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Purchasing Real Estate in Mexico

Resendiz Wong Abogados is the premiere Mexican law firm in assisting U.S. citizens and other foreign nationals in purchasing both private and corporate real estate anywhere in Mexico. Our firm has extensive experience in assisting both buyers and sellers in all types of real estate transactions in Mexico.

Purchasing real estate in Mexico as a foreign citizen can be a very complicated and arduous process without the assistance of a carefully selected legal representative. The extreme variances between real estate law in Mexico and in the U.S. are alone cause for confusion, but when you consider that all those laws and regulations are in a foreign language, you are really going to have your hands full if you try and go at it alone. When buying property in Mexico, it is very helpful to find an attorney in Mexico who is not only well versed and experienced in Mexican real estate law, but one fluent in your native language as well so he or she will be able to transfer that knowledge to you in an articulate, easily digested explanation. For these reasons among others, our firm staffs attorneys fluent in English as well as German and French, and to better serve our American clients, our firm also staffs U.S. citizens to encourage a more comfortable, at home atmosphere throughout the intricate and complicated process of purchasing real estate in Mexico as a foreign citizen.

Resendiz Wong Abogados has been recognized by both the U.S. Embassy in Mexico and the U.S. Department of Commerce as a dependable source of ethical and reliable legal representation and advice for U.S. citizens in Mexico. If you would like information on how you can verify this, or if you would like to receive a list of U.S. companies and individual private home buyers who we have represented for reference purposes, we would be happy to provide such information. Simply send us your detailed request to rwa@resendizwong.net.

Mexico, the Best Fit for the International Expansion of U.S. Companies.

In order for a company to survive in this rapidly evolving global economy, it must eventually expand at least a portion of its business operations overseas or across borders, to become a more lean and cost-efficient organization. One can rest assured that the competition is now or is currently in the planning stages of taking such steps, and it would not be wise for a company to allow itself to be left behind.

Many consider the top three locations for such expansion to be between Mexico, China and India, however after careful consideration of all the facts it becomes clear that Mexico is now, and has always been the best location for the international expansion of U.S. companies’ business operations, whether in production, sales or services.

Some of the reasons why Mexico is the best destination for the international expansion of U.S. companies are:

Low Labor Costs – The average factory worker in Mexico is paid $2.60 an hour with tax and benefits included, as compared to the U.S. 2002 average of $21.11 an hour (Business Week, Dec 14, 2003). It is true that the average pay for manufacturing labor in China is less than that in Mexico, at approximately $0.95 an hour, but in China companies are expected to provide their employees housing, food, medical care, recreational activities, and uniforms; the exact benefits are negotiated with the local government (local communist party headquarters).

Because of the extensive responsibilities involved, many international business consultants would argue that bringing on a new employee is more like adopting a worker as opposed to hiring one. In the end, unless a company intends to employ a very large number of factory workers for a large scale industrial operation, establishing a subsidiary in Mexico is by far the most cost-effective option.

Mexico is a Big Consumer Market in and of Itself – Mexico is the second biggest consumer of U.S. products and services worldwide. By establishing manufacturing or service industry operations in Mexico, U.S. companies are not only producing their products or providing their services more inexpensively, in a business friendly country which borders the U.S., but one with a consumer market in which their services and goods are needed, and one in which their products will not need to be transported very far to reach; something that has yet to develop in neither China nor India.

Proximity to the United States – Being that Mexico and the United States share a common border, the costs of shipping and business travel between the two neighbors is significantly less than between the U.S. and India or China. For example, via air, the cost of shipping from Mexico to the U.S. is estimated to be around $1.90 per kg while from China it is estimated to be about $4.30 per kg; from India $3.90 per kg.

In regards to marine based shipping costs, moving a 40 ft container from China to a U.S. port will run your company about $3,800, not to mention the additional costs involved in further ground transportation to get the products to their final destination city. All the while, a fully loaded tractor trailer from Mexico to anywhere in the U.S. costs approximately $2,800, a significant difference to say the least.

Even business travel by company executives to maintain an eye on your overseas operations is a cost that needs to be taken into consideration. The cost of traveling from the U.S. to Mexico fluctuates from $300-$600, depending from where in the U.S. you begin your travel, while flying from the U.S. to China can cost anywhere from $800-$2,000; to India from $1,100-$2,000.

