Important information about FIDEICOMISO in Mexico
Can foreigners buy real estate in Mexico?
The answer is YES . According to article 27 of the Mexican Constitution, foreigners can buy real estate.
However, there is a restricted area in which foreigners cannot acquire direct ownership of real estate, this area includes one hundred kilometers along the borders and fifty on the coasts, such properties can only be acquired through other legal concepts such as a fiduciary bank (the institution bank holds the title to the property but it is the foreigner who holds the rights to the land) or a Mexican company with foreign capital and foreign partners.
How does a trust work?
According to the General Securities and Credit Law, a trust is a contract by which one person transfers certain goods or money to another to be allocated to a legal order. In Mexico, as a rule, they can only act as trustees of certain financial institutions, which provides greater security for the parties involved in this agreement. This figure can be used for as many purposes as possible and briefly say that the type of trust commonly used by foreigners to acquire ownership of property in the restricted area is called an irrevocable estate transfer trust, where this person (seller) transfers the ownership of the irrevocable trust (Bank) and how the latter in turn can only act on this property with express instructions from the trustee (foreign buyer).
Mexican law allows foreigners to acquire the rights to use, enjoy and dispose of real estate located in the coastal and border areas of Mexico. Through a trust agreement (Fideicomiso), foreigners can acquire land in Mexico for tourism or industrial purposes, with the same rights and obligations as those granted in full.
What is a trust?
In Mexico, banks can open trust accounts and conduct fiduciary operations. The trustee (the bank) holds legal title to the real estate during the term of the trust and also has the rights necessary to achieve the objectives of the contractual agreement that creates the trust.
What rights and obligations has the beneficiary owner of a trust acquired?
The beneficiary will obtain the possession, use and enjoyment of the property, that is to say, he will be able to inhabit the property and carry out any modifications and / or improvements. It also has the ability to order the trustee (the bank) to sell, mortgage or transfer real estate that is the subject of a usufruct to another person or company.
If the beneficiary sells the property to another foreigner, he can designate or grant the same advantages to the new purchaser. This designation of rights must be formalized before a Mexican notary, the payment of federal and local taxes and the costs resulting from the transfer of real rights. You are also required to pay property taxes, such as property taxes, condominium maintenance fees, water, electricity, and annual trust fees, among others.
What happens if the beneficiary dies during the legal term of the trust agreement? The beneficiary has the right to appoint one or more substitute beneficiaries to acquire all the rights and obligations under the trust agreement in the event of the death of the beneficial owner during the period of validity. With this appointment, your heirs will not have to go through probate proceedings in Mexican courts, which could cost time and legal costs. They only need to present the death certificate and identification to the bank, which in turn will require a notary public to register their heirs and the new owners (beneficiaries) of the trust property.
What happens when the trust agreement expires? The new Foreign Investment Law establishes that the term of the trust extends up to 50 years and can be extended for a further period of 50 years. In addition, the Department of Foreign Affairs may also authorize the transfer of a new real estate trust from one trust to another for a period of up to 50 years, when the beneficiaries of the original trust and the new one are different.
How long does the process of establishing a trust take?
The normal process can be done between 30 and 45 working days from the complete integration of the file, until the delivery of the testimony of the public document which contains the trust - that is to say the document. It can vary up to 90 days after closing.
So, if you are a foreigner, you can already feel calm. Well, in Mexico you are protected by law to buy or sell property. Now you just have to worry about finding the best and enjoying this paradise.
