Buying a Home in Ajijic, Lake Chapala, Mexico

If you have stumbled across pictures of the beautiful Lake Chapala area, and are considering moving to Mexico long-term, you might run into the common misconception that you will be unable to own Mexican property outright. Obviously, this notion makes the idea of living in Ajijic, Mexico much less attractive. But luckily, the reality of property-owning in Mexico is much more straightforward. (Which makes your dream home on Lake Chapala that much more accessible). Don’t believe me? Read on for a full guide to Mexican property owning. 

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Think Before You Leap

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A slightly different take on that ancient adage, it is absolutely vital that you think long and hard before you try to purchase property in Mexico. For starters, you absolutely must hire a professional real estate agent who has experience in Mexico. Once you do that, you must discuss with said agent your specific property-owning goals. If you’re looking for an investment property versus a long term live-in property, the process will be different. It is important, therefore, to have your goals all laid out before you begin. 

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Ejido - The Law Behind The Misconception

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Earlier, I mentioned a misconception around owning Mexican land. Ejido is the reason for this misconception. In 1917, Mexico declared all land Ejido’ - this meant that communal land would be used for farming purposes. The implications of the Ejido mandate were simple - owning private property as a foreigner would no longer be possible. But this law is over a century old. Today, not all property is considered Ejido, you just have to make sure that the property you’re looking for is not. Generally, the only land that is still considered to be Ejido is indigenous land. Usually, the Mexican government has laws that make more touristy areas non-ejido, to increase accessibility and, ultimately, make more money. And luckily for you, property in Ajijic, Lake Chapala is not considered Ejido, so you likely have nothing to worry about. Regardless, make sure your real estate professional and attorney closely examine the title of the property in question, to ensure that you’re not accidentally buying into the joint ownership of Ejido. 

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Foreign Investment Law 

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In 1973, Mexico passed its Foreign Investment Law, which allows foreigners to purchase real estate anywhere in the country, with the exception of land that lies on the coast or borders of the country. This is further proof that not only are you, as an ex-pat, allowed to buy and own property, but Mexico also wants you to. Twenty years after the inception of this law, Mexico passed another law, fideicomiso,’ which allows ex-pats to own land in those aforementioned restricted areas. 

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Fideicomiso

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Yes, there is one last law to look over before we look at the actual purchasing process. Fideicomiso is essentially a trust agreement with a Mexican bank, and as such, allows for ex-pats to own properties as though they are Mexican citizens - under fideicomiso, you will have the same property-owning rights as Mexican citizens. This means you can include the property in your will, you will own the property with continuance, and you can sell the trust to another buyer if you so choose. This is a semi-complicated process, but becomes unimportant, as Ajijic, Lake Chapala is in one of the unrestricted areas of Mexican land. This means that you can purchase property in Ajijic, Lake Chapala, without going through the long, arduous process of establishing a trust with a Mexican bank. 

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Buy With a Corporation

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If you’re seeking an investment property or property for your business this makes the most sense. Buying through a corporation will also grant you access to those restricted’ coastal and borderlands, which could prove worthwhile. However, if you do purchase a property through a corporation, you are signing up for more fees and more headaches. You will need to release monthly income and expense reports (that are reviewed by an accountant) to the Department of the Treasury. Commercial property is also subjected to greater taxation. If you do choose this process, make sure to hire a well-versed corporate real estate attorney in advance. Working with someone who truly understands the nuances of Mexican real estate law is vital to your early success. 

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"The Process"

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The Offer 

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Once you have selected the property you want to own, it is time to make your offer. While Mexican law does acknowledge verbal agreements, it is vital to put your offer in writing, to ensure that there will be no confusion. To send your offer, use an offer to purchase contract’ - here, your real estate agent will be very helpful. Here, include the details of the terms of this purchase - price, deposit, payment plans, and deadline for acceptance. If your offer is accepted, make your deposit right away. 

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Contrato de Promesa

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This will be entered into once the deposit is made. This contract (Promissory agreement) is a binding agreement on both parties. Once entered into, if all terms are met, neither party is allowed to back out of this legal agreement. Once entered into, the seller (or his attorney) will contact your bank and begin the trust application process (fideicomiso). At the same time, your own attorney should be examining the property to make sure everything is in order - legal status, title, rights of transfer, terms of the contract, among other seller-provided documentation. All you need, as the buyer, is a passport, a driver's license, and a copy of your most recent utility bill. If everything seems to be in order, you move on to step three. 

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Compraventa

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Compraventa, also known as a purchase or sales agreement, starts the closing process and transfers the title to your trust which is established through fideicomiso. When all the final closing paperwork is ready, and you verify that it is all correct, you will sign the deed, and the title will be transferred to your trust. The notary will issue an official proof of ownership, which allows you to put utility costs in your name. The Public Registry will deliver the final deed. But, because Mexican law is different, you might not get the keys to your property at the same time as you get the deed. It just isn’t always aligned. 

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The Walk-Through

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Once you are given the keys, do a final walk through and make sure everything is in order. Then, just sign a quick delivery statement, and you’re all set for your new life in Mexico. 

If for any reason, you can’t or don’t want to be in the country during this process, your attorney is allowed to go through it extensively on your behalf. Regardless, owning a property in Mexico is not nearly as difficult as it might seem. That’s one less pothole on your highway to the beautiful Lake Chapala.