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Baja Real Estate / No laws which regulate the sale or management of real estate in Mexico!

1 Mexico Review updated:

This is important information. Don't listen to agents and sales people who want to make a buck off of you. Baja real estate guide for homes, land and condominiums for sale in Rosarito Beach, Los Barriles, East Cape, Cabo San Lucas, Tijuana, Ensenada, Mexicali, Tijuana, La Paz and Loreto.

Buyer Beware: Be advised that there are no laws which regulate the sale or management of real estate in Mexico and abuses do exist. It is always prudent to ask for local references and obtain competitive bids for all services when possible.

The Mexican Constitution prohibits direct ownership by foreigners of real estate within 100 kilometers (about 62 miles) of any border, and within 50 kilometers (about 31 miles) of any coastline. In order to permit foreign investment in these areas, the Mexican government has created a trust mechanism (contrato de fideicomiso) in which a bank has title to the property, but a trust beneficiary enjoys the benefits of ownership. The Bank Trust Agreement (contrato de fideicomiso) allows for renewable long term leases that may be sold or enjoyed by your heirs.

A foreigner may be the sole and exclusive stockholder of a Mexican corporation which may hold fee simple title to non-residential property in the prohibited zone. There is a broad definition for "non-residential" property.

Buyer Beware: Mexico real estate prices that seem too good to be true are usually too good to be true! Many of these "bargains" are located on what is commonly referred to as "Ejido" or communal tracts of land. It is highly recommended that you consult with a Mexico attorney regarding Ejido land rights. Any agreement between the "Ejido" and a foreigner may be revoked or canceled without cause, notice or recourse!!

Caution: Mexican law recognizes squatters' rights, and homeowners can spend thousands of dollars in legal fees and years of frustration in trying to remove squatters who occupy or rent their property. Always inspect the property and be certain that your property is not occupied by a Mexican citizen in any manner whatsoever. Anyone who occupies the property on behalf of the owner should be totally removed/gone from the property prior to closing. Warning: A Mexico citizen may simply refuse to pay rent and continue to occupy your rental property for a long, long time - maybe years.

American property owners in Mexico should exercise caution when hiring employees to serve in their homes or on vessels moored in Mexico. Several American property owners have faced lengthy lawsuits for failure to comply with Mexican labor laws regarding severance pay and social security benefits.

Caution: Exercise extreme caution when considering time-share investments and be aware of very aggressive tactics used by some time-share sales representatives. Buyers should be fully informed and take sufficient time to consider their decisions before signing time-share contracts, ideally after consulting an independent attorney. Mexican law allows time-share purchasers five days to cancel the contract for unconditional and full reimbursement. U.S. citizens should never sign a contract that includes clauses penalizing the buyer who cancels within five days.

A formal complaint against any merchant should be filed with PROFECO, Mexico's federal consumer protection agency. PROFECO has the power to mediate disputes, investigate consumer complaints, order hearings, levy fines and sanctions for not appearing at hearings, and do price-check inspections of merchants. All complaints by Americans are handled by PROFECO's English-speaking office in Mexico City at [protected]. You might also complain about the lack of an English translation for the PROFECO web site.

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Comments

  • Ke
      7th of Aug, 2007
    0 Votes

    Thanks for the informative post! I am sure the property owners and real estate agents needing to unload problem properties don't like you warning us about the risks of doing business there. It is really scary, no building codes, no city permits and inspections (a real estate walk through is NOT a building inspection.) Unlicensed realtors with no board to govern them, their association board is not a licensing board, and the courts are back logged with cases that make any litigation take years. Yes, rent, don't buy if you go there. If you rent for a while, take your time and get to know the system, then and only then, if you want to buy, then you will be much better prepared.

  • Ma
      7th of Aug, 2007
    0 Votes

    If you end up buying property in Mexico you should always get Title Insurance. It usually runs for 5 dollars per thousand but it's all worth it.

