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Buying a Home
Can I own property in Mexico if I am not Mexican? What are my rights?
Yes, non-Mexican citizens may obtain direct ownership of property in the interior of Mexico. Here in Baja, it’s a little different. By Mexican law, properties within 50 km of any ocean front and 100 km of any border cannot be sold directly to foreigners, and are acquired via a bank trust, called a fideicomiso. Since most Baja property falls within that zone, you will most likely need a fideicomiso to purchase your property. With a fideicomiso, you still own the property, but the title is held in a trust by the bank. As the beneficiary of the trust, you have all the rights of ownership of the property, including the right to build on and improve your property, or sell it at any time. You will also provide secondary beneficiaries who will inherit the property without requiring a will or probate. You can also buy a property outright (and avoid the use of a trust) through the establishment of a Mexican corporation, however, there are multiple legal steps required in order to use this approach, and it’s best to consult a local attorney for guidance if you choose to go this route.
Can the Mexican government confiscate my land?
No, the Mexican government cannot legally seize your property. Under the North American Free Trade Agreement (NAFTA), Mexico may not expropriate property, except for a public purpose. This is the same as “Eminent Domain” in the U.S. When it is necessary to expropriate land, swift and fair market compensation must be paid, together with accrued interest. When purchasing any property, a good closing attorney will perform a thorough title search to assure the property is free of any liens or other claims.
In most cases, buying a property in Mexico is a cash transaction. There are few mortgage options, and the ones that are available typically carry higher interest rates and additional origination fees. There are some scenarios where the seller may be willing to offer financing. If cash is an issue, the most popular financing option we see is to secure a home equity line of credit (HELOC) on your home outside of Mexico to help pay for the new home. Call us for available financing options.
What are the typical closing costs?
Closing costs range from 3-4% to over 10% of the purchase price, depending on the cost and type of property. Regardless of the price of the property, you will need to pay to initiate or transfer the fideicomiso, or bank trust, to your name, and pay both an attorney and a notary for their time and work. These fees typically add up to approx. $4,000 USD. Additionally, you will need to pay acquisition taxes of 2.5% of the property’s value. Lastly, you will also have some smaller expenses associated with escrow services, surveys, legal certificates and appraisal, usually less than $1,000 USD.
How long will it take to close on a new purchase?
The exact time to close a transaction will depend on the buyer’s/seller’s preparedness to provide the necessary documents, which bank holds the trust, and whether it is eligible to transfer ownership. The process usually takes 2 to 3 months, but can be longer if there are special circumstances that need to be dealt with during the transfer.
If I decide to sell my property, can anyone buy it?
Yes, you may sell your property to anyone who wishes to buy it. If the buyer is a Mexican citizen, you will need to cancel the fideicomiso (bank trust), since they do not need it. If the buyer is not Mexican, the bank will typically transfer the fideicomiso, or bank trust, to the new owner.
Home Ownership Questions
1. When will I get my official copy of the bank trust (fideicomiso) from the bank?
It usually takes 2-3 months from the closing date until you receive your official fideicomiso document. It first must be printed on heavy paper, bound professionally, and then it must receive official stamps and signatures from various bank and municipality personnel in different locations across Mexico. The notario can usually print you a letter stating that you are the new owner of the property and that the transfer of the fideicomiso is in process. You can then use this letter to sign up for utilities such as electricity, water and Internet services.
Yes, the bank requires you to pay a fee of approximately $450 USD each year, on the anniversary date when you closed on the property. The bank will contact you by email (the one you gave to the attorney before closing) 1-2 months before this date so be sure to set a reminder and check your spam folder if you don’t see it. You can pay the fee in person at the bank, but most banks also offer some kind of online payment option.
3. How much are property taxes, and how/when do I pay them?
Property taxes depend on the type (house vs land) and value of the property. Property taxes are very low here, typically only a few hundred dollars, and are due in January of each year. However, you will get a 35% discount by paying before the end of November or a 20% discount by paying in December. Late fees start accruing in February and, if left unpaid, can result in severe penalties that must be paid prior to selling your house. Taxes can be paid online using your Clave Catastral number (which can be found in your fideicomiso) at https://lapaz.gob.mx.