Same Time Zones as in the United States – Many companies fail to take into consideration the effects of having business operations located on the other side of the planet, because through technology our world has become so interconnected that we no longer view distance as such an important factor anymore. However, imagine how often a problem or question arises within the typical company or organization which requires the immediate and direct assistance of someone at the corporate headquarters, but then imagine that this is occurring in the middle of the night when all the corporate managers in the U.S. are at home asleep. Is that something your company is prepared to make significant changes to adapt to? U.S. companies with operations in India or China are often required to hire a night shift in the U.S. to cover some of these responsibilities, and it is not too easy to find an effective manager willing to work such irregular hours.

Unlike China or India, Mexico shares the same time zones with the U.S., making communication between offices and production lines in the U.S. and those in Mexico much simpler and more time and cost-efficient.

Higher Education – Mexican institutions of higher education graduate around 30,000 engineers a year while the U.S., a nation with three times the population and many more students from abroad studying technical fields, only graduates around 50,000 engineers a year. Furthermore, the average salary of an experienced well-trained engineer in Mexico is nearly half that of his counterpart in the U.S. This means inexpensive skilled labor for U.S. companies operating in Mexico. Again, other industries offer similar disparate salary comparisons.

Availability of Raw Materials and Secondary Sources – China is extremely short on many raw materials and must import a significant portion from other countries, and the alternative sources are limited as well. This can cause shortages from time to time, which could run up the price of the raw materials and thus your production costs, or worse case scenario, force a temporary shutdown in production all-together.

Mexico has a wealth of raw materials and various sources for them throughout the country, therefore most forms of raw materials do not need to be imported from other countries. This helps cut both costs and lead times by a significant margin, not to mention the increase reliability in supply and thus production.

Shorter Lead Times – Companies also need to consider the lead times pertaining to the countries where they are interested in opening a new production line. From step-one in the production process, receiving an order and then ordering the necessary raw materials required to match it, all the way to the day the product will be put onto the market. For example, in China it will take around 8-10 weeks to locate, negotiate and purchase the raw materials you will need for production, and to then have them shipped to your production facility; whereas in Mexico, this same process will only take you 3-5 weeks. The reason for this notable divergence is that China, as mentioned previously, is extremely short on raw materials and you will need to import them from another country.

Production time in both countries is relatively the same, hovering around the 2 week mark, but you then need to take into account the very distinct shipping times. It will take anywhere from 4-6 weeks to have your products shipped from China to the U.S. (including customs), whereas it will only take a week when shipping from Mexico. After doing the math you will see that on average your lead time for production in China will be around 17 weeks, whereas in Mexico it will only be around 8 weeks; a difference of more than 50%.

Global Politics – Something of a hot button issue, but one far too important to be ignored, is that of the current and potential future political relations between the U.S. and China. Many economic experts argue that the two economic behemoths have such tightly intertwined economies, that conflict between them will never occur because both have far too much to lose. However, many geopolitical strategists see China’s efforts to keep their prices low and foreign investment high, as a direct strategy to grow their military might.

Business Friendly Government – The recently elected President and his Administration are staunch believers that the creation of jobs through the growth of the economy is the best way to fight poverty. To encourage more foreign investment, business rules in Mexico are more or less the same as those in the U.S. In fact, U.S. companies in Mexico may be wholly owned in all but a few specific industries. By comparison, in China a company’s second partner is by mandate the local government (Chinese Communist Party), regardless of the industry under which the company operates. Furthermore, employee salary rates and benefits are negotiated directly with the local government and not with the employees themselves.

To have your company incorporated in our jurisdiction in as few as four (4) days, granting you immediate and complete access to a 100 million person strong inexpensive labor force and viable consumer market, please fill out our contact us form by following the link provided, and we will happily forward to you the necessary materials as well as a step-by-step guide of the incorporation process in Mexico.

Once incorporated, your company will also be eligible to begin utilizing our RWA Legal and Accounting Services Plan, in which our firm will perform all the necessary legal, accounting, and basic administrative services required of your subsidiary in Mexico for a cost-effective standard monthly rate. Through this plan, we also allow our clients to register our office as their temporary tax domicile, saving them from the unnecessary burden of an office lease in Mexico, until it is absolutely necessary. To learn more about the RWA Legal and Accounting Services Plan, please click here.

Property acquisition in Mexico & Trust

Step-by-Step Walkthrough of the Purchasing

Process of Property in Mexico

By: Resendiz Wong Abogados, Real Estate Attorneys in Mexico

Step 1. Find a piece of undeveloped property, home or condo which you would like to purchase and verbally agree on a price with the seller.

