Purchasing Property in Merida
Interested in purchasing a property in Merida?
Merida is one of the hottest property markets in the country for foreigners looking to purchase a home in Mexico. Americans are the largest group of foreign buyers in Merida, followed by Canadians. These buyers are drawn to the wonderful climate, colonial architecture, safety and amenities the city has to offer. Merida is the largest city in the state of Yucatan as well as being its capital. Read on to see how you can purchase property in Mexico and enjoy all that paradise has to offer.
As an expat interested in buying property in Yucatan, it’s easy to find yourself in a position where you don’t know what you don’t know. Mexico’s rules about foreign possession of real estate have their roots in the Mexican Revolution but have been updated to accommodate the modern investor as well as modern-day Mexico. The Mexican government considers the issue of foreigners owning Mexican land a matter of security. They have created two legal structures regarding foreign property ownership, the restricted zone, and the non-restricted zone.
The restricted zones are properties located within 30 miles of the coast or 60 miles from any border with another country (Mexico borders the United States, Guatemala, and Belize). In this zone, a foreigner is not allowed to own land or property according to Mexican law. The non-restricted zone is anywhere outside the restricted zone. Foreigners can legally own property in this area but still must meet some requirements such as being able to prove that they are legally in Mexico.
The North American Free Trade Agreement (NAFTA) was put in place to encourage foreign investment. The Mexican Congress modified investment laws creating a new structure that allows foreigners to invest in Mexican real estate called the fideicomiso (Spanish for bank). The fideicomiso is the only way to purchase and enjoy a property in the restricted zone. In Mexico, only financial institutions can act as trustees and this is how the structure works. There are three parties involved.
This is the seller. They grant the real estate involved and relinquish the rights that go along with the property.
This is the trustee. A Mexican bank serves as the trustee, working in good faith for the buyer and their interests. The bank purchases and owns the property on behalf of the beneficiario.
Also, called the beneficiary is you or any foreigner who enters the fideicomiso to purchase real estate.
Because a foreign buyer is not legally entitled to own property outright within the restricted zone, the trustee (bank) buys and creates a trust to hold title to the property. The bank holds the title but by law, it can only act under instructions of the beneficiary of the trust. The beneficiary has the same rights to lease, sell, improve and mortgage the land or use the property as they want, just like any Mexican property owner.
Understanding the details of the process can be difficult if you are experiencing it for the first time. Merida Property Management can help take the guesswork out of all of this. We are an experienced real estate and property management company that can help ease you into the exciting opportunity of buying real estate in Merida!