05 Real Estate Law
Glossary of Real Estate Terms
Apostille – The way in which a binding document from one country can be legalized or authenticated for accepted use in another country. A certification of authenticity that must accompany documents that have originated outside Mexico, for them to be accepted for use in Mexico. In cases where apostille documents are accepted in place of appearing in front of a Mexican notary to sign a document, the document to be signed, must be signed and notarized in the signer’s state of residence, and then sent to the official government office to be “apostilled”/certified. Usually involves fees and time delays, but can often be preferable then returning to Mexico to appear before a notary to sign a document. See ADIP March 2005 for more information.
Ejido, Ejidal, Ejiditario – In 1917, after the Mexican Revolution hundreds of millions of acres from the original Spanish land grants were expropriated by the government and classified as ejidal or agriculture properties, accounting for almost 50% of all land in Mexico. The state retains ownership of these lands and the Ejiditarios, the farmers who live on them, have the collective right to use them. The rights of usage pass from father to son, but this land can never be sold as private property. In the early 1990’s a decree was passed allowing Ejido land to be converted into private property, and thus able to be sold to third parties. The procedure is a multi-step and often lengthy process, where all members of the group must be in agreement. See ADIP February 2005 for more information.
Factura – Official receipt for goods or services that contains the buyer’s and seller’s RFC number and any IVA collected.
Federal Zone – Applies to land, and real property within land, that is 100 Km from any international border and 50 km from any coastal shore—which is the restricted zone and cannot be directly purchased by foreigners. See ADIP November 2004 for more information.
Fideicomiso – is a bank trust through which Foreigners can acquire indirect title to property. Per Article 27 of the Mexican constitution, any property located within the “restricted zone” (see above), acquired by a foreign person, must be held in a Mexican bank trust (fideicomiso). Essentially, the fideicomiso is a contract with a Mexican bank for it to hold title on behalf of the foreign person. For more information see ADIP February 2001, January 2004, February 2004, March 2004, January 2005, February 2005, March 2005, November 2005, April 2006.
Foreign Investment Act – Mexican Law governing investment activities by foreigners in Mexico, with the purpose to establish rules to attract foreign investment to the country and promote its contribution to national development. You can find a copy of it in English on the Secretary of Economy website: http://www.economia.gob.mx
FM Documents - FM “Migratory Form” is a visa a foreigner can apply for, for permission to enter Mexico and which establishes how long they are able to stay and what type of activities they are permitted to perform while in Mexico.
-FM-T Tourist Visa, non-immigrant, from 30 days to no more than 6 months, granted upon entering, no work or business activities allowed.
-FM-3 Non-Immigrant Visitor, who wants to work and stay longer than six months, must be applied for at a Mexican Consulate before arriving in Mexico or at an Immigration office once in Mexico.
-FM-2 is for immigrants who wish to obtain the rights to reside in Mexico permanently, usually granted after having an FM-3 for a period of years. See ADIP November 2005 for more information.
IVA - (Impuesto al Valor Agregado or IVA) Value Added Tax
Mexican Capital Gains Tax – When a property is sold, capital gains taxes are calculated based on gains as determined by the deed declared value, regardless of what you actually paid for it, if what you actually paid for it is different that you declared on your deed….So, whatever sales price you declare when you buy a property will be the sales price used to calculate gains when you re-sell the property. See ADIP April 2004 for more information.
Notario (Notary) - American Notary Publics, in most states, are regular people who after a simple process have obtained a license to act as a witness to acknowledge something has happened before them, (i.e. the signing of a contract) but they do not need to know or understand the legal scope or duties that the parties are acquiring through that contract. Conversely, the Mexican notary (Notario) is required to be an expert of the Law, they have the obligation to make sure all parties understand the legal act they are entering into, and that the act is legal. Mexican notaries are held legally liable for their actions and are subject to harsh penalties if found to be acting incorrectly, their license can be revoked and they can even be legally persecuted. The services of a Mexican Notary, and the costs associated with them, have little in common with those of American notaries. See ADIP January 2007 for more information.
Presta nombre – “Lend me a name,” the idea of using someone else’s name to buy property, usually to circumvent the prohibition of a foreigner owning property in the federal zone by putting the title in the name of a Mexican national. Not only it is totally illegal and not recommended, but it can be basically buying property for someone else, as you will have no legal recourse or rights to the property. See ADIP March 2004 for more information.
Private Contract between Buyer and Seller - A written and signed agreement between parties defining the purchase terms before official purchase proceedings begin. Keeping in mind a foreigner does not buy property in the federal zone, they buy beneficiary trust rights to property in the federal zone, thus a private contract that states property is being sold, can be null and void. See ADIP November 2006 for more information.
RFC (Registro Federal de Causantes) - Tax identification number, See April 2002 for more information.
SAT (Servicio de Adminsitracion Tributaria) – Taxing authority in Mexico, formerly called “Hacienda.” http://www.sat.gob.mx
