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How to buy real estate
in Mexico Part I
(see Part II below)
Mexico has thousands of miles of pristine coastline, wonderful colonial
cities which boast architectural wonders stretching back many hundreds of
years, and diverse expatriate communities of Americans and Canadians
scattered throughout the country. The Mexican government is encouraging
the expansion of tourism and investment in Mexico. Anyone can acquire real
estate in Mexico if some simple rules are understood.
Mexicans by birth or naturalization can buy real estate anywhere in
Mexico. Foreigners may purchase real estate directly in their own names
throughout the interior of Mexico. In addition, foreigners may buy
property near the border and the coastline in the area referred to as the
restricted zone (about 31 miles inland from the ocean and about 62 miles
from the borders) as the beneficiary of a bank trust.
The bank holds technical legal title to the real estate and the foreigner
is the beneficiary of the trust. The bank acts on behalf of the
beneficiary like any trustee must act. The beneficiary may use the
ownership interest in the trust as collateral for a loan. That interest
may also be transferred by will or through a typical sale process like
other real estate interests. Although the foreigner does not technically
own a direct interest in the real estate, the foreigner's rights to use
and deal with the property are very similar to outright ownership. A bank
trust may be issued for 50 years and it is renewable for another 50-year
term. During the trust term and at its end, the interest may be sold by
the beneficiary at the price determined by the beneficiary if the
beneficiary chooses to sell.
Of course, always obtain proper professional advice before signing any
contract to purchase.
Thousands of people from countries around the world own real estate in
many parts of Mexico. It has been estimated that 300,000 to 500,000
Americans and Canadians spend over six months each year in Mexico. Many
own real estate. As U.S. baby boomers grow older, more and more will be
setting their sights on a secure retirement which includes spending part
of the year in Mexico. Many will buy a condo, house or villa in one of the
many choice beachfront or other interesting locations around the country.
Always work with your own professional advisor to acquire that perfect
piece of Mexican property you have always wanted!
This article is courtesy of Mexico Real Estate and Travel, www.mexico-realestate.com/
How to buy real estate
in Mexico Part II
(see Part I above)
The Secrets of Buying Mexican Real Estate
By the Editors of Mexico Real Estate & Travel Publishing, L.L.C.
There are so many unusual stories circulating about buying real estate
in Mexico that we want to begin by setting the record
straight. A Mexican by birth or naturalization can freely buy real estate
anywhere in Mexico. Now, everyone else can also buy real estate if the
liberalized laws of Mexico are followed.
Border and Coastal Zone
Foreigners can buy property directly in Mexico's interior. However, the
Mexican Constitution of 1917 designated the area within 100 kilometers (62
miles) of Mexico's borders and within 50 kilometers (31 miles) of the
coastline as off limits to direct real estate ownership by foreigners. For
many years this area was known as the Prohibited Zone. Because of recent
beneficial legislation the area is now referred to as the Restricted Zone.
Although direct ownership of real estate by foreigners in the Restricted
Zone is not permitted even now, a foreigner can purchase the right to
hold, occupy, use, improve, develop, rent and sell real estate by
purchasing a beneficial interest in a bank trust which holds the legal
title to the property. Technically it may not be outright ownership of the
dirt under their feet, but it sure feels like it to the thousands of
Canadians and other North
Americans living in their own homes along Mexico's pristine beaches.
Bank Trust Ownership
With bank trust ownership, the bank holds legal title to the real estate
and acts as trustee while the beneficial interest in the trust is owned by
the foreign individual. The trustee bank is obligated to deal with the
property only for the benefit of the beneficiary. The bank takes its
instructions from the beneficiary owner. The beneficiary may be a foreign
individual or other foreign legal person such as a corporation. This bank
trustee arrangement is very similar to the way a trust works in the U.S.A.
and Canada.
The trust exists strictly for the benefit of the beneficiary who is for
all practical purposes the owner of the underlying property. The owner' s
beneficial interest in the property may be passed on by will or
inheritance, it can be used as collateral for a loan and the property can
be freely enjoyed, rented or sold all as determined by the owner
beneficiary.
Direct Ownership
The Foreign Investment Law of 1993 went even further and authorized the
out- right ownership of nonresidential real estate in the Restricted Zone
by a Mexican corporation which can be 100% foreign owned. This includes
real estate purchased for development which will be sold off to foreigners
for residential use. The corporation is considered Mexican and therefore
the foreign shareholders can own the land directly through this Mexican
person.
Notary Public
A Notary is needed to close any sale. In Mexico, a Notary Public is a
quasi-governmental official who reviews all documents of importance with
respect to the sale of real estate. A Notary Public in the United States
typically has minimal training and responsibility. In the U.S.A, a notary
typically attests to the fact that a person has signed a document.
The training, function and responsibility of Notary Public in Mexico is
completely different. In Mexico, a Notary Public is appointed by the
governor of a Mexican state for life. In order to seek appointment, the
person must be a Mexico licensed attorney. This involves attending law
school in Mexico, obtaining a law degree, passing an exam and being
admitted to the bar in Mexico. To hope for appointment, the prospective
Notary Public must then work as an apprentice for several additional years
with a Notary Public. A notary does not act as an escrow service. The
Notary Public' s job is to see that certain formalities
have taken place. Although a notary is always an attorney, it is not the
notary's job to provide any party with legal advice. Any buyer or seller
who wants legal advice should hire a separate lawyer licensed in Mexico.
Public Registry
In Mexico, deeds, usually known as public instruments, can be researched
at the local Public Registry of Property which is open to the public.
There is a Public Registry of Property in most cities and towns in Mexico
of any significant size. The Public Registry of Property is a government
office in which documents are taken for registration so that third parties
may research the ownership of land titles and liens on such titles.
A Public Instrument must be finalized and signed by a Notary Public.
The Public Instrument will typically list the parties involved in the
transaction including the notary, seller, buyer, and the trustee bank It
will also identify the property.
Once the Public Instrument is finalized and signed by the notary, by
the seller, by the bank as trustee (if a bank trust is involved) and by
the buyer (who will also be the trust beneficiary if a trust is used), the
purchase price changes hands and the transaction is considered closed.
Title Insurance
Although title insurance has not been utilized in Mexico to a great
extent, it is now available for purchase by foreigners through title
insurance companies in the U.S.A. There are many U.S.A. companies that
provide title insurance on real estate transfers which occur in the U.S.A.
Now at least three U.S.A. title insurance companies are providing title
insurance services for Mexican real estate transactions. In the U.S.A.
virtually all real estate purchasers and lenders are protected by title
insurance. As more foreign lenders begin funding loans on sales in Mexico,
more title insurance policies will be issued on Mexican real
estate transactions. Purchasing title insurance is a good investment when
buying real estate anywhere. To the extent of the policy's terms, the
buyer is protected from unforeseen problems with the title to the
property.
Knowledgeable Advisors
The acquisition of real estate in Mexico can be straightforward and
simple, but common sense and the laws of Mexico must be considered if a
buyer wishes to obtain good title and avoid problems. Mexico has a well
developed legal system and a buyer should approach it with care and
respect. A good real estate agent with a lengthy track record of success
in Mexico and an excellent reputation is your best friend in buying
property. The safest approach is to also obtain the advice of a Mexico
licensed attorney regarding legal and tax issues.
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