Sometime back, while watching the 11 p.m. news on a local television station, I listened to the veteran anchor report on labor union problems a South Korean company was having in its Tijuana assembly plant. She ended the report saying, “Mexico has no labor laws.” Her demeanor underwent no change while reading that statement from the prompter. So she accepted the statement as fact, which in turn meant that the news and copy editors also accepted it as fact. In fact, Mexico’s labor laws rival, and in some cases surpass those in the United States.

In this country we take great pride in saying, “We are a nation of laws.” We do it so often many of us now believe other countries are not nations of laws or that their laws are in name only, not taken seriously, not enforced and certainly not meant for Americans.

The subject of laws came to mind recently when reading letters about last month’s column, where I pointed out that many Americans participating in Baja California’s real estate boom are failing to obtain an FM3 visa, a requirement of Mexican immigration law. Most writers were thankful for the information and reported having started the process of obtaining the document.

Some inquired about whether the FM3 discussed also allows one to work in Mexico. Well, no. There are two types of FM3 visas, one is the FM3 Rentista, which allows an alien to reside in Mexico for a one-year period and can be renewed. To work in Mexico one also needs a differently classified FM3, along with tax documents.

A number of the general inquiries were from local real estate brokers/agents who have been showing potential buyers Baja properties. In some cases these agents were arranging the purchase in return for a commission. The assumption was that this is perfectly legal and the concern was more about securing the correct FM3 for their clients.

That misplaced concern is a disaster in the making on two fronts. Not knowing Mexican real estate laws and procedures is a disservice to clients, and such activity without a proper working visa makes the broker/agent an illegal alien. That agent is subject to arrest and prosecution. Also, earning income in Mexico requires paying income taxes in Mexico.

In conversations with officials from Realty Executives/Gibbs & Associates, and RE/MAX Baja Realty, two of the leading real estate brokerage offices in the Baja region, we asked about the frequency of California real estate brokers/agents assuming they can legally transact real estate business in Mexico. “Too frequent” was the reply from both offices.

A California real estate license is not a permit to transact business outside California. Knowledge of California real estate laws and procedures does not provide knowledge of Mexican real estate laws and procedures. And Mexico has very distinct laws and procedures.

The error starts when a California real estate professional assumes that since real estate practitioners in Baja California do not need a state license, anyone can sell. This is partly true, with the exception that foreigners without work permit visas are left out of the “anyone” classification. Also of great importance, the prerequisites for practitioners are growing and licensing likely soon will be a requirement.

Operating along the coast from Tijuana to Ensenada are bona fide honest and qualified real estate brokerage offices that handle nearly 85 percent of the area’s home sales. This high percentage is a good number, indicating the growing sophistication of buyers. It is these same professionals who are pushing for educational and licensing state requirements.

California real estate brokers/agents are mostly attempting to work directly with developers. This effort bypasses working with counterpart broker offices, likely to maximize commissions. But it also might be putting a client into what ultimately turns out to be a bad deal.

For an agent or broker wanting to truly understand Mexican real estate, the first thing to do is study the corresponding laws and procedures. Various Mexican universities offer courses. AMPI, which resembles the U.S. National Association of Realtors, also can be of help. CONOCER, an organization working through the Secretary of Public Education, offers a two-day intensive course that will provide even more than the basics.

Brokers and agents wanting to sell properties in Mexico have two legal methods at their disposal. One is to obtain the proper FM3 visa and then register with Hacienda (Mexico’s IRS equivalent). This will allow the agent to obtain a tax ID number. Remember, failing to file or to pay taxes also is against the law in Mexico.

A second easier method is to interview reputable real estate brokers in Baja (or elsewhere) and reach an agreement for “referral” fees. Typical referral fees are 20 percent of the commission paid by the Mexican broker to a California licensed broker/sales agent. Reputable Mexican brokers will insist on having a copy of the California license for their files. This method avoids having to obtain an FM3 or registering with Hacienda. The Mexican broker pays the tax on the amount paid as a referral fee thus satisfying the Mexican income tax liability.

Like the United States, Mexico has laws. It is simply a matter of learning how to comply and work within them for everyone’s mutual benefit, and a bit of profit.

Patrick Osio Jr. can be reached at posiojr@sandiegometro.com. The veteran consultant also has issued The Mexican Perspective, an intensive primer on business culture and protocol. Copies are available at hispanicvista.com/sales/book_sale.htm.