Best Regards,

Stuart Schmal

Senior Loan Officer

First Source Financial

800-254-2251 ext 112

866-466-1470 fax


Dear Mr. Penner,

Good news.  We are off to a good start.  We are constantly learning how to make the loan process as streamlined as possible and are ready for phase two of our pilot program.  Adjustments have been made to speed up delivery and we are anxious to implement them. Our goal is to deliver the best product available in a timely manner that will ensure total customer satisfaction and make your business a success.

We are looking for purchase transactions that need financing in the Puerto Vallarta, Los Cabos, Puerto Penasco and Loreto Bay areas to use in the second phase of our pilot program. During the program your customers will be treated with extra care as they experience closing an American home loan in Mexico.  In exchange for their participation they will be given special considerations on many fronts including closing costs. 

Process enhancements will be introduced such as:

·      Live status reports will be sent to you and your client via email as different tasks involved in the loan process are completed which will save you time and enhance your professionalism. 

·      The buyer and seller will be given complete instructions upon buyer (borrower) loan pre-approval including tax, title, and trust issues, which will eliminate apprehensions many American buyers have.

The pilot program loan parameters are as follows:

·      Term:  20-year fully amortized loan. 

·      Interest rate:  7.99% fixed for the first 4 years.

·      Index:  6-month LIBOR, rate adjusts semi-annually after the first 4 years.

·      Adjustments:  After 4 years, rate adjusts to 6-month LIBOR index plus a fixed margin of 4.50%, today the fully indexed rate would be 7.65%.

·      Closing costs:  2 points plus standard Mexican closing costs.

The pilot program loan restrictions are as follows:

·      Properties must be located in Puerto Vallarta, Los Cabos, Puerto Penasco or Loreto Bay.

·      Vacation homes and primary residences only.

·      Single family residences and condo purchases only.

·      American buyers (borrowers) only.

·      Full income and asset documentation required. 

·      Minimum FICO score:  700

·      70% LTV maximum on properties up to $700,000 in value; 60% to $850,000 in value; 50% to $1,000,000 in value.

If you have American clients who are purchasing a vacation home or primary residence in the Puerto Vallarta, Los Cabos, Puerto Penasco or Loreto Bay areas, please have them apply online for loan approval at My team of Mexican property loan specialists will determine whether they meet the required specifications for our pilot program and proceed to contact them.  If your clients require assistance or if they are unable to apply online, the initial contact person on my team of Mexican property loan specialists is Lisa Carzoli.  Lisa has 10 years of combined loan officer and loan processing experience.  She has been with Nova Home Loans for the past 5 years.  Lisa has more than proven herself as a highly successful loan officer and loan processor.  She can be reached by email at lisa@novahomeloans. Her direct line at my office is (520) 202-5229.  The entire team including myself can be reached toll free at (800) 955-9125.

Once the pilot program is complete and our systems meet my expectations, we will roll out an enhanced program with expanded criteria and a more streamlined process. 

We look forward to working with you and your clients!

Raymond Desmond

Business: (520) 745-0050
Mobile: (520) 977-4000
Fax: (520) 745-8021
Toll Free: (800) 955-9125 

Nova Financial Center
6245 E. Broadway Boulevard
Suite 400
Tucson, AZ  85711  

Monday, April 3, 2006 marked the launch of International Mortgage and Investment Group’s Mexican Loan Program. With Kevin Hardin as CEO, Timothy Kelley as Chief Operating Officer and with Marketing under Tracy Smith, IMI Group is now offering financing for Americans looking to purchase or refinance property in Mexico. Combining the expertise of its principals, IMI Group joins together the experience of over 20 billion dollars in Latin American debt issues, 10 billion dollars in mortgages sold to the secondary market and nearly 200 million dollars in real estate projects managed in Mexico, with offices in Arizona, New York and Austin, Texas. 

IMI Group is marketing this loan program through its Realtor / Developer network as well as through U.S. / Mexico Mortgage Brokers. This allows those business partners to offer this program as a value added service to their existing customers. Although this is the primary marketing vehicle for IMI, borrowers can still apply direct for a mortgage on IMI’s website at


Notary Publics

Notary Publics in Mexico are first licensed attorneys, which then apprentice in the specialty of notary public for an undefined period. They take an exam of qualify for the post and if they pass and there is a post open, the Governor of the state they are in will appoint them.

Almost all title of real estate transfers, all incorporations of commercial entities, many types of powers of attorney, wills and more are all perfected (certified) under the hand of the notary public by means of a public instrument (escritura pública).

Testimonies (original reproductions) of the "escritura pública" are what are given to the public (including the intervening parties) and are used for registry purposes at the Public Registry of Property (and Public Registry of Commerce).


Permits, Filings & Calvo Clause

Permits: (requirements change from time to time): 1.) A permit is required from the Secretariat of Foreign Affairs/Relations (acquirable in the state delegation offices of the head office in Mexico City) through their "Constitutional Article 27 Permits Department" in order to create title transfer bank trusts in favor of foreigners on real property in Mexico. 2.) As a general rule foreigners are to acquire a permit from said agency when they wish to acquire title to real estate in Mexico. However, the agency can set-up general scenarios in which they will not need to specifically request a permit (just the Calvo waiver would be sufficient in these cases), which general scenario cases will never include property located in a municipality totally or partially located in the Restricted Zone (wherein more formality is always required - i.e. the specific permit). The list of municipalities is published by the National Statistics Institute of Mexico. 3) There may also exist a requirement of a permit form the National Registry of Foreign Investment in order for the foreigner directly, via a title trust and/or a Mexican corporation take title to real estate in Mexico (requirements change from time to time) (note: at the least, there is a need for registration filing, see "Additional Filing" below).

Public Registry of Property All titles, limitations on titles and encumbrances on titles of real estate are to be registered at the Public Registry of Property corresponding to the Location of the property (normally one for each city or municipality).