Step 2. Upon receipt of the buy/sell agreement (convenio de compra/venta), which is typically composed by the seller’s real estate agency, have your attorney review the detailed costs, inclusions and exclusions, as well as pertinent timelines set out within. Once everything has been approved by your attorney, a deposit of around 10% shall be paid to the seller, and cancellation penalties shall be set in case either party pulls out. These cancellation penalties are normally equal to the amount of the deposit, but this is something which may be negotiated by your real estate attorney in Mexico.

Step 3. If the property is located within the restricted zone, you will need to establish a trust with a local bank. This process is explained in more detail in our “Guide to Buying Property in Mexico” which you may review by following the link provided. Your legal representation will notify you as to which banks are currently offering the best rates for holding the property deed on your behalf.

Step 4. You will need to request permission to purchase Mexican property from the Foreign Secretary’s office, where you will be required to sign the “Calvo Clause”, in which you agree not to seek assistance from your government in the case of any conflict pertaining to the property under consideration, and that in the case you do request such assistance from your government that you will automatically forfeit your rights to the property.

Step 5. Your attorney will investigate as to whether the seller is in good legal standing and is legally permitted to sell. In the case the seller is a real estate development company, it is also important that your attorney ensures that they are properly registered and all of their permits are current and in good standing.

Step 6. Once you have received copies of the property deeds from the seller, your attorney will verify with the Notary Public that they accurate and there that there are no existing liens on the property.

Step 7. Your attorney will also verify that the property is not included in an ejido land claim. Ejidos are explained in more detail in our “Guide to Buying Property in Mexico”.

Step 8. Your attorney in Mexico will then review any official land appraisals provided by the seller and then arrange to have the property reappraised to ensure that there are not any significant incongruencies.

Step 9.
Your real estate attorney in Mexico will verify your legal status in Mexico to the appropriate authorities by presenting copies of your Passport, Birth Certificate, Marriage Certificate, Visa, etc.

Step 10. Your attorney will require that the seller provides up-to-date original versions of, the original property deed, current tax receipts, utility bills and all corresponding land-service fees of the property in question. All of these documents must be shown to be paid in full to assure that you are not left responsible for any unpaid debts. (Under Mexican Law, all liens or unpaid debts are transferred with ownership of the property).

Step 11. Unless otherwise stated in the purchasing agreement, the seller will pay the Capital Gains Tax, the price of which will be determined by the Notary Public.

Step 12. Full payment is made at the time the deed is signed over to you. This shall take place in the Notary Public’s office in the presence of your real estate attorney in Mexico. Your Mexican attorney’s and the Notary Public’s fees are paid at this time as well as any corresponding taxes involved in the land purchase.

Trademark Registration

RWA renders specialized advice on Industrial Property in order to protect trademarks, inventions, trade names and in general, all kind of industrial property right in Mexico. Our commitment is to provide our clients with accurate and cost-effective legal advice on the existing legal procedures to obtain the protection of rights on trademarks, patents, utility models, industrial designs, commercial names and slogans, further considering the tax, civil, and criminal aspects for an integral service. Likewise, we handle the negotiation and preparation of license agreements, transfer of rights, planning, research, and development of protective strategies including representation in civil, criminal, or administrative procedures involving unfair competition practice, illegal exploitation of patents or illegal use of trademarks. In connection with copyrights, we carry out preparation and filing for the registration of computer programs, audio-visual, radio, television, musical, literary, photographic and architectural works, scientific books, technical, pedagogical and didactic works, lithographic works, pictorial, drawings, engravings and the like, including the negotiation of license agreements which imply exploitation of such works, and any protective or registration procedure before the Mexican Institute of Industrial Property (Instituto Mexicano de la Propiedad Industrial). Specifically, RWA offers in this area the following services:

  • Registration of trademarks, trade names, slogans, patents and PCT National Phase Applications in Mexico before the Mexican Institute of Industrial Property (IMPI).
  • Preparing, filing, maintaining, prosecuting, and enforcing all types of intellectual property rights;
  • Protection of computer hardware, software programs, and confidential information;
  • Guidance in the structuring of technology transfers, technical assistance, and payment of royalties;
  • Filing, defense and appeal in all types of intellectual property proceedings before administrative authorities, including civil and criminal actions;
  • The seeking and obtaining of injunctive relief, including temporary mandates, restraining orders, and permanent injunctions;
  • Guidance and assistance in the development of strategies to protect intellectual property rights and operations in Mexico; and
  • Advice on procedures before the Mexican Institute of Intellectual Property and other authorities to initiate seizure and confiscation processes to prevent the sale and distribution of counterfeit merchandise.