- CFE (electricity): CFE is the city electric utility and bills every two months. The bill must be paid no later than the 25th day of the month, or you may get disconnected. You can pay the bill at any CFE office or substation using one of the kiosks and a credit card. You can also pay online at https://www.cfe.mx/Pages/Index.aspx, but this portal only accepts Mexican credit/debit cards and American Express. If you don’t receive your bill, you can take an old bill to any kiosk and scan it to see what you currently owe.
- SAPA (water service): SAPA is the city water utility, and bills every month. The bill must also be paid by around the 25th of the month. You can pay the bill at any SAPA office or substation, or online at https://sapa.lapaz.gob.mx/.
5. I would like to get (or upgrade) internet service. What are the options available?
- Telmex: this is one of the more popular options, especially in established neighborhoods now that they are rolling out high-speed fiber optic cable throughout La Paz, but this service may not be available everywhere. The cost is as low as $20 USD/month and you can pay monthly, but your cost will vary based on how much bandwidth you want. Bills can be paid online at https://telmex.com/.
- Telcel: Telcel offers a 4G hot spot internet plan that is both reasonably fast and inexpensive. You will need to sign a 2-year contract and either buy or rent the hot spot modem, but there are no installation fees or appointments and you can also take it with you if you move. Bills can be paid online at https://www.mitelcel.com/mitelcel/login.
- Wireless: if neither of the above options is attractive to you, it is also possible to install a point-to-point wireless internet service that can deliver blazing fast speeds. The equipment cost and monthly fees are higher but so is the bandwidth. Contact us for more details.
6. Will I have an official address where I can have mail sent?
Regardless of where you live, yes it is possible to get mail delivered. An empty lot will generally NOT have an address yet, and even some homes may not have registered the number yet. You can request an official address number at Municipio, but generally speaking a numbered address is not necessary to receive mail or package deliveries from DHL, FedEx, etc.
7. Are there any agencies that can manage my home while I am not there?
Yes, there are several property management services that can maintain your home when you are not here, including regular upkeep, gardening, pool service, and house cleaning. Ask us for a referral to services in your area.
8. Can I rent my home when I’m not using it? What do I need to worry about?
Yes, you can rent your home when you are not here. In fact, most of the property management services here will also rent the home on your behalf. Homes can be rented by the day or by the month, and the rental rate depends on the area and amenities of the home. There are tax laws requiring you to report and pay taxes on any income you collect from renting your home, so you should speak with a local accountant to see what your responsibilities are when renting your home.
9. Where can I find services like house cleaners, gardeners, and such?
We have a list of trusted service contractors we recommend, and the property management services also have their favorite vendors they use. Ask us for our list, or check out one of the local La Paz Facebook pages for other recommendations.
Making the Move to Mexico
1. What do we need to bring in order to live there for a season?
Living in Baja for several months is almost as easy as visiting for 2 weeks. You will need a passport that is valid for at least 180 days beyond the date of entry, a valid drivers license and vehicle insurance (if you plan to drive), and a valid tourist card. When you request your tourist card (whether by air or by land), you should state how long you will be here (no longer than 180 days).
2. Can we drive our vehicle to Baja, and can we leave it there?
Yes, you may drive your vehicle to Baja and use it legally while you are here. All of the Baja peninsula, including the states of Baja California and Baja California Sur, is part of the frontier zone, which means you are not required to import your vehicle. You must purchase Mexican liability insurance, and you must keep your registration current.
3. What is the best route to take if we want to drive to La Paz?
The best route depends on where you are starting your journey. Most people use MX-1 from Tijuana, but MX-5 was recently completed, so people coming from Central California, Nevada, Arizona or further East can use that route. Check out our 3-part series on driving Baja at http://bajaliferealty.com/driving-baja-part-one/.
4. Can I bring a boat into Baja? If so, what are the requirements?
Yes, you may bring your boat into Baja. You must purchase a Temporary Import Permit (TIP), which is valid for 10 years and available at the Pichilingue ferry terminal. Additionally, certain marinas may require you to have insurance while on the water.
