Want Ocean Views Without the U.S. Price Tag? Here’s How to Buy Real Estate in Mexico

These guidelines are courtesy of Damian Bassett (formerly of Coldwell Banker Puerto Vallarta, now founder of Bonito Beach Properties) in Puerto Vallarta. Damian was the agent who guided us through the purchase of Villa La Sirena in Boca de Tomatlan. He has since moved on to launch his own real estate venture, Bonito Beach Properties, focusing on beachfront and coastal acquisitions in Mexico. Mexico might be the only possibility of that water view property with the crazy prices in the US.  The process can be somewhat tedious, so you want a firm with a good agent like Damian, an in-house attorney, and a good escrow firm. 

Damian Bassett of Bonito Beach Properties in Puerto Vallarta

Damian was born in Collingwood, Ontario, Canada. He studied Political Science at Laurentian University, which then directed him to British Columbia, where he received his first insights into land development and residential/vacation home sales up the Sunshine Coast. It was a wonderful experience that brought to light his natural knack for salesmanship.

 Shortly thereafter, Damian was offered a position as General Manager of an upbeat new string of retail stores in Ontario, Canada. It was a fast-paced environment and a totally different learning curve, from which sales, social spending behaviors, and company growth were of utmost importance. Damian helped nourish the string of stores for eight years. In the eight years, Damian began buying and selling his own merchandise as well as his own home. This is when Damian knew that if he was going to sell something, it may as well be the most expensive merchandise on earth: Real Estate. Damian came to a crossroads of a personal dilemma. He loved real estate but desperately yearned to improve his quality of life with a sense of adventure and the unknown. These are the events that finally brought him to his final destination in Puerto Vallarta, Mexico. Damian is now a sales associate at Coldwell Banker. He teamed up with a great friend and associate, David Johnson, who specializes in helping Canadian and U.S. citizens have a trusting and smooth transition of buying real estate in Mexico.

Specific guidelines exist for foreigners to purchase real estate in Mexico. There is a process – which at times may seem redundant – and there are no short-cuts. All purchases for non-national citizens are completed through a trust deed established with a Mexican Bank. The Mexican bank acts as a trustee on behalf of the foreign purchaser, and the purchaser holds all rights of ownership. The same applies for a foreign or Mexican corporation; however, the tax ramifications are much more stringent.

How Do Foreigners Own Real Estate in Mexico?

Article 27 of the Mexican Constitution states that foreigners cannot own property outright within 100 kilometers (62 miles) of the international borders and 50 kilometers (31 miles) of the coast. This law was put in place for fear of foreign invasions that might threaten the country’s sovereignty. Non-Mexicans may directly own rural or urban land in the interior of Mexico, subject to certain limitations on specific agricultural tracts. As time has passed, and as the Mexican government has come to realize the benefits of opening these attractive areas up to foreign investment, they have modified this constitutional restriction. Since 1973, foreigners (non-Mexicans) have been able to purchase coastal and border properties by way of a Mexican Bank Trust, known as a “Fideicomiso.”

What is the trust, and how does it work?

Essentially, it is the same as a trust in most other places in the world – the trust is the vehicle that holds the property, the beneficiary is the person that controls the rights to the trust, and the trustee is the entity that manages and oversees the trust. In this case, only Mexican banks can act as trustees (and they vary in terms of service and efficiency). So, you, the buyer (or whomever you elect), become the beneficiary and the property itself becomes the subject of the trust.

Thus, the bank trustee holds the legal title to the property, with the beneficiary of the trust – you, the buyer – enjoying all rights and privileges of ownership, including exclusive use and enjoyment.

The beneficiary enjoys the right to occupy or rent the property, and may transfer the property to any legally qualified person he may designate. Beneficiaries are also allowed to modify their property in accordance with local zoning regulations.

These trusts have an initial term of 50 years. They are renewable at any time or at the end of the 50 years for a filing fee (approx. $1,000 US) for additional 50-year periods, in perpetuity. The property may also be sold to a person legally authorized to own property or to another foreigner via an assignment of the trust or a new trust, at any time. This process is designed to protect the rights of foreigners and ensure that the transactions are legal.

What is a Trust Institution?

In Mexico, a Trust Institution is a banking institution that is authorized to open ‘fiduciary’ accounts and conduct trust operations as a Trustee. The Trust – not the trustee – holds legal title to the real estate property during the term of the trust. The Trustee is also empowered with rights and responsibilities necessary to achieve the objectives of the contractual agreement creating the Trust, for the benefit of the trust beneficiary.

