I have been putting together various posts on the processes involved on how to buy Mexico real estate. You can see the previous posts on this series by clicking here Mexico Dream Home Below I will start to discuss the Mexico Bank Trust
Payment of the purchase price is not enough In order to have a valid ownership interest in the property which you are buying it is necessary to have the title recorded This puts the rest of the world on notice that the property is yours If you area a foreign person purchasing property in many parts of Mexico, including the La Paz Mexico real estate market and all of the Baja pensinsula, the property will transfer not to your name but to the name of a Mexican bank as trustee for your interests The Mexican constitution prohibits direct ownership of real property by foreigners in the “prohibited zone”, a strip of land thirty miles wide along its seacoasts and sixty miles wide along its borders with the United States and Guatemala/Belize, as well as the entire Baja peninsulaThis is the reason for the bank trust, the “fideicomiso”, which has been established under the guidelines of the Mexican government so that foreigners may be protected in their property acquisitions
Whether you are purchasing in a zone requiring a bank trust or in an area where title can be taken directly into your name, it is necessary that this transfer take place and your interest registered as soon as possible after the successful conclusion of the negotiations to purchase your dream property Until this transfer takes place you are vulnerable: the seller may die, the heirs may be unwilling to recognize your rights in the property , you may become involved in a lengthy and expensive probate proceeding Meanwhile, your interest may not be recognized by the authorities should you wish to obtain a building permit, by the bank should you wish to borrow money and use the property as collateral or as part of your assets; by the courts should a third party also claim an interest in the land, or, very importantly, should you later decide to sell it
The prudent buyer of real estate in the United States or Canada would not consider leaving his title “in limbo” in either of those two countries; one should not do so in Mexico either.
The foreigner purchasing real estate in Mexico is buying personal, not real property if the acquisition is on the Baja Peninsula, within thirty miles of any coastline on the mainland, or within sixty miles of any border The acquisition is personal property How does personal vs. real affect the foreigner who acquires property under a Mexican bank trust The effect is negligible Instead of using the words; “transfer of title” one should more property say “transfer of trust rights”, or, “assignment of trust rights” In practical terms the beneficiary has full control of the property He may direct the trustee bank to 1. – lease the property, 2.- mortgage the property, or 3.-sell the property The foreign owner enjoys full rights of usage and may do anything to the property permitted under Mexican law He enjoys the same rights of dominion as any Mexican citizen who has direct title to the property He may construct a building, tear it down or modify it in compliance only with the local zoning and planning ordinances or, if applicable, the home owner’s condominium regime A permit to acquire the rights in the property must e obtained from the Secretary of Foreign Relations and the terms of the permit form a part of the deed Currently, the term for a trust is fifty years Multiple renewals are permitted under that law By requesting extensions each fifty years a property may be controlled by a family or business entity for generations
Author Linda Neil has over 35 years of hands on experience in all aspects of Mexican real estate. She holds membership in AMPI, NAR, and FIABCI and PROFECO Certificate 00063/96. Current member of the national advisory board of AMPI she is the owner broker of LINDA NEIL PROPERTIES for more information (512)-879-6546 www.TOPmexicorealestate.com
“Where 12TOP real estate experts from ALL regions of Mexico come together to share their Tips & Knowledge to help you buy safely !”
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