Buying Property in Mexico's Restricted Zone

Article 27 of the Mexican Constitution regulates all that is relevant to territorial property in Mexico and according to this article the restricted zone is all the land located within 100 kilometers of any national borders and also within 50 kilometers of any ocean. Basically, article 27 states that no foreigner will be allowed to acquire direct  title to land within the restricted zone. However, as of 1993 Mexico’s Foreign Investment Law allows foreigners to acquire indirect  title to land in the restricted zone by a bank trust (Fideicomiso).

Since Puerto Vallarta and the Riviera Nayarit are located in the Central Pacific Coast of Mexico (within 50 kilometers of the Pacific Ocean) we will talk about buying property in Mexico’s restricted zone by means of a trust (Fideicomiso). What is a trust?

A trust is a contract among three parties: The Seller (Settlor/Fideicomitente) which irrevocably transfers real property to a Bank (Trustee/Fiduciario) so that a Buyer (Beneficiary/Fideicomisario) can use and enjoy said real property. And under Mexican law only an authorized banking institution can act as a Trustee.

The bank acquires the title to the real property and is obligated to allow the beneficiaries to use and enjoy the property as they see fit as long as the way in which they use it’s within the law.

The trust is for a period of 50 years and it can be renewed for another period of 50 years as well.

If the beneficiaries wish to rent the property for profit they can but they most do it through a third party or the same Bank (Trustee), never directly themselves.

The Bank cannot encumber or sell the property without written consent of the beneficiaries.

The Mexican Law requires that all real estate transaction be done before a Public Notary which is obligated to register in his books the deed of transfer of title, have it signed by all parties involved and have it recorded in the public registry of property (Registro Público de la Propiedad) that corresponds to the location of the property.

Once the deed of transfer of title is signed in the presence of the Public Notary and registered in the public registry of property, the real estate transaction has fulfilled the requirements of the Mexican law.

This deed of transfer of title will contain the entire trust agreement and it proves that you have the rights to a specific piece of real property.

Once the deed has been registered in the public registry of property, the first deed of title goes to the bank and second deed of title is for the Buyer/Beneficiary.

The process of buying property in Puerto Vallarta.

The process of buying real property in Puerto Vallarta is rather simple and it’s always better to have a real estate agent that knows the area, the properties and that will protect your interests.

Once you have chosen the property you want to buy your agent should write an offer that will be subject to several contingencies, some of which will be that the property in question is free of all liens, that you reserve the right to hire an expert to do an inspection of it, that all the proper documentation is in order, etc.

A deposit will be made once the offer has been accepted by both the buyer and the seller. This deposit will go into an escrow account.

A closing date will be determined in the offer as well as the Public Notary who will record the deed of transfer of title. It is the day of the closing when all moneys will exchange hands (a disbursement instructions sheet will be signed by all parties) as well as the signing of the transfer of title at the Public Notary’s office.

Once all that is done, the Public Notary will have the deed registered in the public registry of property which could take approximately 6 months once that has been done you will get your second deed of title yourself.

Please contact me if you have any questions abut buying a home or condo in Puerto Vallarta or The Riviera Nayarit. 

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