HOW FOREIGNERS CAN OWN PROPERTY IN MEXICO Americans, Canadians, Europeans and any other foreigners can own property in Mexico Territory. Foreigners may obtain direct ownership of property in any city, town or zone in the interior of Mexico except in those areas of zones defined as “Restricted Zones”. RESTRICTED ZONES Restricted zones are those located within 100 kilometers (about 62 miles) from any Mexican border, and within 50 kilometers (about 31 miles) from the coastline. In these zones, foreigners cannot have direct ownership of real estate as the Mexican Constitution prohibits it. However, if a foreigner wants to buy a property in a “Restricted Zone”, the Mexican government created the “Fideicomiso” (fee-day-co-me-so) which is translated as a “Real Estate Trust”. FIDEICOMISO The fideicomiso is a trust created for the benefit of a foreign buyer, executed between a Bank in Mexico and the seller of a property in a restricted zone. The bank acts on behalf of a foreign buyer, taking title to real property. The bank as the trustee, buys the property for the foreigner, then, has a fiduciary obligation to follow the instructions of the foreigner who is the beneficiary of the trust. The trust beneficiary retains and enjoys all the rights of ownership while the bank holds title to the property. The foreigner is entitled to use, enjoy or profit from the property and also sell or rent it at its market value to any other eligible buyer for a period of 50 years. If the beneficiary does not sell the property to another buyer, he can renew his trust for another 50 year period or he can will the trust to any member of his family. The Mexican law defines “use” and “exploitation” (profit) as the right to use or possess a property including its fruits, products, or any revenue that results from its operation and exploitation by third parties or from a trust bank. The beneficiaries of the trust (fideicomiso) can be: Mexican corporations Foreign individuals Legal entities SPECIAL REQUIREMENTS In order to allow foreigners to enter into an agreement to buy a property, the Mexican government requires all foreigners to apply and obtain a special permit from the Ministry of Foreign Affairs prior to the acquisition of the real estate. This is currently done by the trust bank at the time a real estate trust is set up in the case of properties in the restricted zones. The Ministry of Foreign Affairs may grant any petition for a trust permit that complies with the stipulations and requirements within 5 working days following the date of the presentation in the central office of the Ministry of Foreign Affairs in Mexico City. If the application is submitted to one of the Ministry state offices or Mexican Consulates, it will be granted in a period of 30 days. If the maximum period passes with no action by the Ministry, the trust permit or registration is considered authorized. REAL ESTATE TRANSACTIONS Normally there are three players involved in any real estate transaction inside a restricted zone: a) A real estate company b) A bank c) A Public Notary (Notario) All of them are helpful in their respective areas in assisting a foreigner in real estate transactions. The transactions carried outside the restricted zones do not involve a bank since it is not necessary to establish a real estate trust in those areas. Mexican real estate transactions are not the same as in the United States or other countries, therefore is important for the foreigner to become familiar with those transactions with the assistance of a real estate professional. In Mexico the real estate agents are not required to possess a “Real Estate License” as in the United States, so you should make sure there is an existing business license and professionalism or a recognizable name. The Notario Publico (Public Notary) is an important entity in the process of buying a property. The Notary Public is an attorney authorized by the government to give legal advice in all real estate transactions. The Public Notary is a person with enough legal experience and is the only one that will determine if the transaction can be carried out under the Mexican laws and regulations. Also a Public Notary will determine closing costs, and tax considerations for the buyer and seller. COLDWELL BANKER TROPICANA CAN HELP FOREIGNERS All of the Coldwell Banker brokerage offices in Mexico are owned and operated by real estate professionals. Most of the Coldwell Banker offices are active AMPI or NAR members so they can help foreigners not only in finding the best property at the best price, but helping and advising buyers and sellers in every step of a real estate transaction. If you are thinking of buying land, a house, or condo in Mexico, ask Coldwell Banker Tropicana. You can find more detailed information about our affiliate offices in Mexico by visiting the Coldwell Banker Tropicana web page at www.coldwellbankertropicana.com As a foreigner, you can be certain that Coldwell Banker Tropicana will help you find the property you desire and also will help you save time and money. |