Purchasing in Baja

Purchasing real estate in Mexico has changed dramatically over the past 10 years for U.S. citizens, according to Mitch Creekmore, senior vice president of business development at Stewart International. Starting in 1994, Mexico’s federal government liberalized the laws that affected the “restricted zone” (50 kilometers along Mexico’s coastline and 100 kilometers along Mexico’s natural borders), which includes all of Baja California. Despite having more legal rights, U.S. buyers should remain aware of some basic issues, says Creekmore.

A buyer should always ask the seller for a copy of the public deed (escritura publica) vesting title to the real estate, he says. The buyer should also request a copy of the lien certificate (certificado de libertad de gravamen), which should indicate the owner who is on record, the property’s surface area, the property type, the legal description and whether there are any liens on the property. The buyer can also request a certificate of no tax liability (certificado de no aduedo) from the local taxing authority.

Title to real estate in the restricted zone can only be vested one of two ways, explains Creekmore: either in a 50-year renewable Mexican bank trust (fideicomiso); or in a Mexican corporation that is solely owned by one or more foreign stockholders with no Mexican ownership. For buyers who go the fideicomiso route, it essentially designates a Mexican bank as the trustee and title owner. However, for all intents and purposes, the foreigner owns the land.

Creekmore also says it’s a good idea to utilize a U.S. title company to provide escrow services, such as Stewart Title Guaranty de Mexico.

And with the help of companies like Prudential California Realty, Cabo Gold Division, which steers clients through the real estate process, purchasing in Mexico is easier than ever. Plus, the availability of services such as mortgage financing opens the market to everyone.

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