Incorporating a Company in Mexico

Resendiz Wong Abogados is the premiere Mexican law firm in assisting U.S. citizens and other foreign nationals in purchasing both private and corporate real estate anywhere in Mexico. Our firm has extensive experience in assisting both buyers and sellers in all types of real estate transactions in Mexico.

Purchasing real estate in Mexico as a foreign citizen can be a very complicated and arduous process without the assistance of a carefully selected legal representative. The extreme variances between real estate law in Mexico and in the U.S. are alone cause for confusion, but when you consider that all those laws and regulations are in a foreign language, you are really going to have your hands full if you try and go at it alone. When buying property in Mexico, it is very helpful to find an attorney in Mexico who is not only well versed and experienced in Mexican real estate law, but one fluent in your native language as well so he or she will be able to transfer that knowledge to you in an articulate, easily digested explanation. For these reasons among others, our firm staffs attorneys fluent in English as well as German and French, and to better serve our American clients, our firm also staffs U.S. citizens to encourage a more comfortable, at home atmosphere throughout the intricate and complicated process of purchasing real estate in Mexico as a foreign citizen.

Resendiz Wong Abogados has been recognized by both the U.S. Embassy in Mexico and the U.S. Department of Commerce as a dependable source of ethical and reliable legal representation and advice for U.S. citizens in Mexico. If you would like information on how you can verify this, or if you would like to receive a list of U.S. companies and individual private home buyers who we have represented for reference purposes, we would be happy to provide such information. Simply send us your detailed request to rwa@resendizwong.net.

RWA Legal & Accounting Services Plan

Your company’s products and services may have excellent business potential and expansion capabilities in Mexico, the second largest market for U.S. services and products worldwide. Our firm, Resendiz Wong, Abogados, S.C. (RWA) can help U.S. companies create a business presence in Mexico almost overnight by incorporating a subsidiary here in as few as four (4) days, upon receipt of the necessary documentation.

3 Steps to Incorporation
1. Execution by client of a power of attorney (PoA) prepared by our firm.
2. Notarization and legalization of the aforementioned PoA.
3. Submission of the PoA to us.

The number of U.S. companies already gaining an upper hand on their competition by utilizing the one-hundred million person strong Mexican consumer base and labor force, is growing at a tremendous rate, but it is not too late for your company to take advantage of the excellent business climate in Mexico. Our specialized legal services and business consultation have been tailor-made to assist U.S. companies in doing business in Mexico, both affordably and effectively, allowing our clients a soft landing into the Mexican free market, and giving them the opportunity to test the waters before making any large-scale capital investments in the Mexican Republic.

If your company would like to enter the Mexican free market, but there exist concerns regarding the amount of expenses involved, our firm offers a way for you to consolidate costs considerably through the RWA Legal & Accounting Services Plan. Our cost-effective combination of professional services includes all legal, accounting, and administrative needs contingent to your company’s success in Mexico, covered under a single inexpensive monthly standard fee. Some of the services included in this plan are:

    • Specialized Legal Services. Our firm provides all the legal support and advice that a Mexican subsidiary may require to close transactions and contracts with costumers , hire personnel, import, export or distribute products, participate in biddings, secure governmental permits and licenses or purchase assets. In general, we render all the appropriate legal advice and consulting necessary to isolate contingencies and boost the success of the subsidiary in Mexico.
    • Accounting and Tax Filing Services. Our firm provides tax compliance services through our accounting department in order to fulfill all the tax obligations a Mexican subsidiary is subject to after incorporation. Our office conducts the timely filing of all monthly and annual tax returns, including any additional tax reports required by the statutes in effect.
    • Checkbook Keeping Services. Our firm can open a bank account for the subsidiary in Mexico and manage, allocate and distribute funds received in accordance with the written instructions of the client. With this service, the Mexican subsidiary can be financially controlled and monitored from the U.S. without the need of hiring administrative personnel in Mexico.
    • Registered Tax Address Services. Our firm can provide a registered tax address for the Mexican subsidiary in order to allow our U.S. clients to save considerable expenses in office lease. Message center and use of the meeting room are included with this service.

Thanks to the RWA Legal & Accounting Services Plan our U.S. and International clients are currently operating in Mexico efficiently and inexpensively. If you are interested in learning more about Resendiz Wong Abogados, or if you would like a list of some of the U.S. and International corporate clients we represent to use for reference purposes, please let us know and we will be happy to provide you the necessary information.