How are these trusts created?

To establish a real estate trust (fideicomiso), any one of the banks in Mexico will charge an annual fee for maintaining the trust, averaging $450 to $550 per year. The Mexican government specifically set up the trust system to provide non-nationals the security of deeded property ownership without having to change their 1917 Constitution. Mexican real estate law allows foreigners to acquire residential real estate located in the coastal and border areas of Mexico through a Trust (“Fideicomiso”). A Trust grants the same rights and obligations as if you owned the property outright. Alternatively, foreigners may also acquire title to non-residential real estate located in the coastal and border areas of Mexico through a Mexican corporation. When they do so, they will also be obliged to pay 16% VAT on the improved value of the property (ie, not the land value) at the time of purchase.

Are Mexican banks the only institutions that can hold trusts on behalf of foreign investors? Yes, however, you have the right to choose which bank you would like to hold your Trust. The Trust is not an asset of the bank. Trusts also allow foreign investors to participate in other sectors of the Mexican economy.

Are there differences in other aspects of property ownership in Mexico?

Financing is relatively new in Mexico and not designed for non-nationals. If financing is something one wants or needs, get pre-approved ahead of time, just as you would in the U.S. or Canada. US or non-Mexican banks will not lend on the security of Mexican real estate as they are not chartered to do so.

Closing costs to the buyer tend to be higher in Mexico than they are in most places in the U.S. or Canada, averaging 4 to 6 percent of the purchase price (If property is less than $100K, this percentage increases to an 8-10% range, due to some fixed costs, such as trust fees). Once a Purchase Agreement has been negotiated, closing usually takes between 30 and 60 days, depending on contingencies and financing requirements.

Escrows are used almost universally in all transactions in Puerto Vallarta. There are several reputable private escrow companies specializing in this function. Their fee is typically between $600 to $700 US per transaction. This cost is typically paid for by the buyer; however, it can be split between the buyer and the seller.

The Notary of record is the Official Agent that collects all taxes and exclusively records all deeds to be registered in the Public Registry of Property office.

What characteristics would a trust agreement have?

In the Trust deed, the present owner of the real estate would appear as the trustor (fideicomitente) and would thereby convey title of the real property to the Trust that will hold title to the property during the life of the Trust (50 years) for the benefit of the Beneficiary. You can renew the Trust perpetually. The buyer (you) would appear as the Beneficiary (fideicomisario), the person having the absolute use and avail of the property.

What are the requirements of the property trust?

1. A copy of the real estate title or deed indicating the exact surface area, metes and boundaries, a free of lien certificate, receipts for federal, local, or municipal Taxes (these documents are provided by the Seller).

2. Your complete name, nationality, occupation, address, and phone number. Copy of your passport, immigration form (if appropriate), phone or other bill serviced by mail to your address.

3. The name, nationality, address, and phone number of the substitute beneficiary(ies) in case of death of the Beneficiary during the life of the Trust (Optional).

4. The agreed purchase price.

   
   

What is the process?

Upon receiving the information and documents described above, the Trustee will proceed to apply to the Foreign Affairs Ministry (Secretaría de Relaciones Exteriores) for the permit authorizing the execution of the Trust deed. Once the permit is issued by the Foreign Affairs Ministry, then the Trustee will be able to execute and formalize the Trust deed before a Mexican Notary Public. Notary Public Offices in Mexico have a greater legal status and competence than those in the United States. The Notary Public is an Attorney at Law who is authorized by the State Government to, among other faculties, grant final formality to the title transfer process in the protocol book. The resulting document, taken from this protocol book (the Trust deed), is registered at the corresponding Public Property Registry, and it will provide evidence of title. If you cannot be present at the execution of the Trust deed before the Notary Public, a duly empowered representative may execute the Trust deed on your behalf. Powers of Attorney for representatives must be granted in compliance with Mexican formalities, including its formalization before a Mexican Notary Public.

What specific rights and obligations does the beneficiary assume upon the celebration of the trust deed?

