Americans and Canadians often look to purchase real estate outside of the United States--whether for retirement, investment, recreation, or as a hedge against increasing real estate prices back home. Many foreign nations permit Americans to purchase land with few restrictions. Similarly, foreigners are generally permitted to purchase land in the United States. There are, nevertheless, a few considerations one should take into account before buying land in a foreign country.

First, Find an Attorney:

if you don't know the laws of Mexico, you should find someone who does. If you choose to proceed without knowing the law governing your real estate transaction you are playing Russian roulette with your money.


Another issue to consider is what happens if something goes wrong with the property and you have to seek recourse against the seller. You will likely have to sue them in Mexico. If the seller is located elsewhere, for example the United States, you may need to sue him in the state in which they reside but with Mexican law applying.

Second, Purchase Only Land Conveyed via Record Title:

The first step in any land transaction should be to make sure that you are buying from a record title holder and that you, as a foreigner, buy under a real estate trusts and that it eventually gets recorded with your name on it. Real estate in the United States is conveyed through recorded (registered) deeds of title. These deeds are public records and can be accessed by anyone with the time to head down to the county courthouse and do a bit of digging (and now many counties provide online means for deed research). Mexico, also uses a title registration process similar to the process in the United States. If for some reason your seller is unable to show that they are the property owner of record, this should be more than a red flag...it should end the transaction. There are too many tricks used, “oh the land is registered to our father who died last year and you would have to finance the probate and then we there is an appointed Executor can sell you the property”, don’t fall for that dirty trick.

Third, Physically Inspect the Property:

Did the seller show you photos of the property before you purchased? Did you know the property is occupied and under lease? In the United States there are laws requiring a seller (and their agent) to fully disclose adverse conditions relating to property that they are selling. If a seller fails to disclose a material adverse condition...well, they are going to have a problem...likely in the form of a lawsuit with an outcome in favor of the buyer. In Mexico, things are not that clear, also, laws controlling Real Estate Agents include no ethics. The law controlling licensed real estate agents has no provisions governing full disclosure. We are talking caveat emptor to the max. You buy it, you own it. (Or do you?) ..Moles and all.

Take the time to get down there...beat around the bushes and make sure you know what you're getting. There is an additional economic reason for this. The Real estate market in Mexico is rather inefficient --they involve the sale of disparate, individual parcels of land...none quite exactly the same as another—sellers not being owners, plus most real estate agents are rather inefficient. If you learn a bit of Spanish and head south...but with the right information and the right support you might just find yourself a bargain that will pay for the costs of your trip.

Fourth, Consider The Purpose Of Your Investment:

There are a few things that one ought to consider before buying property that they do not intend to immediately occupy.

Rentals: This part of what you ought to consider before buying rental property outside the United States. First, who is going to manage the property? The best option is to buy properties that offer rental management services. This should save you the time and effort of managing a distant property yourself. The next best thing is to find a local professional who is in the industry (hotel owner/manager) who can help you arrange for repairs, cleaning, and other lease issues.

Vacancy: Land is a solid investment, and your rights in the land are generally safe from anything except adverse possession. For example, in Baja California, adverse possession takes a minimum of 10 years. Yet, if you buy property, lease it or you may find a squatter next time and he may not want to budge to pressure.

Understand The Risk:

The complexities of foreign law and a foreign language and culture are tremendous foes that pose even larger risks, don’t go solo on this, and hire a real estate attorney.

Consider Other Options For Investment :

This goes back to a point I probably should make initially. You need to know why you are buying the property. If you're interested in purchasing property for retirement or as a second home you should follow the steps above. However, if you're really looking to purchase foreign real estate for investment purposes I would strongly suggest investing in a foreign owned Real Estate company. These have rather popular investment options over the past few years.

Regards,