5. Will I need to speak Spanish?
La Paz is friendly towards ex-pats, and as such, you may be able to get by with speaking only English in most tourist areas or popular ex-pat areas (like El Centenario). However, some of our favorite restaurants and many specialty shops, as well as local service providers and contractors, will only speak Spanish, so you will limit your options unless you can at least try to speak a little Spanish. Most times the local will meet you half way if you try. Check out our article with some basic phrases that can help at http://bajaliferealty.com/will-i-need-to-speak-spanish-in-la-paz/.
6. Are there any items I should consider bringing from US/Canada?
La Paz has come a long way in the past 10 years, and as a result you should be able to find most items you’re looking for locally or by ordering from Amazon Mexico https://www.amazon.com.mx or Mercado Libre https://www.mercadolibre.com.mx (similar to eBay for Latin America). Still, there are some items that you might consider bringing with you because they can be tougher to find here. Some vitamin supplements and specialized medications may not always be available, and some of the latest technologies may also be tougher to find (or they may be more costly). Also, we have found that some clothing may be tougher to find here, especially if you wear special sizes.
Miscellaneous Questions
1. Do I need to have a Mexican bank account?
Generally speaking, you do not need to have a Mexican bank account. However, you may find that having an account may make certain things easier. For example, some Mexican online vendors will not accept a non-Mexican credit card for payments (most often because the system will not allow a non-Mexican billing address). Also, if you want to have any of your utilities on auto-pay, you will likely need a local debit card.
2. How do I open a new Mexican bank account?
To open an account, you should be a resident and have a property ownership document or a valid lease agreement. Additionally, you will need to bring your passport to the bank, along with your tourist card or resident visa. Some banks may require a temporary or permanent resident visa to open an account.
3. I would like to get a resident VISA. What is the process and who should I contact for help?
Applying for a temporary or permanent resident visa is not difficult, but it is important to note that you will need to initiate the process at the Mexican consulate in your home country, not here in Mexico. To apply for residency, you will need to provide sufficient documentation to prove you will not place a financial burden on the Mexican government. For example, if applying as a retired person, you will need to show 12 months of financial statements showing that you have maintained a certain amount in your accounts (the numbers change yearly) . If you plan to continue working, you will need to show proof of monthly income or use other monthly income sources to prove you can meet the financial requirements. Once your application is accepted in your home country, you are issued a one-time entry visa to Mexico, and will need to complete the residency process with INM in Mexico within a certain timeframe before you leave the country again. A local immigration attorney can help you organize your paperwork and navigate these requirements. Salvador Ramirez at https://www.facebook.com/bajapaperworks/ has helped many ex-pats with their residency applications.
You can receive mail at your local address, but if it is coming from outside Mexico keep in mind that it may take 4-6 weeks for it to arrive. Most delivery services (FedEx, DHL) operate here as well. Some people do use a US based mail forwarding service to make sure their mail gets forwarded to their local home. https://mailbaja.com/ is one such service.
5. Can I order items online and have them delivered to my home in Mexico?
Yes, we have several local online stores that will deliver to your door including Costco MX, Liverpool, Sam’s Club MX, and Amazon MX.
6. Are there any logistics services that can help me ship things from the US/Canada here?
Yes, there are several logistics services that will allow you to order items online delivered to their facility in San Diego CA and they will deliver it to your door here in 1-2 weeks. ACV Logistics is one such service. All of them will charge roughly 35% on the total invoice price, of which 16% pays for IVA (Mexican sales tax), which is required when bringing new items into Mexico.
7. Where can I learn more about living in Baja?
We have multiple articles about moving to and living here in Southern Baja (specifically La Paz) on our blog. Here you can learn about the health care and insurance options, read about local beaches and day trips, and get a feel for what it’s like to actually own a home here. Visit our blog here to browse the articles: http://bajaliferealty.com/this-baja-life/.
8. Are there any social media resources where I can find useful information?
Yes, there are several sites on Facebook that are dedicated to helping ex-pats get to know the area and interact with other ex-pats. Check out:
- Baja Life La Paz
- Loco La Paz ex-pats
- La Paz Living
- What’s up in La Paz
- Everything Social La Paz, Todos Santos and Beyond
- Talk Baja
You can also follow us on Instagram @bajaliferealty.