Foreign Real Estate--Buyer Beware

The eviction of some 200 American citizens from their homes in Baja California serves as a cautionary tale for others who are considering buying Mexican real estate.

For starters, prospective buyers must be aware that the Mexican constitution forbids foreigners from owning land within 20 miles of the ocean or 35 miles from national borders. If a salesman in Baja says there is a way around this, beware. Sometimes foreigners can build a house under a bank trust called a fideicomiso; sometimes the deal doesn’t pan out and a lifetime of savings evaporates.

To evade the constitutional mandate, some buyers build houses on ground that has been leased. But often there are no subdivision maps to clarify boundary and legal issues if a dispute arises. Nor is it unusual to find conflicting claims to the land, as was the case in the Baja land disputes.

The high cost of living in the United States, especially in California, has made many American retirees look south for affordable properties on which to build and live. Mexico is a preferred choice for more than half a million Americans, and some 70,000 of them are estimated to be in Baja. By most accounts, they live a good life and rarely face serious problems with their property. But conflicts do arise, and Americans should be aware that in the case of a dispute their options are very limited.

Mexico has no such thing as title insurance, which protects property owners in the United States. Also, Mexican property records are kept in municipal public registries and are not organized in the same way as those of American county recorders.

If you want to invest in real estate abroad you should understand that no amount of prudence is excessive and due diligence must include researching the country’s land tenure laws. In the case of Mexico, these are complex and can be confusing. Legal advice is recommended.