Owning property in Mexico, The Bank Trust
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Yes, a foreigner can own property in mexico. They can own property by getting a fideicomiso, also known as a "bank trust"
What is a trust and who
needs a trust ownership?
Since 1973, a
constitutional amendment known as the Foreign Investment Law has allowed
non-Mexicans to acquire coastal and border property through a
"trust", called fideicomiso, established with a Mexican bank. This
trust assures the foreign buyer of all rights and privileges of ownership, and
is needed to own properties which fall into the "restricted zone".
Any property located within 50
km (32
miles) of any coastline or 100 km (64 miles) of either border
is defined as the "restricted zone" by Article 27 of the 1917 Mexican
Constitution. As of 1994, the Foreign Investment Law dictates that the trust be
established for a term of 50 years, renewable at any time during its existence
by simple application.
Why trust ownership?
The trust arrangement was established by the Mexican government as a way
of protecting foreigners who own property in Mexico. By means of the trust there
is an automatic authoritative review of the transaction to ensure it is legal
and unencumbered. Prior to the trust agreement being signed by the purchaser,
the bank must confirm the seller's information; i.e. proper ownership,
insurance and any liens or indebtedness against the property. All of which
provides protection to the foreign owner.
How does the trust work?
The bank, known as the "trustee" holds the Deed for the
purchaser, known as the "beneficiary".
This property is not part of the bank's assets and cannot be subject to
a lien or attached to bank obligations. While the bank is the technical owner
of the property, they have a statutory obligation to follow the beneficiary's
instructions concerning the property.
What rights does the
beneficiary have to the property?
The beneficiary has all ownership rights to the property and may sell,
lease, mortgage, pass to heirs or do any other legal act with the property. 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
heirs and there is no inheritance tax. This is accomplished by naming them as
substitute beneficiaries in the event of your death.
How long does the trust
last?
Trusts are granted and now extended in 50 year periods. The original
periods were 30 years and if you purchase property currently held in a trust, a
new 50 year period can be established or the existing trust can be assigned.
Trusts are renewable at any time by simple application.
How much are Trustee Fees?
The costs to establish a fideicomiso trust vary from bank to bank. The
typical range is approximately $1,000-$1,500
U.S. for trust set-up and about $300-$500 U.S. each year for management of the trust. These fees are paid directly to
the bank that has your trust.
How are these trusts
established?
The fideicomiso trusts are established by a Notary Public following the
receipt of a permit by the Ministry of Foreign Affairs. There are a large
number of foreign-owned properties in Mexico,
especially Puerto Vallarta
and standard forms are utilized by the local Notary Public.
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Carpe
Diem Real Estate in Puerto Vallarta, specializes in the Mexico Resort Real
Estate Industry, assisting clients with their buying and selling
decisions. The Broker and Agents at Carpe Diem Real Estate, Puerto Vallarta,
are members of AMPI, the Mexican National Association for Real Estate Agents,
as well as being members of NAR, the National Association of Realtors in the
U.S.
The
Broker/Owner of Carpe Diem Real Estate Puerto Vallarta is Saul Groman. In
addition to all real estate in the Puerto Vallarta and Bay of Banderas area, he
also works with clients needing 1031 Exchange expertise. His assistant and
agent, Robin Miller, is the “Vallarta Beach Bum”. Carpe Diem’s
number for U.S. and Canada is (310) 683-0051, or the Mexico Office
011-52-322-222-3494.
Website:
www.carpediemrealestate.com and email is info@carpediemrealestate.com
View
the MLS: http://mls.cdrepv.com
www.youtube.com/carpediemvallarta