Additional Filing: 1.) The companies (with foreign investment or that can have foreign investment) are to provide notice of the acquisition of real estate in the Restricted Zone to the Secretariat of Foreign Affairs/Relations of Mexico, via its Head Office of Permits (Dirección de Permisos) for Article 27 of the Constitution or its Regional State Delegations of said office, within 60 days of the acquisition of the real estate. 2.) Acquisitions by foreigners of real estate in Mexico via the title transfer trust require notification to the National Registry of Foreign Investment. 3. Form time to time the Immigration Authorities, as well as the National Commission or Foreign Investment (in general terms synonymous with National Registry of Foreign Investment) are involved in approval of acquisition of real estate in Mexico by foreigners. You can acquire specifics on your case by contacting these authorities or in many cases by inquiring with a knowledgeable Notary Public in Mexico.

Calvo Clause: The Mexican federal authorities require that foreigners that wish to acquire rights in Mexico in general, agree to act as a Mexican national regarding all matters concerning these rights and those obligations that may arise in relation thereto; to submit themselves to Mexican courts and laws relative thereto, and not to invoke the protection of their foreign governments in regard to these rights and obligations. In other words "When in Rome do as the Romans".

The Mexican federal authorities in present day have an extended hybrid of this clause which they use. It is a pre-requisite for many permits and authorizations.



1. BOOK - REAL ESTATE IN MEXICO AND THE FOREIGNER. Published in English by Vernon Penner, Esq. It gives a detailed accounting of the elements relative to issues of real estate ownership, title, registration, the parties involved, trust holding, limitations, use and many other subjects regarding private property in Mexico. Price $35.00 Dls. U.S. + $7.00 shipping and handling (Please send payment to Vernon Penner, at P. O. Box 42773, Phoenix, Arizona 85080).

2. PAMPHLET ON THE "A B C's OF REAL ESTATE TRANSACTIONS IN MEXICO FOR FOREIGNERS. Published in English by Vernon Penner, Esq.. A smaller publication than the preceding, however, good for the individual that wishes to purchase a house or condominium in Mexico. It also provides a basic step by step description of the parties involved in a normal real estate transaction in Mexico (seller, buyer, real estate agent, notary public, attorney, trust bank, taxing authorities, government authorities, registries, title documents, types of transactions, powers of attorney and other related issues). Price $15.00 Dls. U.S. + $4.00 shipping and handling (Please send payment to Vernon Penner, at P. O. Box 42773, Phoenix, Arizona 85080).

 3. There are other publications on other subject matters. See Publications elsewhere in this website.


Residential Property:

Here the property is residential due to its intended use. This can be because of its classification by government regulation (like zoning) or because of its use (like building a residence on it). The end result is the same. The property is used as non-commercial and/or non-industrial, and for residential property.

The land that is held by private parties for residential use is subject to the federal, state and corresponding municipality (in which it is located) laws, regarding its use, holding, transfer and encumbering.

This land may exist inside the city limits or outside city limits, it may be "campestre" (countryside), suburban (without services or utilities) or urban (with services/utilities).

For further classification on how the regulations regarding foreign investment in Mexico view the difference between residential and commercial/industrial real estate,see RESIDENTIAL VS. BUSINESS PROPERTY CLASSIFICATION FOR FOREIGN INVESTMENT elsewhere on this page.



For the purposes of better defining the terms of that set forth in Article 5, Title Two of the Foreign Investment Law of Mexico (regarding foreign investment in real estate in Mexico), it has been determined that real estate used for "Residential Purposes" is to mean any real estate destined "exclusively for residential use by the owner or third parties".

The following activities or qualifiers, without limitation, shall determine real estate as held for non-residential purposes (for purposes of this section): (i) that real estate destined for time-share use; (ii) that real estate destined for any industrial, commercial or tourism activity that simultaneously contain a residential use component; (iii) that real estate acquired by credit institutions, financial intermediaries, and auxiliary credit organizations for the recovery of debts owed to them from their course of business (as foreseen in their corporate purpose); (iv) that real estate used by entities in the course of their business consisting of sale, urbanization (development), construction, subdivision, and all other activities included in the development of real estate projects, until these are commercialized or sold to third parties; and (v) generally, that real estate destined for use in commercial, industrial, agricultural, cattle, fishing, forestry or service-related activities.

When there is doubt in respect to whether real estate is to be considered as destined (used) in residential activities, the Ministry of Foreign Relations (Foreign Affairs) will resolve the corresponding consultation in a period not to exceed 10 business days . If this period has transpired without response to the consultation, the real estate in question shall be understood to be of non-residential activities.

When there is doubt in respect to whether real estate is within or out of the Restricted Zone, the Ministry of Foreign Relations shall resolve the matter, but first it will consult the National Statistics, Geography and Information Institute of Mexico.


Restricted Zone:

The land located in this zone (beach and border areas) is not permitted to be directly owned by foreigners. However, a specific long term irrevocable title transfer bank trust system was created years ago to facility the acquisition of this land by foreigners. Please refer to The Restricted Zone in Mexico elsewhere in this website.



There is a company in Baja California Sur that was put together to provide certain of the services that escrow companies do in the U.S. (Normally there is no escrow concept in Mexico. Closings are done with the buyer and seller showing up at the Mexican Notary Public's office simultaneously and signing the transfer documents and the buyer delivering the purchase money). Any feedback on results from using this company will be appreciated.

(The Settlement Company) Tel: (114) 142-2016


Sonoran Real Estate Agent Law

There has since been a revision in 2007 and now the Federal Mexican government is looking into the whole matter, thinking that perhaps it is time to consider doing a licensing in a federal level. 





The Law passed May 21, 2002. and took effect immediately upon publication (May 25th). The Regulatory law for its application was passed August 5th. Although they are working on its implementation, it appears to not yet be enforced as of this writing (November 3rd, 2002). The following is a summary of the Law itself.

