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Robert Ruyg
Coldwell Banker Riveras
Los Cabos, B.C.S., Mexico

Buying Property in Mexico

"Can you safely buy residential coastal property in Mexico?"



You acquire Title to property in what is known as the "restricted zone," (32 miles inland from its coastline) through a 50-year Trust renewable for an additional 50 years. (total of a 100 year transferable trust) The trust is a legal substitute for fee simple ownership where you (the buyer) are the beneficiary and an authorized Mexican bank of your choice is the trustee. In this case, the trustee only maintains your Title Property for an annual fee (typically $300-400.00 USD). This trust cannot be broken or altered in any way by anyone but you or your legal beneficiary or their assignee!

As a trustee, the Mexican bank acts on behalf of the foreign beneficiary in transactions involving the property held in trust. However, the beneficiary retains the sole the use and control of the property held in trust and makes the investment decisions with respect to the property. As beneficiary, you have the right to use, lease, improve or sell the property without restriction, to transfer your rights to a third party, or to pass the property onto named heirs. In essence, you have the same absolute rights to use and enjoy the property as if you owned it in fee. Bare legal title is held in trust by a Mexican bank, but the bank can never sell or change the property in any way unless it is approved by the beneficiary of the trust. On January 1, 1994 the term of the trust was increased from 30 to 50 years with an automatic renewal of fifty additional years.

How the Trust Works
The three parties involved in the trust are the seller of the property (the trustor), the buyer (the beneficiary or Fideicomisario), and the Mexican bank (the Trustee or Fiduciario).

Establishing the Trust
A foreign person or company interested in purchasing real estate in the restricted area selects a Mexican bank to act as trustee with respect to the property. The investor then furnishes certain basic information to the trustee, which in turn applies to Mexico's Secretariat of Foreign Affairs for a permit authorizing the trust. Once the permit has been obtained the trustee and other parties involved contact a notary public to draw up a deed for the property. The trustee registers the trust with the National Registry for Foreign Investment. Then, individual lot or home buyers are simply designated as beneficiaries in the master trust.

Selling the Property
If at a later date, you decide to sell the property, anyone can buy it. If the new buyer is also a foreign buyer, upon application, the buyer becomes the new beneficiary of the trust for the balance of the term of the trust without repeating the initial costs to establish the trust. If, on the other hand, you sell to a Mexican National, the bank can endorse the fee title in favor of the buyer.
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