U.S. citizens should be aware of the risks inherent in purchasing real estate in Mexico, and should exercise extreme caution before entering into any form of commitment to invest in property there.
Investors should hire competent Mexican legal counsel when contemplating any real estate investment. Mexican laws and practices regarding real estate differ substantially from those in the United States. Foreigners who purchase property in Mexico may find that property disputes with Mexican citizens may not be treated evenhandedly by Mexican criminal justice authorities or in the courts.
The Mexican Constitution prohibits direct ownership by foreigners of real estate within 100 kilometers (about 62 miles) of any border, and within 50 kilometers (about 31 miles) of any coastline. In order to permit foreign investment in these areas, the Mexican government has created a trust mechanism in which a bank has title to the property, but a trust beneficiary enjoys the benefits of ownership. However, U.S. citizens are vulnerable to title challenges that may result in years of litigation and possible eviction. Title insurance is virtually unknown and untested in Mexico. In addition, Mexican law recognizes squatters' rights, and homeowners can spend thousands of dollars in legal fees and years of frustration in trying to remove squatters who occupy their property.
American property owners should consult legal counsel or local authorities before hiring employees to serve in their homes or on vessels moored in Mexico. Several American property owners have faced lengthy lawsuits for failure to comply with Mexican labor laws regarding severance pay and social security benefits.
American citizens should exercise caution when considering time-share investments and be aware of aggressive tactics used by some time-share sales representatives. Buyers should be fully informed and take sufficient time to consider their decisions before signing time-share contracts, ideally after consulting an independent attorney. Mexican law allows time-share purchasers five days to cancel the contract for unconditional and full reimbursement. U.S. citizens should never sign a contract that includes clauses penalizing the buyer who cancels within five days.
A formal complaint against any merchant should be filed with PROFECO, Mexico's federal consumer protection agency. PROFECO has the power to mediate disputes, investigate consumer complaints, order hearings, levy fines and sanctions for not appearing at hearings, and do price-check inspections of merchants. All complaints by Americans are handled by PROFECO's English-speaking office in Mexico City at 011-52-55-5211-1723. For more information, please see the PROFECO’s "Attention to Foreigners” web page at Profeco (Procuraduría Federal del Consumidor).
