A mist of misconceptions and misinformation has always surrounded the topic of purchasing a property in Mexico. People hesitate to buy property in areas within Mexico because of two reasons, lack of proper knowledge about the city and the lack of adequate intimacy with the laws of the area. It is not an easy task to buy property in Mexico. This article will try to address all the misconceptions that have arisen. It also aims at providing a healthy amount of information that is required by an individual who is looking forward to buying a property in Los Cabos, Mexico.
The biggest misunderstandings
The biggest fear of a person while buying a property in Mexico is regarding the ownership of property. The first point of hesitance is the fact that people believe ownership can be ceased at any time. This statement is not valid. This scenario can be avoided if the proper steps are followed while buying a property in Mexico.
- The prohibited zone: The foreigners, who want to buy property in Mexico, can do so, but they have to keep in mind about the concept of the Prohibited Zone. The Mexican Constitution’s Article number 27 had come up with this law. It states that in an area that extends up to 30 miles from the coastline, foreigners cannot buy any property.
- The bank trust program: In the year 1970, the bank trust program was initiated to provide tourists a way to own real estate along the coastlines. The interested foreigners must set up a bank trust with a recognized Mexican bank. Doing this will enable you to acquire a property in the bank trust that you can renew after 50 years. Following this method, you can enjoy every ownership rights without any headache.
- Through the Mexican corporation: this is one of the most popular ways in which a foreigner can own a property in Mexico; all they need to do is hold a Mexican corporation. Doing this will give them 100% ownership of a property. After the expiration of the period, the Mexican corporation will acquire full ownership.
- Mexican land lease: it should be properly understood that under Mexican law, a contract with tenure of more than ten years is illegal. If you own property under a lease like this, then it is quite evident that it will get confiscated. Usually, the Mexican landlords give out property under the structure of a renters lease. In this, the contract is spread out over 10+10+10 years. Even then, it is up to the landlord’s discretion whether or not he will renew the lease after the first ten years. Therefore while investing in this type of contract, you should be able to renew the money so that in case the lease is not renewed, you can carry the burden of the loss.
- Concession of the federal zone: neither Mexicans nor foreigners can own land in the federal zone. The federal zone extends 20 meters inwards from the average tide line. The federal government of Mexico owns this whole area.
Owning a property in this region is not possible, but foreigners can use the land for a fee. The federal government, in this regard, provides a concession for the temporary use of the property, pools, decks, and other areas. The amount of fee depends upon the size and type of property you own. Moreover, self-maintenance and beautification of the area may also mean you won’t need to pay any fee.
The above mentioned five points are quite essential for you to keep in mind while making plans for buying a property in Los Cabos, Mexico. Following and maintaining these points will make sure that you do not get yourself into ant sort of fuss. Moreover, these few points will provide a clear picture of the legality of actions in regards to owning property under Mexican law. It ensures that none of the contracts you get into or none of the transactions you make are illegal.
The other most significant factor in making a note about is the legitimacy of the agent. You should double-check the background of your agent and each of the paper he provides. Your agent should work within the limits of his power of attorney. Furthermore, the documents that he provides should be legally accurate and obtained from proper owners. If you have a hard time understanding Spanish, then you should consider translating it into English.
The title insurance can be considered as one of the measures using which you can assure unhindered ownership of your property. The title insurance protects you from all the unknown risks that may linger in regards to ownership of the property. The insurance guarantees that you will not be made void of owning your property.
The title insurance covers the following points:
- Forgery of papers or identity.
- Misinformed client.
- Case of secret or unknown heirs
Apart from these, there are a few more cases and conditions which come under title insurance. It provides both protection and payments for any legal expenses related to this matter.
The best option while dealing with property within the Mexican region is hiring an escrow company. The escrow companies are companies that are authorized by the Mexican law to act as a third person while dealing with property. As these companies do not need a license to operate, it is a wise decision to properly assess their part records to obtain proof of their legitimacy. Making use of the services of these escrow companies is the most sensible choice when dealing with real-estate across international borders.
Making this a guideline and going forward with owning or buying a property in Cabo, Mexico, it will ensure that the process will be safe and hassle-free. Along with that, most of the misconceptions and misinformation have also been addressed within the article for your betterment. Hopefully, you do not need to give it a second thought before buying a property within the Mexican region.