Foreigners Can Own Property In Mexico!
Can Foreigners own property on the beach or near the beach in Mexico? Yes. Recent changes to Mexican laws now permit foreign ownership of Mexican Real Estate. There are actually several ways a foreigner can legally purchase property and the best way for you will depend on your investment interest.
Can I get U.S. Title Insurance for Mexican property? Yes. There are now at least two U.S. title companies that will insure your investment in Mexico. Baja123.com will make certain you are buying a property that can be secured with U.S. Title Insurance.
Is financing available? For more information on financing click here or Contact us for leading information on Mexican real estate purchases. Click here to read and article from Julia Wert Marrocco a director of Realtor Relations for the Villages of Loreto Bay on financing in Mexico
What is a trustee? In México, there is a Bank, which is authorized to open fiduciary accounts and conduct trust operations. The Trustee holds legal title to the real estate property during the term of the Mexican trust contract, and is also empowered with rights and powers necessary to achieve the objectives to the contractual agreement creating the Trust.
What exacly is a Mexico Bank Trust? The Fideicomiso or Mexican Bank Trust is a mechanism that enables foreign persons or companies to purchase property in Mexico. The trust mechanism was created to allow foreign investors to participate in Mexico's rapidly expanding sectors, while exercising complete and legal control over their investments while complying with Mexico's investment laws.
The trust is a property interest held by a Mexican bank. The sole purpose of the bank is to manage the property for the benefit of the owner of the trust. Real estate investment trusts enable foreign entities to invest in Mexico's coastal and border areas which were once restricted from foreign investment of any kind.
Only Mexican banking institutions authorized and regulated under Mexican laws can serve as trustees. The beneficiary of the trust, the foreigner, retains the use and control of the property held in trust and makes the investment decisions with respect to the property. This can include the decision to transfer such property interest to another foreigner realizing all of the economic benefits that accompany equity ownership in Mexico's attractive coastal properties.
Trusts are established for initial 50 year periods and can be renewed indefinitely for additional 50 year periods. The beneficiary may transfer or assign his beneficial interest to any person and keep the profits from the sale of the property subject to applicable tax laws and expenses for the sale. Property held under a trust can be passed on to future generations and the person to which the bequest is made is not burdened with an inheritance tax.
Fideicomisos are an easy and safe way for you to own property in Mexico. They are government sanctioned and offer strong protection. Potential investors are encouraged to contact us for assistance in setting up your Mexican bank trust.
What requirements are necessary? You or the seller must provide to the bank the following information:
A) A copy of the real estate title or deed indicating the exact surface area and boundaries.B) A copy of a draft of the property.C) The name (s) of the beneficiary (ies), nationality, address and phone number.D) The agreed purchase price.
Upon receiving the information and documents, the bank shall proceed to apply at the Mexican foreign affairs ministry, for the Trust Permit; once obtained at the Bank, we shall proceed to execute and legalize the Mexican Trust Contract before a Mexican notary public. Notaries in México have far greater legal competence than those in the United States. The Mexican notary public is an attorney at law, who is authorized by the Goverment to give final formality to the title transfer process in his protocol Book. The resulting document taken from his protocol book is registered at the public registry of the properties, and it will give evidence of the title in the name of the buyer.
What rights and obligations does the beneficiary assume upon the celebration of the Mexican trust contract? As the Trust Beneficiary, you will have the use and possesion of the property, that is, you may live on the land, undertake any alterations and improvements. You also have the capacity to instruct the Trustee on mortgaging the real estate, renting it, selling, transfering it in to your beneficial interest to another person or corporation.
If you sell the property to another foreigner, you may assign your beneficial interest to the new purchaser. This assignment of rights must be formalized before a Mexican notary public, prior to the payment of the federal and local taxes and fees that arise from the transfer of beneficial rights.
You will have the obligation to pay the duties on land, i.e.: Annual property tax, condominium, maintenance fees, water, electricity, annual Trustee fee, ETC.
What fees will the trustee charge for this type of Mexican trust contract? The fees which the Trust Division of Scotiabank Inverlat., charges for this type of Trust are:
A)As a Trustee acceptance charge, $500.00 USD, payable once upon the signing of the Mexican Trust Contract.
B)For the handling and servicing of the Trust, $500.00 USD a year, payable in advance. This fee will be increased by the Trustee each two years, according to the U.S.A. inflation rate. Every year, on the anniversary date of the Trust, the Bank shall mail to your address the bill of the annual fee for keeping the property in Trust. All the Trusty fees cause the value added tax (IVA) and are subject to change.
What other expenses must the beneficiary meet upon the celebration of the trust deed? You must pay out the fees, taxes and expenses that arise from the purchase as well as the formalization of the Trust deed before a Mexican notary public.
Also, you will pay the cost of the permit that must be obtained from the Mexican foreign affairs ministry to acquire the property in Trust, and the recording of the Trust deed at the National Registry of Foreign Investments.
What happens if the beneficiary should die during the legal period of the Mexican trust contract? The Beneficiary has the right to appoint substitute Beneficiary (ies) who will recieve all the rights and obligations that arise from the Mexican Trust contract, if the Beneficiary dies during the life of the Trust.
With this designation of subtitute Beneficiaries, your heirds will not need to follow any probate proceeding before the Méxican courts, that could take time and attorneys fees. They would only have to give notice to the bank of the deceased and show the death certificate and their identifications. Then, the bank will give instructions to a Mexican notary public as to the proper protocol of the documents and with the resulting deed register them as the new owners (Beneficiaries) of the Trust property.
What will happen at the expiration of the Mexican trust contract? On December 27, 1993 a presidential decree was issued establishing the new Foreign Investment Law. According to article 13 of this Law, the Mexican foreign affairs Ministry shall allow the renewall of the Trust over the "Restricted Zone" upon the expiration of their term.
Furthermore, the Mexican foreign affairs ministry may authorize a new Trust over real estate transfered from one Trust to another for a period up to 50 years when the Beneficiaries of the original and the new Trust are different