The summary below has been prepared by Jonathan A. Pikoff, Esq. founder of Pikoff & Associates, a Mexico-based law firm. Mr. Pikoff is one of few attorneys with law degrees in both the U.S.A. and Mexico. His practice focuses on real estate development and advising U.S. public and private companies doing business in Mexico. He is fluent in Spanish, and lives in Los Cabos, Mexico, where he has an active law practice. The firm also has offices in Mexico City and Houston, Texas.
The regulations on the sale of real property to foreigners are found in the Mexican Foreign Investment Law. An American (or any foreign national) can acquire land almost anywhere in Mexico with the permission of the Foreign Affairs Ministry. The only exception in the Foreign Investment Law is that foreigners may not acquire directly real property in the "restricted zone."
The restricted zone is the strip of land 100 km from the border and 50 km from the beach. If a foreigner wishes to acquire land in the restricted zone, he or she may enter into a trust agreement with a Mexican bank.
A Mexican company with foreign investment, even 100% foreign investment, may acquire fee simple title in the restricted zone as long as it is not used for strictly residential purposes. If the property is considered to be solely residential, the company must use a trust. The Regulations of the Mexican Foreign Investment Law state that residential real estate is real estate specifically to be used as a dwelling by the owner. The law provides a list of examples of real estate that seems residential, but is not considered as such by the law.
According to the law, non-residential real estate includes, but is not limited to:
1. Time Share;
2. Real estate intended for both industrial, commercial or tourist use and residential use;
3. Real estate acquired by credit institutions in payment of debts;
4. Real estate bought by companies to be developed and sold. This would include apartments and residential communities; and
5. Generally, any real estate to be used for commercial, industrial or agricultural purposes, as well as, ranching, fishing, forestry, or to provide services.
The Regulations make clear that this list is not complete and that any questions of whether an activity is residential should be sent to the Foreign Affairs Ministry.
If you're considering any real estate transactions in Mexico, contact Pikoff & Associates.
