Yes! You can Own Property in Paradise!
The Mexican laws permit foreigners to acquire the rights to use, enjoy and avail, real estate located in the Coastal and border area of México, through a trust contract (fideicomiso) with a bank. It is the only legal instrument and the most advantageous available, foreigners can acquire land in México for touristic or industrial purposes, having the same rights and obligations that a full ownership property gives.
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 trust contract, and is also empowered with rights and powers necessary to achieve the objectives to the contractual agreement creating the Trust.
WHAT ARE THE CHARACTERISTICS OF A TRUST CONTRACT?
In the trust Deed, the present owner of the land would appear as the settler or Trustor (fideicomitente) and would thereby deliver title of the real estate to the Trustee (the bank), who would hold the property during the term of the Trust for 50 years. Just to be clear, the title of the property is FOR EVER, as long as you want to own the property, until sold. It is the bank trust that renews every 50 years. It is a simple act of bank administration to renew the trust and the the property is not in jeopardy.
The Buyer (you), appears as the beneficiary (fideicomisario) of the trust. The legal effects of the trust contract is that the Trustee will keep temporary ownership of the real estate, in so doing it complies with the laws (article 27 of the Mexican Constitution) that prohibit foreigners from acquiring full ownership of the real estate located 50 kilometers wide along the coastlines and 100 kilometers wide along the border areas of México. This belt of Land is so called "The Restricted Zone".
While as foreigners you cannot record title to land in the "Restricted Zone", you can own the Beneficial interest to the Trust contract. It is, in a way, like owning 100 per cent of the shares of a corporation. It gives you the buyer all the rights and responsibilities of ownership.
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 foreign affairs ministry, for the Trust Permit; once obtained at the Bank, we shall proceed to execute and legalize the Trust Contract before a notary public. Notaries in México have far greater legal competence than those in the United States. The 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 TRUST CONTRACT
As the Trust Beneficiary, you will have the use and possesion of the property, that is, you may live on the land, live in the condo or house, build, make alterations, and improvements. You may have the right to mortgage the real estate, rent it or sell it or transfer the property 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 Méxican 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 TRUST CONTRACT?
The fees which the Trust Division of Bancomer S.A., charges for this type of Trust are:
- A) As a Trustee acceptance charge approximately 1500 $ USD, payable once upon the signing of the Trust Contract.
- B) For the handling and servicing of the Trust, approximately $600.00 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.
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 Méxican notary public.
Also, you will pay the cost of the permit that must be obtained from the 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 TRUST CONTRACT?
The Beneficiary has the right to appoint substitute Beneficiary (ies) who will recieve all the rights and obligations that arise from the 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 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 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 foreign affairs Ministry shall allow the renewall of the Trust over the "Restricted Zone" upon the expiration of their term.
Furthermore, the 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.
If you wish to obtain further information please call an associate at Living Riviera Maya
LIVING RIVIERA MAYA REAL ESTATE
1 800 441 3275
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