Legal
After Mexico's election: is it safe for a foreigner to buy property in Mexico?
The peso reacted sharply to Mexico's June 2 election. What changed and what did not for foreigners buying in the Riviera Maya.
For whom
Buyers from the US, Canada or Europe who hesitate because of the election noise.
On June 2, Mexico elected a new president. A few days later the peso moved sharply: on June 7 it closed at 18.36 per dollar, compared with 17.88 the day before, a 2.65% drop in a single session. Analysts tied it to the majority Morena and its allies won in Congress and to the constitutional reforms that were announced, starting with the judicial reform, which kept pressure on the peso the following week.
A foreign buyer wants to know whether it is still safe to buy here. Some things moved, and some stayed exactly where they were.
What moved
- The exchange rate. If you earn dollars and the property is priced in pesos, your money goes further today than a month ago. If you earn pesos and the property is priced in dollars, the opposite is true.
- Uncertainty about the reforms. They have not been approved yet, and their real scope will become clear over the coming months.
What did not move
- The legal way a foreigner buys. In the restricted zone, which covers 50 kilometers from the coasts and 100 from the borders, a foreigner cannot hold direct ownership, under article 27 of the Constitution. The purchase goes through a bank trust, a fideicomiso, with a permit from the Ministry of Foreign Affairs, as set out in the Foreign Investment Law. The permit is a public procedure of the Ministry.
- The paperwork that protects your purchase: a public deed signed before a notary, registration in the Public Property Registry and a lien-free certificate. It is the same as before the election.
- The difference between a property with legal certainty and one without it. That risk does not depend on who governs.
What we recommend today
- Do not sign anything that does not go through a notary and, if the property is in the restricted zone, through a fideicomiso.
- Ask for an updated lien-free certificate and review the deed before you put down a deposit.
- Put the currency of the price and the exchange rate to be used in the contract.
- If the exchange rate works in your favor, use it to negotiate, not to rush.
If this is your first purchase in Mexico, our guide on how to buy safely has the full steps, and here we explain what a fideicomiso costs.
Our take
In 19 years we have sold under governments of different parties and with the peso at many different levels. What protects a buyer is not the result of an election. It is the paperwork.
If you have a purchase in progress and something worries you, send us the documents and we will review them.
Sources
- El Financiero, June 7, 2024: why the peso and the markets reacted this way after the election (in Spanish)
- Proceso, June 12, 2024: the peso weakens on nerves about the judicial reform (in Spanish)
- Political Constitution of the United Mexican States (in Spanish)
- Foreign Investment Law (in Spanish)
- Ministry of Foreign Affairs: permit to set up a trust in the restricted zone (in Spanish)