We can help you  to buy land using either method  Fideicomiso Trust contract: a helping hand to real estate  foreign investors in Mexico. The Mexican laws permit foreigners to acquire the  rights to use, enjoy and avail of real estate  located in the coastal and border areas of Mexico through a trust contract  (Fideicomiso), the only legal instrument and the  most advantageous available, foreigners can acquire land in Mexico for tourist or industrial  purposes, having the same rights and obligations  that a full ownership property gives.

What is a trustee?

In Mexico, it 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 of the contractual agreement  creating the trust. What characteristics would a  trust contract have?  In the trust deed, the present owner of the land  would appear as the settler or trustier  (fideicomitente) and would thereby deliver title of  the real estate to the trustee who would hold the  property during the term of the trust contract,  that is, 50 years with the option to renew  the contract.  The buyer (you), would appear as the beneficiary  (fideicomisario), that is, the person having the  absolute use and avail of the property. 

The legal effect of the trust contract is that the  trustee 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  real estate located 50 kilometers wide along the coastlines and 100 kilometers wide along the  border areas of Mexico. This belt of land is so  called the "restricted zone".  While as foreigner 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 shares of the corporation which in turn owns a  farm,  it is for most practical purposes like ownership.

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What requirements are necessary?

You or the seller must provide to the bank the  following information (a notary public usually  takes care of this): A copy of the real estate title or deed indicating  the exact surface area, merits, and boundaries.  A copy of draft of the property. The name(s) of  the beneficiary(s), nationality, address, and  phone number. 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 it shall proceed to execute and  legalize the trust contract before a notary  public. Notaries in Mexico have far greater  legal competence that those in the United  States. The notary public is that attorney at law  who is authorized by the government to give final formality to the title transfer  process in his protocol book. The resulting  document taken from this protocol book is registered at the public registry  of properties, it will give evidence of 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 possession 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, transferring your beneficial  interest to another person or corporation, or  performing any of the acts that by law derive from the ownership. 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 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 trust fee, etc

What fees will the trustee charge for this  type of trust contract?

The annual fees charged for a trust vary  depending of the bank you have as trustee.  It also depends on the value of your property. What happens if the beneficiary should die  during the legal period of the trust contract?  The beneficiary has the right to appoint a  substitute(s) beneficiary(ies) who will receive 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 substitute  beneficiaries, your heirs will not need to follow  any probate proceeding before the Mexican courts, that  could take time and attorney 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,  to protocol these 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 renewal of the  trusts over the  "restricted zones" upon the expiration of their  term.  Furthermore, the Foreign Affairs Ministry may  authorize a new trust over real estate  transferred  from one trust to another for a period of up to  50 years when the beneficiaries of the original  the new trust are different. If you have  Questions we'll be happy to answer them for you.

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Mexican Company

It is relatively easy to form a Mexican  Corporation. You can hire an attorney to do this  for you, but Playa Realty can help you through every step  of buying real estate in Mexico. Until recently, foreigners had to have a Mexican partner in order  to start a Mexican Company. Not anymore. Now Mexican Companies can have 100% foreign  investment and ownership. The difference with a "fideicomiso" is that a Mexican Company  MUST be formed  if you intend to make a business out of whatever  property you buy.  Then, the company will own the property, you will  own the company. Another instance in which a Mexican Company is  used is for lots that are larger than 1,500m2.  When you buy more land than this, you must  commit investing a certain amount of money  within the first year  in order to get the Foreign Affairs Ministry  permit. It is much easier to form a Mexican  Company,  where there are no limitations in this regard.  Then, you declare a "state of dormancy" when the company is completely inactive and you  do not have to worry about tax declarations or  the like. The costs for forming the company can be around  $3,000 to $4,000 usd. 

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If you have Questions, we'll be happy to answer  them for you.

Inmobiliaria Greg
calle 17 Num 200 L entre 18 y 20
Garcia Ginerés 97070
Tel 011 52 (999) 9200651
                           9203272
                           9200652
inmobiliariagreg@prodigy.net.mx