The Law is regulated and enforced by the Secretariat of Economic Development and Productivity (Secretaría de Desarollo Economico y Productividad), hereafter referred to as Secretariat, with technical support from the Institute of Property Values and Registries of the State of Sonora (Instituto Catastral y Registral del Estado de Sonora)

Law requires all Sonoran real estate agents to register themselves in the State Registry of Real Estate Agents. In order to register, agents must:

-Present personal identification and pertinent information relating to their business and its location(s)

-Accredit their professional training, specialized knowledge and experience in real estate sales

-Agree to enroll in training programs on a regular basis and provide proof of completion

-Prove they have not been convicted of any crime of fiscal malfeasance or of any other serious crime

Following initial registration, real estate agents must:

-Comply with legal norms for real estate brokers as established by the Secretariat and/or existing law

-Re-register regularly as required by the Secretariat

-Advise the Secretariat of changes in registry information submitted

-Permit inspectors to make on-site visits, as established by regulation

Sanctions for non-compliance range from fines to suspension of registration to removal from the state registry, depending on the offense. Three offenses within a three-month period constitute grounds for possible removal from the registry.

Registry information is open to the public

Regulations for the new law will be submitted within 45 days of the of effective date of the law, after which date agents have three months to register.

NOTE: More recently there is an interpretation that it is no obligatory to register or take continuing educational classes in order to be a real estate agent in Sonora. The reader should seek more information on this subject matter.

Subdivisions in Mexico: The laws of the states of Mexico each have laws governing over real estate subdivisions in their respective states. In order to create a real estate subdivision, one must comply with a a multi-stage process. Please refer to the Subdivisions in Mexico elsewhere in this website for more on this topic.


Time Share in Mexico

Timeshare as a means of use of real property is recognized in Mexico. The two federal laws that directly cover this topic are the Federal Consumer Protection Law and the Official Mexican Norm number NOM-029-SCFI-1998 (Commercial Practices - Informational Requirements for the Commercialization of the Time Share Service). The State of Sonora (a northern state of Mexico) has also created a state level legislation regarding time share and its' sale with that state (there are some other states in Mexico that have their own state law regarding timeshare).

Please remember, that when purchasing timeshare in Mexico, the Federal Consumer Protection Law provides the buyer a 5 day right of recission (right to cancel and get his money back). Even if the selling agent gets you to sign a waiver to the 5 days, you still have the five days (they are not waivable)



Sellers' Title of Real Estate: <Notary Public Public Instrument held in Testimony or certified Copy of Testimony>

Title Held due to: <Sale/Assignment of Title> <Court Order> <Government Title>

Location of Real Estate (for Foreigner) in Restricted Zone : <Trust Title -Trust Bank> <Corporation holding Direct Title for business>

Location of Real Estate (for Foreigner) outside Restricted Zone : <Trust Title -Trust Bank> <Corporation holding Direct Title> <Direct Title>

Seller: <Agent and/or Attorney>

Buyer: <Agent and/or Attorney>

Prepare New Notary Public Public Instrument of Title Transfer:

----Documents-for-Closing- - - - - - - - Content-of-New-Title-Document-(Direct)---------------
----(2)Certificate-of-No-Liens--------  *Title-Transfer-or-Retention------------------------
----(3)Appraisal----------------------- *Sale/Assignment Contract (with or without Trust)/ Judgement
----(4)Land-Tax-Receipts------------- *Certification by Notary-----------------------------
-- -------------------------------------------------------------------------------------------------


Title Insurance: The issuance of an insurance policy to cover against risks on the title of real estate is a concept familiar in the United States but not in Mexico. However, with the advent of U.S. and Canadian citizens coming to Mexico to acquire a second home or lot on which to build a house and with the financing of these items and the financing of building or purchasing commercial properties in Mexico by U.S. and Canadian based banks and financing companies, the commercial viability of title insurance is present. The U.S. and Canadian buyers and builders want this title insurance, since that is what they are comfortable with. As such, there are presently title insurance companies offering this service. See Short Title Insurers List below.



AS OF MAY 2008 THERE IS A NEW AND ADDITIONAL TITLE INSURER IN MEXICO. its LandAmerica Title Insurance Company of Mexico, S.A. (1-877-252-6326) or e-mail

There presently exist title insurance companies in the U.S. that may issue title insurance on the "second home" type houses in Mexico for U.S. resident.

(NOTE: no representation is made regarding this list or the companies mentioned)

Lawyers Title of Arizona (520) 748-3500 (Douglas Thompson)

First American Title

Stewart Title Guaranty Company 

José M. Pallí - independent agent with World Wide Title tel: 305-670-9849, fax 305-670-9852

Title Insurance de Mexico, S.A. de C.V., Av. Patriotismo No. 671, 1er Piso, Colonia San Juan, 03730, Mexico D.F., Tel: (52-5) 209-0135, 209-0136, Fax: (52-5) 209-0156, E-Mail: . (affiliated with Grupo Nacional Provincial, S.A.)

Titulación Inmobiliaria Internacional, S.A. de C.V. / in the U.S. - 6032 Lake Worth Blvd., Fort Worth, Texas, 76135, U.S.A. Tel: (817) 237-5000, Fax: (817) 237-4298; and in Mexico - Parral No. 6 Esq. Juan Escutia, Colonia Condesa, C. P. 06140, Mexico, D.F., Mexico, Tel: (52-5) 211-6686, 211-6986, 211-7061, Fax: (52-5) 286-4262. (Kenneth R. Klein), (affiliated with Seguros Interamericana Independencia, S.A.)