As the Trust Beneficiary, you will have the use and possession of the property; that is, you may live on the real estate, undertake any alterations and improvements subject to any applicable limitations and/or requirements stipulated by the local laws and regulations, such as zoning and construction regulations, among others. You also have the capacity to instruct the Trustee on mortgaging the real estate, leasing it, selling, transferring your beneficial interests to another person or corporation, or performing any of the acts that by law derive from the ownership. If you sell the property to another foreigner, you may assign your beneficial interest in the Trust to the new purchaser or instruct the Trustee to convey the property to a newly formed Trust for the benefit of the new purchaser. This assignment of rights must be formalized through a Mexican Public Notary, before the payment of the federal and local taxes and fees that arise from the transfer of Beneficiary rights. You will also have the obligation to pay the duties on the real estate, i.e., real estate and water service taxes, power supply fees, the condominium maintenance fees, if applicable, as well as the Trustee's annual administration fee.

What happens if the beneficiary of the trust dies during the legal period of the trust?

The Beneficiary will be required to appoint substitute beneficiary(ies) at the moment of formation of the Trust (Closing) or in a later event. The substitute or secondary beneficiary will receive all the rights and obligations that arise from the Trust if the beneficiary dies during the life of the Trust. With this designation of substitute beneficiaries, your heirs will not need to follow any probate proceeding before the Mexican courts, which could take time and incur attorney’s Fees. They would only have to give notice to the bank of the deceased and show the death certificate and their identifications, and then the Bank will accept and register them as the new owners (beneficiaries) of the Trust Property. Some fees and taxes will apply.

How long does a trust remain in effect, and can it be renewed?

The trust is renewable at the end of its 50-year term and for additional periods of 50 years each. The law provides that if an application is filed no more than 360 or less than 181 days before the end of the original Trust, the Secretary of Foreign Relations must issue a new Trust permit, effective for an additional term of 50 years. The Trust can be renewed in perpetuity.

Can I sell or transfer my interest in a trust?

A Trust interest may be sold or transferred much like any other interest in real property. Upon the sale of an interest in real estate held under a Trust, the Secretary of Foreign Relations is required by law to issue a new Trust permit to the buyer. If property held under a Trust is sold to a Mexican National, the Trust can be terminated, and the Mexican National may then own the property in fee simple

What about the availability of insurance on the transaction (title insurance), as well as the property itself?

Title Insurance is available. Other types of insurance, including property, liability, damage, and earthquake, are all readily available at low costs. Please ask your Coldwell Banker La Costa agent for further information regarding this matter.

What about taxes? What can I expect to pay in Mexico?

For the buyer, the subject of real estate taxes generally comes as good news, especially in the Puerto Vallarta area, where real estate taxes tend to be very low. Known as the “Predial”, the annual property tax is calculated as a percentage of the assessed value determined at the time of sale, paid bi-monthly or yearly (in advance). Property taxes have been historically low in Mexico, because they have never been considered to be a significant source of governmental revenue (plus, if you pay for the whole year in advance, before February 15th, you get a 10% discount).

What other expenses should I consider in the purchase of property in Mexico?

If you are not planning on living full-time in Mexico, property maintenance will need to be considered for the time you are away. For condominium owners, common area maintenance and security are handled by the Condominium Owners Association, paid for through monthly fees. Homeowners may want to consider a property management company to manage the payment of utilities, inspect the property, check on renters should the property be rented, and respond to any issues surrounding the property.

How can I be assured of dealing with a qualified Real Estate Professional in Mexico?

One of the major differences in buying properties south of the border stems from the fact that Real Estate agents in Mexico are not subject to any national certification or educational requirements. As such, the best advice you can act on is to always deal with an established Real Estate Agency, whose references you have checked personally with several former clients.

In addition, the agency should be a member in good standing with the Mexican Association of Real Estate Professionals (AMPI). The AMPI Chapter in Puerto Vallarta is particularly active and has been in existence for about 30 years. It operates the FLEXMLS system, among other things, and has a very stringent admission process as well as a very effective Honors and Justice Committee. Coldwell Banker La Costa Realty is one of the original founding members of the local AMPI Chapter and has always maintained an active role over the years. As of 2025, Damian Bassett departed Coldwell Banker and established Bonito Beach Properties, a boutique real estate firm focused on coastal and beachfront developments in Mexico. Under this new venture, he continues to serve clients, specializing in premium ocean-front property acquisitions.

Update (2025): Since this article was first published, Damian Bassett has founded Bonito Beach Properties, a dedicated real estate company specializing in beachfront and coastal properties throughout Mexico. While his previous association with Coldwell Banker informed many of the perspectives in this post, his new venture now leads his client services.

Damian Bassett, Founder & CEO, Bonito Beach Properties, Puerto Vallarta, Mexico (https://www.bonitobp.com/)

+52 322.111.3488 (Message me on WhatsApp)

damian@bonitobp.com