• Why are so many North Americans buying a retirement or vacation home in Puerto Vallarta?

Mexico’s close proximity to the US is a great benefit to the vacationer or retiree. The low cost of living, availability of quality resort home and lower prices compared to the US, wonderful weather conditions, and great medical facilities make living in the Puerto Vallarta area extremely attractive. Puerto Vallarta’s international airport features many direct flights to and from all major North American cities daily.

• What types of ownership can a foreigner have and what is the acquisition process?

Residential properties located within costal areas are acquired through a Mexican Bank Trust called a Fideicomiso. The bank serves a trustee which holds the title to the property for 50 years. The cost for the permit to establish a bank trust is less than $1000 USD. To purchase through a Fideicomiso, a foreigner must hire a ‘Notario’ (a governor appointed attorney) who will prepare the deed based on the instructions from the trustee bank. Applicable taxes are paid (2% of purchase price), and then the deed is recorded in the local municipality.

The foreigner, as a beneficiary of the Fideicomiso, has the right to use, improve, lease, sell, mortgage and will the property. A second beneficiary to the trust can be named on a Fideicomiso to avoid probate. Upon expiration, a Fideicomiso may be extended indefinitely in 50-year periods. After 100 years, the property remains yours, but a new trust must be created.

Escrow arrangements in Mexico do not typically exist as in the US. Some American-based real estate companies such as Prudential California Realty, work with a hybrid type of escrow, incorporating the closing customs of Mexico and California for U.S.-based buyers. Prudential Realty has close relationships with the best ‘Notarios’ to help better serve its clients.

• What type of financing is available in Mexico?

In Mexico, most residential real estate is purchased on cash basis. Financing of homes in Mexico has been customarily done through a home equity loan on a U.S. buyer’s primary residence. Mexican banks and finance companies have begun to offer loans to foreigners. U.S.-base mortgage companies are offering long term, fixed rate financing with as little as 20 to 30% down.

• Is a title insurance policy necessary?

Absolutely! Questions of title may be resolved through the title company rather than through the Mexican Courts. It is always prudent to get a title policy. First American Title Corporation, Stewart Title, and Fidelity National Title are a few U.S.-based companies offering title policies in Mexico.

* The above is provided as general information. As laws are subject to change and not all details can possibly be mentioned in this page. We recommend that you seek legal and tax advice from a qualified professional.