Title Insurance de Mexico, Webpage: Title Insurance de Mexico, E-Mail: (or ) , Tel: in Mexico (5) 209-0135, 209-0136 , Fax: in Mexico (5) 209-0156. (Note: This is a company I have recently been advised of. They may be worth a call). On Wednesday, January 20, 1999 11:35 AM, they advised us that: Title Insurance de México, S.A. de C.V. has brought together the Chicago Title Insurance Company and Grupo Nacional Provincial in a strategic alliance with the specific purpose of bringing title insurance policies to the international marketplace for real estate transactions within the Mexican territory; that these policies are licensed and approved by the Mexican Insurance Commission; and these Title Insurance Policies are almost a copy of the ALTA policies that are so familiar to all real estate transactions that take place every day in the U.S. If you need additional information ask for Arq. David Alkón.

Fidelity Title Insurance. I have been advised that this comnpany is also providing title insurance on Mexico real estate. I do not have their particulars but they should be available on the internet.


Title to Real Estate:

Direct Title. This is where the title of ownership is held directly by the acquirer, and almost always via a notary public, public instrument, wherein the owner/seller sold and transferred title to the new owner/buyer.

Trust Title. This is where the title of ownership is held by a Mexican federally licensed bank (to act as a fiduciary), who obtains a permit to acquire the property title in a long term irrevocable title transfer bank trust. In this case the seller transfers title of the property to the fiduciary bank via a notary public, public instrument, wherein there is a sales transfer of title and as well, the creation of trust in favor of the buyer/beneficiary. This trust mechanism is used when the buyer does not qualify to acquire direct title (potential alternative is title in a corporate name).

Corporate Direct Title. This is where the direct title is taken in the name of the Mexican corporation, which in turn is owned (via the stock or corporate parts) by the shareholders of the company. This is used most in the cases of a functioning entity that acquires a corporate domicile, plant or development land. It can also be used as a means to permit a foreigner to acquire title in the Restricted Zone (rather than use the trust system) via his company for commercial or industrial use of the land (and not for residential use). (note: there are limits on the amount of foreign ownership permitted in Mexican companies, depending on the business activity it performs : see the "Foreign Investment law", and there will be an asset tax on assets held by commercial entities).


TITLE VS. CONTRACT, Their Comparison:

(Although it can be said that, in generic terms, title has passed to buyer upon simple verbal agreement and compliance of transaction, it is not wise to pay purchase price until public instrument and registry have taken place).

PRIVATE-CONTRACT -------------------------PUBLIC-INSTRUMENT ---------------
Unperfected-Title (*)-----------------------------Perfected-Title---------------------------
Withhold-money---------------------------------Money-Paid (***)-----------------------

(*) Title is no perfected either because it is only a promise to deliver title or because the final formal (registerable) title document has not been executed, or both.

(**) At the Public Registry of Property corresponding to the location of the real estate. Registry should take place ASAP after signing final public instrument.

(***) At signing the final formal public instrument at the notary public's office (note: there is a difference between just ratifying signatures on a document and the execution of a notary public public instrument).


Transfer Costs on Sale of Real Estate The calculation on closing/transfer costs for real estate in Mexico, is not easy to determine, in that additions, subtractions, divisions and multiplications are done using several numbers, including official general salaries for the area in which the property is located. This calculation process is normally left to the Notary Public that is formalizing the transaction (or the accountant in which the notary has confidence), since it will be the responsibility of the Notary Public to collect these costs (including but not limited to certain taxes). If the buyer insists on getting s general idea of what closing (transfer) costs might add up to, I usually tell him that they may be a number equivalent to approximately 6% or 8% of the official declared sales price (that is set forth in the title transfer document).


Various Values Set on Real Estate in Mexico The Government Holding Land Tax Value, The Appraised Value, The Transaction Value, The Ideal Commercial Value, and The Depreciation Value.


(USA) See Real Estate Issuses in Arizona Legislation

(Township measurement runs North to South & South to North)
(Range measurement runs East to West & West to East)
example NE1/4 of the NE1/4
Triangulation system (Æ) is the land surveying system used / 1North 1 East (starts from a meridian - in Phx,Az it is the Gila & Salt River meridian 119th ave. & Baseline rd)

Township = 36 sections
1 Section = 1 square mile = 640 acres
1/2 Section = 1/2 square mile = 320 acres
1/4section = 1/4 square mile = 160 acres
1/8 section = 1/8 square mile = 80 acres
1/16 section = 1/16 square mile = 40 acres


Terms And Conditions Usable In The Transfer Of Private Residential Real Property In Mexico,
As Related To A Foreigner In Mexico Acquiring Title Via A Title Transfer Trust


Verify the existence of and acquire original documents regarding:

  1. Permit from the Municipal government of Puerto Peñasco, Sonora to build the house.
  2. Payment of all social security debt (to be paid on behalf of the employees) regarding the workers that worked on the house.
  3. Payment of all labor (employee salaries) for all employees that worked on the house.
  4. Payment of all materials that went into the house.
  5. Acquire authorized original of the construction drawings approved by the City.
  6. The determination by the Municipal government and social security, that the construction was completed in proper terms and conditions, all requirements have been fulfilled and all money owed to them therefore has been paid in full by the owner.
  7. Sign-off by the architect (in charge of the construction) to the municipal authorities, stating that all requirements regarding the construction has been fulfilled.
  8. That there is no labor lawsuit pending or completed regarding the laborers that worked on the house.
  9. The house was built on the lot in question and not in part or whole on another’s lot.

Verify that an independent contractor built the house (in which case the contractor is handling the social security, construction permit and the labor – get documents form the contractor). It appears from the papers you sent that an architect is acting as the contractor and responsible party.


Verify existence of and acquire original documents regarding:

  1. Choose and contact the Mexican bank that shall act as the fiduciary (trustee bank) that will hold the title in trust.
  2. Negotiate the costs the bank will charge (acceptance fee, annual management fee, the fees to be charged for isolated events that you, the beneficiary, may wish performed –example, rent, mortgage, sell)
  3. Identify that the trust contract will be an irrevocable (trustor/seller can not cancel after property is placed in the trust), long term (50 year trust, with right to request additional 50 years after 1st 50 years are over), title transfer (full private ownership) Mexican bank (as trustee) form of title trust.
  4. Acquire the corresponding trust permit from the Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores), in order to create and execute the title trust whereby your bank (as fiduciary trustee) and you (as beneficiary) shall take title.


