That's My Story

BUYING YOUR BAJA SPOT Pt. 1 – Published July 2005 – Western Outdoor News

I’m probably going to hate myself for telling you how to do this, but I think I get asked several times a day about buying land in Mexico. You might as well jump in too…everyone else is!

So, I bet you heard that foreigners can’t own Mexican land. Well, if that were the case then thousands of Americans buying up the Baja must be investing in the wrong place and all these subdivisions springing up from Rosarito and San Felipe to Land’s End, must be getting bulldozed for the French. Here’s the bottom line. You absolutely can own Mexican property. Ask all those former San Diegans who now own beach front property lining the cliffs between Ensenada and Tijuana and commute back and forth to their jobs in Chula Vista and Del Mar!

I’m no real estate Einstein, but because I get asked this all the time, I did a little research and found a pretty succinct explanation in the land brochures offered by the folks developing the massive El Dorado Ranch in San Felipe.

I’m going to do this in 2 parts with a little background this week and then follow it up with some practical information next week.

Technically speaking, Joe American cannot own Mexican property. Previously, Mexico had welcomed foreign settlement which is basically how places like Texas, Arizona, California, et. al. got settled. The problem with Americans however is that once we move in, we don’t like moving out. (See “The Alamo”, “Davy Crockett”, “Jim Bowie”). So we had this little war with our neighbors to the south. To end the war, in 1848, we made Mexico give us what basically became the southeastern United States.

You can see why in 1917, when Mexico formed their current federal constitution, they were still smarting a bit and enacted legislation restricting foreign ownership of their most precious commodity…land! It allowed Mexican Nationals and Mexican companies to own property, but prohibited foreign ownership or businesses within the “restricted zone” (62 miles from the borders and 31 miles from any coast).

However, there’s something magical about the words “American investment dollars” that makes all things possible. Mexico, however, like many countries on the planet realized that there’s nothing like American cash and that it had to find a way to encourage American investment without making it’s constitution rollover like 3 day old bait.

Therefore, in 1992 it enacted an amendment to the Mexican Constitution in conjunction with the Foreign Investment Act of 1993. Accordingly, these measures created a system that allows foreigners to suddenly own property in the restricted zone that was still in harmony with it’s Constitution. Called a “Fideicomiso,” (Real Estate Bank Trust) this symantic play-on-legislation also allowed foreigners to form Mexican corporations as well as run businesses in Mexico without a Mexican partner.

Next week, I’ll tell how how the Fideicomiso works. However, here’s what the El Dorado folks say about investing and buying in Mexico:

Mexico is the #1 free-trade country in the world having free-trade agreements with 32 countries. It’s the #2 free trade partner with the U.S. and the #1 trade partner with California and has the 9th largest economy in the world. It’s also the #1 vacation destination for Americans and by far the #1 retirement destination for Americans.

That’s my story…
Jonathan