Can foreigners buy a car in Mexico?

With the changes in temporary auto import policy here in Mexico in recent years I have been more and more a proponent of expats owning Mexican plated cars instead of driving down their vehicles from the States or Canada and leaving them here. I must admit, I had an American plated car for a long time, but because of my migratory status driving it was no longer legal and getting parts for it was a hassle, so this year I made the switch to a Mexican plated car.

It used to be that buying a Mexican car was prohibitively expensive because of the costs involved because of the famous “Tenencia” tax, which over the life of the car added up to an extra 25% of the car’s value. As of 2012, there is no tenencia, or at least not at a federal level, therefore the cost of having a vehicle has gone down considerably.

So, as I said, I have recommended to a lot of people that they get Mexican plated cars to save themselves some hassle. Some people have started to look into the process, or at least have started to consider it for the coming year. I thought I’d write a little primer on buying a car in Mexico, specifically in Quintana Roo, so that people have an idea of what they are doing, as buying a car in Mexico, as with many things, is a little bit different here.

First a little aside, I debated going into this part because it is a little bit “legal theoryish” and sometimes when I tell people this I feel like I am confusing them, but I decided that my readers are pretty smart and if I put it down on paper (pixels), you can go over it again if you miss it the first time:

According to the law, there are two major classifications of goods that we need to take into account: real estate and EVERYTHING ELSE. Real estate has a very specific manner of being sold, basically through public deeds and notaries. Everything else is sold, according to the law, when there is an agreement on the item to be sold and the price. You don’t even need to exchange goods and money in order for the sale to have taken place, just the act of determining what is going to be sold and for how much makes the deal good.

So we go back to, the two types of goods, real estate and everything else. A car is not real estate, therefore it is everything else. Therefore, there is no special procedure for buying and selling cars in Mexico. Anyone can do it. If you want to sell me your car for $300 and I want to pay it, the deal is good and I have myself a new car. Anyone can buy a car in Mexico.

The problem comes in when you want to register the car. According to the law, you have 30 days after you purchase the vehicle to change the name of the owner. I know people who have had vehicles for a few years and never changed the name, just saying every time they get pulled over that they bought the car last week. I don’t recommend this, but it can be done.

In order to register the car in your name, you have to produce some specific documents. This is actually where the process can get difficult or tricky, so this is actually the HOWTO part of the article, I think the rest may have just been a little rant.

So, when getting ready to put the car in your name, here are the important things to remember to have:

1. You need the ORIGINAL invoice (factura) for the vehicle. It doesn’t matter if the car was originally sold in 1983, you NEED the original invoice in order to transfer the vehicle registration into your name. The original invoice will have the dealership’s logo and fiscal information on it and will be endorsed on the back by every owner. Normally, at the time of sale, the previous owner writes something on the back of the invoice to the effect of “I transfer all rights and obligations related to this vehicle to so-and-so”.

If the car you are trying to buy was originally foreign and has been legally permanently imported (has Mexican plates), you will not have the original dealer’s invoice, but instead will need to provide the ORIGINAL foreign title and ORIGINAL of the import documents (called the pedimiento, usually two pages with wet signatures and one of them will contain a printed seal showing that the duty has been paid). This documents are just as important as the original title.

If you don’t have the original title, there are ways to get the car registered to your name, but all of them are SO dastardly that I won’t really go into them here. Usually they involve witnesses, police reports, judges and notaries. Really.

2. There is a silly requirement, at least in Quintana Roo, that in order to register the vehicle in your name, you need an FM2 or FM3. This is not anywhere in the law, but it is an interoffice policy created by some boss somewhere. If you don’t have one of these residency documents, you will need to get one.

There is a workaround to this, I don’t recommend it, but I know a lot of people who don’t have FM3′s that have registered the car in their neighbor’s, lawyer’s or accountant’s name, which seems to work. If anyone goes this route, it is a REALLY good idea to draw up a little contract explaining that while the car is registered in a third party’s name, it is still your property and you retain all rights of ownership and possession over the car. Again, I really don’t recommend this method, it is sneaky and leaves yourself open to problems.

3. If the car was manufactured before 2012, you will have to provide the ORIGINAL payment receipts of the tenencia tax for up to five years before 2012, except if the car is older than 10 years old, in which case you will have to show that the taxes were paid for the five years prior to when the car became 10 years old.

What? I was going to make a diagram, but I think it is easier to just think of it this way: If the car is more than 5 years old you will need to provide 5 years of tenencia tax receipts, but if it is less than 5 years old you will only need to provide the tax payments until 2011.

The tax receipts are important, if you cannot prove that the previous year’s taxes were paid on the car you will have to pay them yourself in order to register the car, even though the tax is no longer in effect. This can be a deal-breaker because the tax on a $20,000.00 USD car can be $1,000.00 USD. If the seller cannot provide the tax receipts, you might want to think about not buying the car.

4. You need a proof of address. This should be a phone, water or light bill in your name. If the bill is not in your name, you should include a copy of your rental contract or a letter from your landlord (whose name is on the bill) stating that you live where your bill says you live. If you go with the letter from the landlord, also bring the copy of the landlord’s identification.

5. Finally, you need to bring copies of everything with you. Copies are very important and if you don’t have them you will be sent away to make them and will have to stand in line at the tax office all over again once you have them.

You will take all of these documents to the State tax office, any police officer can help you find it, in Spanish it is known as “hacienda estatal” or the “recaudadora de rentas”. There you will stand in lines and pay your fees, the car will be inspected to make sure it is really the car you have documents for and you will be issued a new set of license plates and maybe a sticker to go on the windshield.

As you can see, buying a car in Mexico is not that hard, but it has some differences from the process in the US or Canada. There are variations to the process, many people decide to draw up a simple sale document or document that transfers all responsibility for the vehicle to the new owner, but in the end the tricky part of the negotiation is getting the car registered. Good luck!