Verify and obtain the proper documents to substantiate the following:

1.The title to be transferred is private property “direct title of ownership” (equivalent to “fee simple”).

2.The title is private property, not subject to any specific governmental programs limiting use, ownership or transferability (“ejido”, “patrimonio familiar”, etc.).

3.Title of ownership to property is registered at the local (Puerto Peñasco, Sonora) Public Registry of Property.

4.The title is registered in the name of the seller.

5.That the seller was not married at the time of acquisition of the lot/house nor has been married since the acquisition of the property (if married then or now, then there is to be a sign-off by the spouse in the title document to create the title transfer into the trust) (otherwise you may only acquire 50% of the property rights).

6.Full and proper physical and legal description of the property to be purchased (lot and house). Since this house is new, there is a need to verify that it is properly registered with the municipal authorities (as a finished and approved construction – and that it is included in the land tax account – “registro catestral”). (The house, if new, may not be registered at the Public Registry of Property in Puerto Peñasco, which can be acceptable, provided that the house is included in the new title trust and all other elements are fulfilled).

  1. There are no encumbrances or liens registered at the Public Registry of Property and Commerce of Puerto Peñasco, which affect the title, possession or use of the property in question.
  2. The lot in question has its own land tax payment number and registry (“registro catestral”) for land tax payment (“impuesto predial”) and that the land taxes in question have been paid through the date (most likely through December 2001) you agreed upon (land tax – impuesto predial is an annual occurrence payable every two months or a full year’s payment within the first two months for the whole year, with a discount).


Verify and acquire those documents which evidence:

  1. There is a validly existing and enforceable subdivision authorization for the subdivision wherein the lot and house are located.
  2. The subdivision permit identifies the lot on which the house is being built.
  3. The subdivision permit and corresponding documents (maps, etc.) have been registered at the Public Registry of Property in Puerto Peñasco, Sonora and do not contradict any other documents or acts therein registered.
  4. The subdivision permit allows the sale of the lot and house in question.
  5. The “Zoning” for the lot in question is single family residential (as approved by the state and municipal authorities).
  6. Any studies, applications, and other compliances required to be performed with the Ecological authorities of Mexico have been performed and all final permits required have been granted by them.
  7. The house in question is not being built in any part on or is any part of the lot in question considered part of, the Federal Maritime Land Zone.


  1. Verify that the seller will pay the Mexican income taxation owing by him (due to the sale) (have the notary public withhold the Mexican income taxation at the time of closing when the buyer pays the sales price). This income tax is the liability of and to be paid by the seller (it is not considered a closing cost for title transfer). If the seller is a non-resident of Mexico, then the income tax is a flat rate on the full income (I believe this to be 25% of gross – due to a recent change in the Mexican Income Tax Law or it still may also offer the 28% of net - this needs to be verified).
  2. Income taxation to substitute beneficiaries- Verify whether there is not an inheritance tax in Mexico (I believe there in not). If the substitute beneficiaries are to receive this property in the future, there may be a Mexican taxation payable by them on value received- need to verify this).
  3. Note that closing costs payable to the notary public (for his fees and expenses, as well as the sums owing to state and federal government for the transfer) are excessive as compared to the U.S. closings. It can easily be 6 to 7% of the appraised value of the property being transferred.
  4. The Civil Code of Sonora determines that if there is no agreement between the parties (buyer & seller) as to who pays which closing related costs, then it is understood to be both parties in equal portions. This is most likely the same in the civil code of each state of Mexico.
  5. The notary public will most likely determine certain taxation for the closing based upon the greater of the declared sales price or the appraised value of the property.


1. Confirm and approve (by you) as to form and content, those terms and conditions to be contained in the title transfer portion of the notary public instrument (whereby the title will be placed into the title trust) - (fully identify all the terms and conditions of a full, unencumbered title transfer, with all proper warranties and guarantees of the seller, backed up with the proper documentation).

2. Fully identify the seller, verifying that the seller has full title and right to sell, assign and transfer the property to the lot and the house. Please note that if the lot has been acquired by a foreigner to Mexico, he must have taken title in an irrevocable Mexican bank title trust (or Mexican business corporation of which he owns the stock, in the case the lot was for commercial purposes – with proper authorizations and registries)

3. Confirm and approve (by you) as to form and content, the terms and conditions to be contained in the irrevocable title trust portion of the public instrument.

4. Verify marital status of the seller (see prior note in this document)

5. Verify who the beneficiaries will be (yourself, spouse, etc.).

6. Verify who the substitute beneficiaries are to be (see section on taxation in this document).

7. Verify that all accessory documents customary to this type of transaction are included (as mentioned in this document - chain of title documents, permit to create trust, certificate of non-encumbrances and no liens with identification of owner from the Public registry of Property of Puerto Peñasco - Sonora, land tax “predial” payment receipts, authorized property appraisal).

8. Verify that the notary has acquired an appraisal acceptable to himself and to you (notice the value the appraiser puts on the property)

9. If a Mexican corporation is involved with the title transfer process (owner in all or part), then there is the requirement of verifying the existence of and acquiring properly authenticated documents which show:

a. The existence of the company (Mexican notary public public instrument containing the incorporation document consisting of articles of incorporation, bylaws and first shareholders meeting);

b. Registry of the company at the Public Registry of Property and Commerce of its corporate domicile;

c. Registry of the company at the National registry of Foreign Investment -if it has or may have a foreign stockholder; and

d. Properly authenticated power of attorney for full and unencumbered authority for acts of ownership – preferably via notary public public instrument power of attorney.


Closing can be defined as that moment in which all parties to the completed title transfer notary public public instrument sign the same. This is when the seller normally expects to receive his/her sales price.