  • Ro
      10th of Aug, 2007
    0 Votes

    There is no real ownership for foreigners living along the coast line in Mexico. And these bank trusts? What happens if the banks fail? They are the real owners of the property.

    I have lived there full time for a while in the Ejido Primo Tapia in Marbella. Since the property was purchased in the mid 90's we were promised titles we had paid for, but never received. There was to be a height restriction for homes and trailers were supposedly not allowed, that never happened. They opened up a sewage treatment plant a block away from my house after the home was built. The smell at times was atrocious.

    It turns out that the so called titles were to be issued at the end of last year, but were in reality a "Certificate of Occupancy".

    I lost my home because I was in dispute with my ex (A Mexican born American) who hired an attorney, Jesus Moreno Guzman from Tijuana. He threatened to fabricate criminal charges against me and had successfully cut the power to my home and I was not able to restore. He also libeled my character.

    Under these auspices and due to unscrupulous actions by the Ejido Primo Tapia in conveniently losing a record of my co-ownership with my ex, I was forced to leave as I did not relish the thought of spending time in Tijuana jail. It's only a house.

    My home had been broken into a total of five times and losses were into the thousands. I am 55 years old and a software designer. I knew or associated with 6 people who were murdered within a half year span a few years ago, including my neighbor who was a policeman and was beheaded.

    I love Mexico and many people are honest. However I would never buy there again. Renting is a lot more viable and less expensive. Be careful. We thought we were. And how do you know if your attorney is honest or competent. English documents hold no legal basis in Mexico. I knew a lot of people down there and am or was aware of many property disputes etc. It's not only the Mexicans, the Americans trying to unload or turn a quick buck are even worse. Watch out!

  • Ke
      11th of Aug, 2007
    0 Votes

    The important thing in investing in real estate anywhere is to take time. Anyone that trys to make you feel that this is the last chance to get something is applying pressure, and should not be trusted. I agree, renting is easier, cheaper, and easier to get away from should you change your mind.

  • Ke
      28th of Aug, 2007
    0 Votes

    know first hand what a problem buying in a place like that is. I bought a place in Real Del Mar in 2004 for $170,000.00. It cost $12,000.00 in closing costs, and another $2,000.00 in other fees to establish the trust. I am now trying to sell the place, and have only been offered $220,000.00. I have been to told it is worth $260,000.00 by people in the development and realtors, but I have only had one offer is eight months. I have been paying almost $1,200. a month for three years. That is over $40,000. in interest. When I sell I have to pay 35% capital gains on what the Mexicans consider capital gains, the difference between the $220,000. and $170,000. It is easy to see with the money I also put into furnishing it, this has been a very expensive and not profitable experience. If I had put that money in the same mutual fund I have my 401 K in I would have received dividends, capital gains distributions, and growth on the price of the shares. I thought I was investing, but instead I was getting an education, and I learned a lot from this mistake. I paid a lot for this education.

  • Ke
      1st of Sep, 2007
    0 Votes

    I did not buy my home in Mexico as an investment. That would have been stupid. I bought it because I liked being away from my relatives and most of them are too afraid of the cops in Mexico and other things that have happened to tourists to visit. When I want to see them I go there. All kidding aside, I bought it because I wanted it. I am not going to sell it. Anyone who has bought three or four condos anywhere just to flip them for profit gets what they deserve when they are speculating. These people ruin the market for basic people who are looking for a place to live. What will happen over the next three years is a normal adjustment. Prices will drop to where they should be. If you really want a place in Mexico, be patient, wait about three years, and you will get a realistic price, because it is getting just too expensive for these (speculators)investors to hold on and pay the interest they are. I don't feel sorry for any of the developers or speculators who are sitting there with unsold property. They tell everyone to buy and that they will make money, only because THEY want to take the money. Never buy in Mexico as an investment, do it as entertainment, it is a vacation, or something. Look at it as money spent. That way if something happens and it is taken away from you, you won't be disappointed.

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