Puerto Vallarta

Hey, sharing my firsthand experience with real estate in Puerto Vallarta, Mexico – it's been quite the journey. For us non-nationals, Americans, and Canadian expats, owning property there has never felt safer or more feasible.

Navigating through the process, you'll realize that due diligence is your best friend. Specifically, there's a structured system for foreigners like us to purchase real estate in Mexico. Every transaction for non-national citizens is channeled through a trust deed with a Mexican bank. This trust deed is crucial; it establishes a trust with the bank acting as a trustee on behalf of the foreign purchaser, while we hold all the rights of ownership.

Now, let's talk about the constitutional context. Article 27 of the Mexican Constitution outlines restrictions, stating that foreigners can't outright own property within 100 kilometers of the international borders and 50 kilometers of the coast. This was initially set up due to concerns about foreign invasions. However, this restriction has evolved, and since 1973, foreigners have been able to purchase coastal and border properties through a Mexican Bank Trust known as a “Fideicomiso.”

So, what exactly is this trust, and how does it work? Think of it like any other trust worldwide – it holds the property, we, the buyers, become the beneficiaries, and the Mexican bank serves as the trustee. The legal title is held by the bank, but we enjoy all the rights and privileges of ownership.

This trust has a 50-year term, renewable at any time or at the end of the period for a fee, allowing the property to be sold or transferred legally. The trustee, which is a Mexican bank, plays a crucial role in managing and overseeing the trust, ensuring the transactions are within legal bounds.

Now, let's get into the details of creating a trust. To set up a real estate trust (fideicomiso), any Mexican bank charges an annual fee for maintaining the trust, averaging $450 to $550. The Mexican government designed this trust system to provide non-nationals with deeded property ownership security without altering the 1917 Constitution.

Financing in Mexico is relatively new and not tailored for non-nationals, so if you need it, get pre-approved ahead of time. Closing costs tend to be a bit higher in Mexico, averaging 4-6% of the purchase price.

Escrows are widely used in transactions in Puerto Vallarta, with several reputable private escrow companies offering their services for around $600 to $700 per transaction. The Notary of record collects all taxes and records deeds in the Public Registry of Property office.

Moving on to the trust agreement – it designates the current owner as the trustor, conveying title to the trust for 50 years for the benefit of the beneficiary (that's us). The buyer appears as the beneficiary, having absolute use and avail of the property.

The process involves submitting required information and documents to the Trustee, who then applies for a permit from the Foreign Affairs Ministry. Once issued, the Trustee formalizes the Trust deed before a Mexican Notary Public, with the resulting document registered at the Public Property Registry.

As the Trust Beneficiary, we have the use and possession of the property. We can live on it, make alterations, instruct the Trustee on various actions, and even sell the property to another foreigner through a formalized process with a Mexican Notary.

The trust is renewable every 50 years, and selling or transferring our interest is like any other real estate transaction. Title insurance is available, as are other types of insurance for the property at low costs.

Real estate taxes in Mexico, known as "Predial," tend to be low, calculated as a percentage of the assessed value paid bi-monthly or yearly. For buyers, this is usually good news. Other expenses include property maintenance, which is essential if you're not planning to live full-time in Mexico.

Ensuring you're dealing with a qualified real estate professional is crucial. In Mexico, real estate agents aren't subject to national certification, so it's wise to choose established agencies with a good track record and membership in associations like AMPI (Mexican Association of Real Estate Professionals).

I went through Coldwell Banker La Costa Realty, an original founding member of the local AMPI Chapter, and they've been rock-solid for about 30 years in Puerto Vallarta. Loved working with them some much, I joined their firm. So, here's to your Mexican property adventure – it's a bit of a dance, but totally worth it! 🌴 🇲🇽

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