 |  |  |  |  |  |
| The most common concern for foreign buyers considering Mexico as an investment is: Can I purchase property in Mexico and is that property safe from any “banana republic-like” government seizure? The answer to both is Yes! Foreign “deeded ownership” of property within Mexico’s ”Restricted Zones” (Within 100 km of an international border or 50 km from a coast) is prohibited. But that doesn't mean foreigners cannot buy and enjoy all the rights and privileges of ownership in these same areas. It is simply done differently, through either a “Fedeicomiso” or a Mexican Corporation, and in many ways, works better for foreign owners. In fact, the ease and safety associated with these two methods of ownership are making them a preferred method to own property in areas of the Mexico where it is not specifically required. Both, the Fedeicomiso and the Mexican Corporation, are now recognized by international lenders, even in the US, as safe terms and conditions under which to lend. Mexico’s recent stable economic history, as shown by the strong peso for almost 10 years, has elevated Mexico to a new status within the world economic community. This helps prevent the country from reverting back to the old “banana republic” methods of government seizures or nationalization of private property. Today, Mexico has attained more of a “rapidly developing nation” status, joining Brazil and Venezuela as the economic leaders of Latin America. One reason for this is that over the last 25 years, the Mexican Government has enacted stronger property rights laws and limited the power of the government as a way to assure and attract foreign investors. This is a key component to Mexico’s continued growth and development strategy. Given the recent Supreme Court ruling in the US giving local governments much more power of eminent domain, and what many believe to be the rampant abuse of this power since its inception, it might not be a stretch to say your property is much safer from government seizure in Mexico than even in the US these days. “Fideicomisos” have been used for foreign ownership in the Restricted Zones for about a quarter century. The same Fedeicomisos have also long been a source of much misunderstanding by foreigners regarding ownership in Mexico. In this arrangement, a Mexican bank acts as the trustee and the foreign buyer as a beneficiary. The bank actually purchases the property, maintains title and is the legal owner of record, but for administrative purposes only. By entering into this arrangement, the bank is required by Mexican law, to honor and follow all instructions of the beneficiary and that all rights and privileges of ownership are those of the beneficiaries, including renewal of the trust at its 50 year expiration date. The bank/trustee assumes fiduciary responsibility for full technical, legal and administrative supervision in order to protect the interests of the buyer/beneficiary, as well as meet the requirement that no foreigners “own” property in the Restricted Zone. This local professional supervision is why many owners are migrating to this method of ownership in areas outside the Restricted Zones. Finally, it is important to note, Fideicomisos, by law, are not held as an asset of the bank. The reason is the bank has no financial interest in your property. That financial interest stays with the beneficiary/buyer, as they are the only party that can sell, lease, use or collect payment from the property. The Fideicomisos are intended for “residential” buyers who are the primary users of the property. The concept was originally intended to attract foreign investors who wanted to build a part time or full time home. The actual annual costs associated with a Fideicomiso are a few hundred dollars higher that the similar fees for a Mexican Corporation. However, the month to month costs associated with the required corporate/government paperwork is such that, at the end of the year, it is usually much easier and less expensive to use the Fideicomiso for “residential” buyers. The second method for purchasing property in the Restricted Zones is to set up a Mexican Corporation as the ownership entity, with the buyer as the sole owner. This allows the corporation to take actual possession of the deed. The corporation method is intended for “non-residential” purposes. It is ideal for foreign owners who use their property a few weeks of the year for their own enjoyment and as income producing property the remainder of the time. Closing procedures are the same as a Fedeicomiso except a corporation is created to own the property. The property is registered with the Foreign Affairs Ministry and is subject to Mexican laws. This usually adds $1,000 to $2,000 US to a transaction but then allows buyers to use Mexico’s favorable tax laws. This method of ownership works best and is encouraged for income producing properties, from a single villa to a hotel. Both methods of ownership are safe and solid, so buyers should carefully discuss their investment and planned use expectations with Mexican professionals before deciding. Our team can help buyers make the right choice. Generally, the rule of thumb for a buyer planning to use the property as an income producer, it is best to own the property through a Mexican corporation. Otherwise, the Fideicomiso is usually the best choice. Both are very safe and easy ways to own property in beautiful Mexico. |
| Owning Property In Mexico |
| Or Call 983-113-0677 983 124 7081 MX |
| Or Call 949- 894-7674 US |