Registries. Once the final long, term irrevocable, title transfer, Mexican bank trust has been created, perfected and protocolized (I assuming that you as a foreigner to Mexico and will be taking title for residential purposes) in a notary public public instrument, all parties (sellers, trust bank and buyer *- if so warranted, and the certifying-protocolizing Mexican notary public) have signed it, and the notary has issued a first and second testimony of the resulting public instrument, then register the first testimony it at the following registries:

    1. Public Registry of Property and Commerce of Puerto Peñasco, Sonora (NOTE: since there will most likely be a time delay between the moment in which the parties sign the title transfer document and the moment in which the notary public or other person registers the title document at the Public Registry of Property in Puerto Peñasco, Sonora, there will be the need for a “Preventive Notice Letter form the Notary Public”. This letter is a notice from the notary to the Public Registry advising the registry that there is a title transfer that has taken place on certain property and that the notary is requesting that the Registry be put on notice that the notary or other person will file this title transfer document with them in less than 30 days. This creates a date of registry priority for the title document, as the date the letter was received by the registry.
    2. National Registry of Foreign Investment – Title Trust on real Property Section.

* There are occasions when the buyer need not sign the title transfer trust document prepared by the notary public. The notary and the bank will advise you. If you do not need to sign, then the rational will be that you previously agreed in writing with the trust bank on the terms of the trust and therefore need not sign this title document. If so, then the trust in the title document is to be the same to which you agreed to with the bank previously.

The trust bank will hold the first testimony and you, the beneficiary buyer, will hold the second testimony.




Purchasing Residential Property in Mexico by Foreigners

Article 27 of the Federal Mexican Constitution of 1917 prohibits foreign ownership of real property within 50 kilometers (approximately 30 miles) of any coastline or 100 kilometers (apprximately 60 miles) of either international land border (north and south). This is referred to as the prohibited or RESTRICTED ZONE.

In 1973, recognizing the need to formally organize and recognize the ownership by foreigners of the real property in the RESTRICTED ZONE  and to further promote foreign investment,  the Mexican Bank Trust, or 'Fideicomiso," was established for the acquisition of the real estate in the restricted zone by the foreigners. This law governing ownership under a the Mexican bank trust was reformed and clarified  in the Foreign Investment Laws of 1989 and 1992.

Residential Property vs. Commercial Property concenrs in the restricted zone  

Residential Property is that which is used for such purpose (irrelevant of  zoning issues, for the purposes of the Mexican Bank Trust), while Commercial Property is that which is used for such purpose (irrelevant of  zoning issues, for the purposes of the Mexican Bank Trust). Where the acquisition by foreigners of real estate in the RESTRICTED ZONE is only through the Mexican Bank Trust, the commercial property may be acquired either through the mentioned trust or through a Mexican business company (please note that the limit on the ownership of the Mexican company is based upon rules set by the Foreign Investment laws - including the limitation based upon the corporate purpose).

 The Mexican Bank Trust

This is the only (exclusive) manner for a foreigner to Mexico (not a Mexican citizen) can hold any kind of long lasting, durable, registered and transferable title to real estate located in the RESTRICTED ZONE. These trusts are normally long term (initially for 50 years and renewable if being used for the purpose set in the trust), irrevocable (the seller-transferer can not take it bank - unless the trust says he can), title transfer of direct title (approximate equivalent to the U.S. fee simple, provided the trust document so states), Mexican bank trust (only a Mexican bank licensed to act as such my be a trustee in these trusts).

There is a trust permit that must be acquired from the Mexican Federal Government. Although the cost for this permit does varty over time, it is approximately $1,200.00 dollars U.S. 

The Mexican trust bank charges a fee to accept to act as a trustee under theses trusts, and also charges an annual trust administration fee. These can be approximately $250.00 dollars to $2,000.00 dollars, depending upon factors like the value of the property.  per year.

The real estate  located within the restricted zone, which includes the entire Baja Peninsula, may be acquired by a foreigner through a bank trust, which designates the buyer of the property as the beneficiary of the trust. Legal title is placed in the name of the bank selected by the buyer as his trustee. The bank administers the property in accordance with the instructions of the buyer/beneficiary. The buyer/beneficiary enjoys the same rights of ownership, as does a Mexican national. He may build on the property, tear down existing buildings, modify them, rent, lease or sell at anytime, conforming only to the governing laws of the country established for all persons.

Purchasing Real Property Under a Mexican Corporation

  Under the 1993 Foreign Investment Law of Mexico, a Mexican business company is considered Mexican under said law, even if all the shareholders are foreigners. Thus, foreigner can acquire real property in direct ownership (similar to fee simple) in the RESTRICTED ZONE. This, however, is only for non-residential property (used for non-residential purposes), such as:

1. Promotion and sale of timeshare rights of  use to real estate  (here no ownership of real estate is given but rather rights of use);

2. For industrial, commercial or tourism activity that may simultaneously contain a residential component for the subsequent buyer;

3, Real estate acquired by credit institutions, financial intermediaries, and auxiliary credit organizations to recover debts owed to them and in the ordinary course of business;

4. Real estate used by entities in the course of their business consistent with sale, development, construction, subdivision and other activities included in the development of real estate projects, until these are sold to third parties that use them for residental occupation; and

  5. Generally, real estate destined for use in commercial, industrial, agricultural, cattle, fishing, forestry, or service related activities.

It is a violation of the mentioned Mexican Foreign Investment Law to place a retirement or vacation home in the name of a Mexican corporation (since it will be used for retirement or vacation of the owner). It will also be more costly than a trust due to periodic tax declarations and taxes on corporate assets.

XXX Contract Process to Purchase Residential Property in Mexico

Most real estate transactions in Mexico will have at least two (2) contracts: (i) an offer and acceptance (oferta); and (2) a purchase‑sale agreement (contracto de compraventa). The first one is a preliminary agreement containing the basic transactional information. They are not the instruments by which title to the property is transferred to the buyer. The second contractional document is the agreement to be "protocolized" by the notario which will transfer title to the buyer.

