FAQs

The legal systems of the United States and Mexico differ in several ways. The U.S. legal system is based on common law, meaning that laws are developed through judicial decisions (court opinions), while Mexico’s legal system is based on civil law, meaning that laws are developed through legislative action (codified statutes and regulations). Another key difference is that the U.S. has a federal system of government, meaning that there are separate federal and state laws, while Mexico has a centralized system in which federal laws supersede state laws. These differences can have significant implications for how legal disputes are resolved and how laws are enforced in each country.

Even though Mexico’s legal system is based on civil law as opposed to common law, the procedures for purchasing and leasing real estate are very similar to those used in the US. Our legal team takes special care, on a case-by-case basis, and considering each jurisdiction’s local rules and regulations, to determine and explain the legal, administrative, and title registration aspects of each real estate transaction. 

We do not encourage the purchase of any type of Ejido property.

We do not recommend that you attempt to buy Ejido Property because, by law, only Mexican citizens are allowed to own it. Ejido property is not private property and cannot be sold to foreigners. If a Mexican citizen wishes to buy Ejido land, they must have the agreement of the whole community that owns the land. If Ejido property is sold without the consent of all owners, the buyer may risk a legal battle and the land may be returned to the original owner. The owner of Ejido property has rights of possession but does not have a Deed, and they need approval from the assembly of the commissary to sell it. The commissary will never approve selling to a foreigner because it is against the law.

The only way to acquire Ejido land is through a privatization process that transfers the property to a Mexican citizen through a Title or Deed. This process takes time and is not guaranteed to succeed. Until the transfer of Ejido Title to private property is completed by a Mexican, foreigners cannot own Ejido land. It is important to be cautious as many foreign nationals have purchased Ejido property without the appropriate Title, which puts them at risk because the communal commissary or the government may reclaim the land at any time.

The restricted zone is defined as all land located within 100 kilometers of Mexico’s national borders and within 50 kilometers of any ocean. Buying property in the restricted zone in Mexico is completely legal and 100% secure. However, Mexico’s Foreign Investment Law only allows foreigners to acquire title to land in the restricted zone by one of two methods: through a Mexican corporation or through a “fideicomiso” (bank trust).

The fideicomiso is a trust held by a bank, which provides the buyer with all the benefits of direct ownership. Terms for fideicomisos are usually in 50-year increments and can be renewed indefinitely. Fideicomisos are transferable and are considered an extremely safe investment vehicle.  At Criteria, we work with many reputable financial institutions to help you set up your fideicomiso.

fideicomiso.

A Mexican Notario is a highly respected legal professional who is appointed by the state government to provide legal and notarial services to the public. They play a vital role in the Mexican legal system, as they are responsible for ensuring the authenticity of legal documents, such as contracts, deeds, and wills. All Notarios in Mexico are attorneys and are required to undergo extensive training and rigorous examination to become licensed. They are also required to maintain strict ethical standards and are held accountable for any errors or misconduct. Due to their expertise and authority, Notarios in Mexico are often involved in high-value transactions and are considered to be a trusted source of legal advice for individuals and businesses. It is worth noting that a Notario’s word and signature are dispositive in any court of law.

The Notario must be impartial to the buyer and seller. He or she will undergo and perform the title search, prepare all the legal paperwork for the transaction, record it in the county and municipal registry, and collect and pay all the applicable taxes and fees. It is very important that you choose a trusted Notario for any transaction. Criteria can provide a list of English speaking and highly ethical Notarios that we have worked with over the years. We, of course, are also open to working with the Notario of your choosing.

 Given that only documents executed in Spanish are legal in Mexico, if you are not fluent in Spanish, we can provide a translator for you or inspect the translations provided to you by the realtor, attorney, or Notario.

We work with certified and professional appraisers around the country to ensure that the price you are given is the fair market price.

Criteria is not a real estate brokerage firm; however, we have developed strategic partnerships with some of the most recognized brokers (Century 21, Citius, etc.), Notarios, and attorneys in the country.

Criteria advises and supports its clients through the entire real estate process:

a)- Identifying the property

Criteria assists our customers with real estate scouting and tailors the search to the type and/or location of the desired property with one of our tried-and-true strategic partners.

b)- Price Negotiation

Once you have established interest in the property, we give you a preliminary «go ahead», after performing our due diligence, to make a verbal offer to the owner or real estate broker with your price, terms, and conditions (in some cases, a nonbinding Letter of Intent is necessary).

c)- Contract

Once the parties agree on the price, terms and conditions, a preliminary purchase contract is signed between buyer and seller.

Two types of contracts are most used for real estate transactions:

1. Promesa de Compraventa

A Promesa de Compraventa (“promise to buy”) is a contract in which the parties disclose all the terms and conditions which shall be incorporated in the finalized escritura (“deed”) which is executed by the Notario. You DO NOT give any deposit money in advance in a promesa de compraventa.  

1. ii) Compraventa

The Compraventa (“purchase) contract is similar to the promesa de compraventa but involves a deposit (5-10% is standard). At Criteria, we recommend utilizing the compraventa contract on most transactions since it is easier to enforce.

d)- Preparation of the Escritura and/or Fideicomiso (Deed and/or Trust)

Your Notario of choice will start the process of creating your Fideicomiso (if you are purchasing in the Zona Restringida), or the Escritura definitiva de Compraventa (Deed).

The Notario is bound by law to:

1. Conduct a Legal Title Review of the property.
2. Obtain an official valuation of the property. (The official valuation is only for tax purposes and might not indicate the real market value of the property. Criteria performs an independent real market appraisal to ensure our clients pay a fair market price.)

• Execute the escritura (deed)- The Notario must sign the Escritura de Compraventa which is a true representation of your final real estate contract with all its terms and conditions.

1. Calculate, collect, and pay taxes, fees, and closing costs- The Notario must calculate, collect, and pay all the taxes, fees, and closing costs associated with the purchase agreement. In Mexico, as in most federal republics, real estate transactions are subject to federal, state, and municipal taxes. While each state has a different tax schedule, the Notario provides his or her clients with an invoice detailing all the applicable taxes and fees, including his professional fees.
2. Register the Property. The Notario must register and record the property’s legal title in the public registrar (Registro Publico de la Propiedad) and provide you with a registered deed (Primer Testimonio). This is your legal and registered deed and evidence of your ownership of the property. This process usually takes a few months.

Criteria offers a free initial consultation.

Retainer: Criteria requires an initial retainer.

• $2,000 USD for a House, Apartment or Condominium.
• $3,500 USD for commercial property.
• $5,000 for industrial Property.

Criteria charges a fixed fee of $175 per junior associate hour and $225 per senior associate hour. We have a fee ceiling that will NEVER surpass 1% of the total price of the purchase or lease, plus expenses. (Expenses to be disclosed and approved by the client beforehand, Criteria will NEVER have any hidden or surprise fees).

Upon receipt of the retainer, a preliminary due diligence of the property (legal title, restrictions, paid taxes, market value, etc.) is performed.   

Risk/Reward Valuation System- WHAT IS THE SYSTEM? We will walk hand-in-hand with you during the whole process. At the end of the process, you will receive a report with our findings and our professional opinion on whether or not to purchase or lease the subject property.

The final Risk-Reward Valuation will ALWAYS be supervised and signed by one of our Senior Associates.

While there is always risk associated with any real estate transaction, and the decision to purchase or lease land in Mexico will ultimately be yours, we are here to minimize that risk and to ensure that you make the most informed decision possible.