During early 2007, flush with money rolling in from my mortgage broker customers, I began a serious search for a 2nd home on the beach. Property prices in California left me breathless and the Pacific is too cold much of the year so I started to look at Mexico's Sea of Cortez (aka Gulf of California) properties. Mid year I found a suitable property & made an offer with a significant earnest money deposit. It was rejected by the seller but he countered with a price real close to his asking. Before I had a chance to maybe split the difference or something on a Friday in August two mortgage customers phoned and said "CANCEL EVERTHING" the other one, probably in shock & unable to phone yet waited to Monday to cancel. Grateful that my offer had not been accepted I scaled back the price range I could look for. Now that plunging property values in the US have finally effected 2nd homes in Mexico I have found a beach house my reduced budget can barely afford. It does need a little fix up so I thought that I would invite fellow TKers to come and visit, and swing a hammer or a paint brush as the payment for a week on the beach. Here is a photo:

As I said, it is with in reach of my budget.  Of course I will have to liquidate my Trade King account to help pay for it.   So should I buy or not?

No.  Mexican law dows not allow any ownership of land 60m from the tide line.  You will have to pay rent to whoever has the government concession to the land.  Sometimes more than one person claims to have the concession to the same land.  Non-Mexican can only control land that is held in a bank trust called a fideicomiso.

I know the sea of cortez on the Baja side very well having driven up and down Baja many times staying at many beaches.  I have also driven the the west coast of Mexico from Oxaca to Hermosillo.  I have also driven the Gulf of Mexico coast from Yucatan to Texas.  

Never have I seen such a bad beach house.  You can do a lot better by going to Mexico, taking a look around yourself.  My advice is to get a lawyer for any realestate transaction in Mexico.  Mexicans use lawyers to buy homes.

Well I am off to my sailboat in Mexico!  Enjoy your house hunting!  

Saludas a todos mi amigos en TradeKing desde Mexíco! 

No fue la significa que digo.  Nope, that wasn't the meaning of what I said.  No one can own land 60 meters from the sea, it is under exclusive control of the Mexican government called the federal zone.  I was wrong, it is 20 meters (60ft).  http://www.mexicolaw.com/LawInfo30.htm

A foreigner can own land, in their own name, in the interior, but must have a permit from the Ministry of Foreign Relations (and they do give permits).  100km from the border and 50km from the coast is the restricted zone.  Non-Mexicans can control/buy/sell land in the restricted zone only within a bank trust. 

http://www.bajabound.com/before/legal/rights.asp

Here is the Mexican Secretary of Exterior Relations page (translated by google) which gives the regulations on foreign ownership.

http://translate.google.com.mx/translate?u=http%3A%2F%2Fwww.sre.gob.mx%2Ftramites%2Fsociedades%2Ftema2g.htm&sl=es&tl=en&hl=es&ie=UTF-8

Again.  Get a lawyer.  There is no regulation (of any kind) of real estate sales people.  We know what they did in the U.S.  Everyone in the U.S. should have had lawyers involved in their home purchases.  Lawyers would have told people don't sign that mortgage you can't afford to pay.

Hehehahahaha!  Can you see a gringo with a bottle of tequila in one hand and a torch in the other laughing at his new mother of all mosquito repellants!  

Every time I drive down Baja, I visit with a guy in a mexican beach house 1 to 10 steps off his lanai on the beach to the water on the Sea of Cortez.  I parked my rowboat right on his patch of beach.  Sometimes the water is in his living room when a hurricane comes through.  (Astroturf makes a great living room floor.)  There is no way in hell he would trade it for a the U.S. suburbia with an ARM.

My friend on the beach told me most of his neighbors who passed on had alcohol realated deaths.

My landlady told me she lived in Cancun and Acapulco for two years after selling her real estate business.  She told me when she realized all her friends were alcoholics, she realized it was time to come back home.

Elizabeth Taylor and Richard Burtan seemed to have nice houses in Puerto Vallarta.

The post was done to provide a little levity after last weeks market action.

Actually I downloaded the photo from a link on Google Earth thinking to use it for a visual comparison to the structure of the stock market recently.  What triggered the beach house buying idea is the fact that I was contacted last week asking my offer to buy was still on the table - NOT.  Running-with- scissors is quite knowledgable about Mexico real estate.  The 20 meters  above mean high tide is public, that is why vendors ply the beachs in front of even the most exclusive hotels & condos.  Non mexicans  do not get to own a residential property within 50 km of the mean high tide, however a trust can be set up and as the benificiary of the trust you enjoy almost the same rights as fee simple ownership in the US.  Looked seriously at El Golfo de Santa Clara for a while, it is the closest Sea of Cortez beach to the US, only about 70 miles, with Yuma AZ another 20 miles away for great medical care.  If you want the reasons I gave up on it send me a private message.  Below is from El Golfo on a busy 3 day weekend:

The best way to buy a house in Mexico is to start with a lawyer you pay.  The transaction is carried out by a notary, a lawyer who is appointed to a notary concession by the Mexican government.  The notary's job is to check the credentials of the parties involved in the transaction, to identify problems with the title, to collect the 8% transfer tax from they buyer, and the 20% capital gain tax (off inflation adjusted cost basis) from a seller.  If the seller was resident of the home, then the capital gaint tax is waived.  If you do not make Mexico your tax home, don't expect the waiving of the capital gain tax when you sell.  The notary verifies the transfers of monies in the contract of sale.  When the transaction is finished, the notary registers the new title in the federal land registry of the Republic.

There are U.S. companies selling title insurance in Mexico.  However, the lawyer I hired said there is no such thing as title insurance in Mexico, and it has no value in Mexican law.  The title in the federal land registry is pre-eminant.  Another wacked out part of the U.S. companies selling title insurance in Mexico which they say is enforced in U.S. Florida court.  I have never, ever heard of any case of this.  I have heard of cases of the same company selling title insurance to both parties contesting the title of the same land in Rosorito.  That should be a tip off of a scam.  If I was a U.S. judge I would say land title in Mexico is out of jurisdictioin.  

Basically, the transaction should conform to the laws of Mexico.  Attempts to make it look like a U.S. style transaction where real estate agents claim to collect for escro accounts (their pockets) unregistered with the notary end up only with sorrow to show for it.  Also under the Mexican constitution, people entering into a contract in Mexico are prohibited from enlisting the aid of a foreign power in the matters of the contract.

Hence, you are best off being represented by your own mexican lawyer. 

I don't live in Mexico, but I have.  I have only rented.  One paramount issue of moving somewhere is having an income which sustains you.  In hard times, it may be hard to find income in a culture that is foreign to you.  That said, the grandfather of Presidente Fox, emigrated from the U.S. to Mexico during the great depression.

A residency visa is called an FM3.  You will need an FM3 visa to buy a house, it is required to enter into a contract such as a property purchase contract.  It can be obtained with or without permission to work.  See the secretary of exterior relations webpage for details (under Visas for Foreigners).

http://www.sre.gob.mx/english/