It may have several different forms:

  1. A real estate trust agreement (contracto de fideicomiso);

2. a reserve title agreement (contracto de compraventa con reserve de dominio) , or

3. an assignment of real estate trust rights (contracto de cesion de derechos fideicomisarios)

The Civil Code defines an agreement (convenio) as an accord (acuerdo) between two or more persons to create, transfer, modify or extinguish obligations. Specifically, the Civil Code defines contracts as agreements that produce or transfer obligations and rights. In general, real estate contracts in Mexico must be recorded before a notary public (notario) and, to be binding on third parties, they must be filed with the public registry of property. Once there is a written acceptance of the offer, it is recommended that the buyer's attorney draw up the sales contract. Since this agreement is the single most important document the buyer will execute with the seller, and the agreement's contents will determine the terms and conditions of the transaction, the buyer should insist that his attorney assume this responsibility.


Contract Process to Purchase Residential Property in Mexico

Historically, earnest money deposits and contractual consideration were given from the buyer directly to the seller. There are now a few Mexican title companies that will utilize U.S. bank accounts for earnest money or you may utilize a few U.S. title companies that have international offices in Mexico to handle the transaction. It is recommended by this firm that all foreign persons purchasing real estate in Mexico utilize credible U.S. title companies such as Stewart Title, First American Title or Fidelity Title to handle your transaction. Further, they can provide the necessary title insurance to protect your investment.

In Mexico, all real estate transactions and the legal conveyance of any type of property involve the participation of a notario publico. They are appointed by the Governor of the State and the Executive Branch of the federal government for a particular state district and are attorneys who have passed two extensive examinations in order to receive their lifetime appointments. In a typical transaction, they will prepare the deed of conveyance subject to the "protocolized" purchase‑sale agreement. The notario brings buyer and seller together for the formalization of the property transfer and they authorize the appropriate signatures upon execution of the escritura. And lastly, after the property transfer has been formalized, the notario will record the escritura with the public registry of property where the property is located. Prior to the closing, the notario's additional duties include:

1. To examine the documents of the selling party to ensure their accuracy and legitimacy;

2. To verify title;

3. To search the public records to determine the status of seller's title to the property and the existence of liens against the property; and

4. o collect all applicable property taxes and government transfer taxes.


Process of Establishing a Bank Trust (FIDEICOMISO)

1. Purchase‑Sale Agreement (contracto de compraventa)


2.  Establish an Escrow account (possible translation - "plica" or "deposito condicional") and due diligence

          appraisal to establish transfer tax

          title search (recommend a US title company policy)

          determine property tax amount


3. Preparation of the deed (escritura publica) by a Public Notary (notario publico)

4. Application is made to the Secretary of Foreign Relations for the permit to establish the Bank Trust (fideicomiso)

5.       Upon receipt of the permit, the trustee bank sends instructions

to the notario for preparation of the deed to the beneficial rights

(contracto de fideicomiso)

6.         Applicable taxes and closing fees are paid

7.       The deed is recorded in the municipality (public registry) where the property is located

8.             A bank trust is normally for 50 years, with renewability for the same period


Subdivision Approval in Mexico (Fraccionamiento)

Under Article 27 of the Mexican Constitution, there are three (3) recognized property types in the county:

 1. Private property

2.  Social property

3. public property

In 1976, the government of Mexico established the Human Settlement Law for the regularization of land development and, in essence, the elimination of development chaos. Each of the 31  states (and the Federal District)  in Mexico has its own development law and subsequent requirements. In the case of Sonora, there is the Law of Urban Development for the State of Sonora (La Ley de Desarrollo Urbano Para el Estado de Sonora). It is commonly referred to as Urban Development Law lol. The procedure to authorize the development of a subdivision (fraccionamiento) is specified by the Office of Urban Administration, Secretary of Urban Infrastructure and Ecology for the State Government of Sonora (Direccion de Administgracion Urbana, Secretaria de Infrastructura Urbana y Ecologia (SIUE), Gobierno del Estado de Sonora). Typically, the process to receive approval for an intended residential subdivision is as follows:

The developer must obtain a land use license for the local municipality and city council (ayuntammiento). This process includes:

1.  Submission of an environmental impact study on the land to be developed;

2.     Deeds of ownership on the property (escrituras);

3. A  land plan of the tract;

4.  location map of the overall property;

5. Blueprint or draft site plan of the proposed development (anteproyecto)

         Subdivision Approval in Mexico

The local municipality will then present the draft of the proposed project along with the land use certificate, deeds, location map and land use plan, including layout of the lots and blocks of the subdivision, to SIUE. At the same time, the city council or municipality will facilitate and obtain the feasibility of potable (drinking) water service, drainage and electrical service for the proposed subdivision from the appropriate municipal agencies. The developer will then receive initial approval for the intended subdivision from the city or municipality.

Once initial approval is granted, the developer must then submit a formal executive development plan and all required documents to the city council or municipality according to Article 129 of Urban Development Law lol of Sonora. The local authorities will present the project again to SIUE with the calculations for water and sewer use for review, revision and approval. Additionally, the city will submit the calculations for electrical usage and street lighting to Mexico's Federal Electricity Commission ("Comision Federal de Electricidad" or CFE) for their possible revision and subsequent approval. After a satisfactory review of the general project plan by the authorities, the developer will be authorized by way of formal agreements with the Mayor which will establish the obligations and the time period required to complete the proposed subdivision. After the developer donates 15% of the overall land as required to the local municipality (which is generally used for open space, green belts or schools) and pays the development fees as mandated, they must publish the subdivision approval in the "Boletin Oficial" or official bulletin. The Boletin gives the public notification and government approval of the intended development. Lastly, the developer must record the agreement in the Public Registry of Property along with the unilateral declarations of intention to develop the property with copies going to the local tax assessor, the treasury department and to SIUE.

Any foreigner interested in purchasing property in Mexico should request copies of these approval documents from the developer or owner prior to disbursing any funds.





The acquisition of real estate or rights to real estate (in direct title, under the Mexican bank Trust or in a Mexican company) occur (close) when the deed of conveyance is executed by the buyer seller (under a trust by the trustee), money changes hands between the parties and the deed is then recorded in the corresponding Public Registry of Property (corresponding to to the location of the real estat).

This is not an event in Mexico but rather a process and it is not fluid, it does not take place in a single moment and the only controling party is the Mexican notary public that is perfecting the transfer process..

Traditionally, this process has left the buyer or the seller (most likely the buyer) without protection during the process, in large part due to the ignorance of the buyer.  It is alarming to see the methodology used for selling to foreigners in Mexico. It is also alarming to see purchases made where title is not even available for many weeks or months after payment is made by the buyer. 

Foreigners take greater risks than they realize every time they buy real estate in Mexico. Not becuase the law does not provide them protection but rather becuase they do not get good legal, fiscal and financial advise.   Amazingly, the comment given many times to foreigners desiring to buy in Mexico is, "That's the way we do business here." When in real it is not the way it is done in Mexico.

--The following scenario is typical regardless of the geographic locale and doesn't seem to vary much between Los Cabos, Puerto Vallarta, Puerto Pefiasco or the Cancun corridor. Foreign buyers, who more often are American (though many Canadians are also acquiring Mexican real estate), identify a house, condo, villa or lot on the beach they want to buy. Usually they employ the services of a local real estate agent in that market who informs them that in order to proceed to a contract, an initial deposit is required. The deposit may range from $1,000 to $5,000 and the check is written to the agent or to the seller. Generally, the deposit is not tied to an escrow agreement with a third party acting as the escrow agent, and commonly it goes directly into the bank account of the agent. The buyer is told that the deposit is required just to get the process started and more times than not, the deposit will become non‑refundable. Keep in mind, buying public, once you write the check and hand it over in Mexico, how are you going to get it back without an escrow agreement.

Now we proceed to the letter of intent or the contract stage. The customary process in Mexico ‑ultimately leads to an arrangement between the parties known as a "promise to trust agreement", though there may be other proposals or simple contracts prior to this final document. Upon execution of the promise to trust between the parties, the buyer is invariably required to pay the seller 100 percent of the agreed purchase price. Since the seller has agreed to convey the property and authorize the Mexican bank acting as trustee for thefideicomiso (bank trust) to transfer the beneficiary interest to the new purchaser, he is therefore entitled to all of his money! Real estate agents in Mexico will tell foreign purchasers the "closing" of the transaction occurs when the promise to trust agreement is signed. Caveat emptor, buying public, nothing has closed! Understand what has transpired and what has not in order to have a legal and protocolized beneficiary interest established on the real property under Mexican foreign investment law.

       You, the buyer, have given the seller all of the money contemplated in the transaction and yet you do not have a trust permit required by Mexican law to be issued by the Ministry of Foreign Affairs in order to establish your beneficiary interest.

       You do not have the escritura publica (public deed) prepared by the public notary in Mexico. The notary must be authorized by the trust bank to proceed with the transfer of the beneficiary interest via the public deed and which he must draft to effect the transfer

There is no property appraisal prepared, yet that is a requirement under Mexican federal statutes for tax purposes in order for thefideicomiso to be established. There is no lien certificate from the public registry that would indicate any liens or encumbrances on the property and is a required element of any real property conveyance. Heck, you, the buyer, really don't even know if the seller has good title to the real estate in question. Why? Because you have never been presented with a copy of the deed that vests the title to the seller. The public notary, at this point, has yet to begin his required title search of the property. You have received verbal assurances from the seller and the agent that there are "no problems" with the title.

It would be this writer's opinion that the reason for this onerous process is twofold. The sale of real property between Mexican nationals is a fairly simple and expeditious transaction via a compra‑venta. They are not concerned nor do they have to be with Mexico's foreign investment laws. This is not the case, however, when they sell to Americans or Canadians in the restricted zone. Their attitude is, "Why should I wait for my money just because you have to get a bank trust. That's your problem, just pay me." Secondly, this attitude has been pervasive because some, not all, real estate agents push it and expect it. If the seller receives all of his money, the agent gets paid his commission. Why should the agent be concerned with whether the buyer gets hisfideicomiso established once he has received the fee due from the seller? Besides, many agents will tell purchasers nothing can or will go wrong, and that is a fallacy. What if the seller dies before the conveyance? What if there are title defects or undisclosed lawsuits, maritime matters or lien issues? What if an agent, who receives the money via a deposit, doesn't give the seller all that he expects? Then who will execute the deed? What if there are unexpected problems with obtaining trust permit or notario problems? Or what if the seller has sold the property twice, unknown to you or the agent? The simple truth is you have given the seller your money with little or no chance to get it back other than a lawsuit in Mexico.

In every real estate deal, buyers have choices. There are many properties for sale in Mexico. Buyers need to be smart and educated about the deal, deposits, title and conveyance matters. Many real estate developers sell their property with a percentage down at the time of the promise to trust agreement, with the balance paid when the public deed can be executed to establish the trust. Many developers, and more and more real estate agents, are utilizing third party escrows in the U.S. to protect foreign buyers. Full disclosure of potential issues is becoming more prevalent. Any property in Mexico can be researched and a title investigation can be done in order to issue an Owner's Policy of Title Insurance. Purchasers can be insured when they release their money to the seller upon execution of the escritura publica and the issuance of the notario's preventive notice to the public registry of property. At the end of the day, foreign buyers have a right to a transaction process that ultimately protects their investment and minimizes their risk. Those who participate in the sale of real estate in Mexico must strive to protect that which "feeds and prospers them." When they don't, purchasers should walk away and buy elsewhere.