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BUYING IN MEXICO

Real Estate in Mexico: Rules of the game

All too often, citizens of the United States, Canada and other countries assume that property purchases in Mexico are carried out automatically in a manner similar to their native countries. The first rule of any property purchase in Mexico is, NEVER ASSUME ANYTHING! Purchasing property in Mexico is not the same as in other parts of the world.  

Would you purchase property in your hometown, which is not registered in the local public registry, or land title office? Would you hand a complete stranger, without an office or established business, a check for perhaps hundreds of thousands of dollars to pay for a property? The obvious answer to these questions is, OF COURSE NOT.

Then why do so many foreigners do this very thing when they purchase property in Mexico? Many do not take the time to investigate how Mexico's real estate transactions function and how the supporting legal system has responded to that industry's needs. It is essential that you have an idea of how this system works and what to expect when considering an investment in Mexico.

MEXICO REAL ESTATE LAW AND HOW IT RELATES TO FOREIGN INVESTMENT

Article 27 of the Mexican Constitution regulates the ownership of its territory by establishing that "....in a zone of 100 km. (62 miles) along any border or 50 km. (31 miles) along the coast, foreign entities cannot acquire direct ownership of the land and waters". Until recently, foreign investors were allowed ownership of real-estate only outside of the "Restricted Zone".

Recognizing the demand by foreign interests for ownership of real property, and the importance of making these desirable properties available to foreigners for the potential positive impact on the economy, the Mexican government implemented a series of Foreign Investment Laws begun in 1973, Modified in 1989 and modified again in December of 1993 to incorporate the provisions of the NAFTA treaty.

Creation of the Land Trust (FIDEICOMISO)

For those who wish to acquire property for residential usage, and who have a valid entry visa, current law requires that title to the property be transferred to a Mexican bank, as trustee, in the establishment of an individual land trust. The bank handles all of the paperwork including filing for all of the necessary permits with the Ministries of the Interior and Foreign Affairs. In general, the bank has the responsibility to the government to ensure precise fulfillment of the Trust agreement, assuming full technical, legal, and administrative supervision in protecting the interests of the beneficiary (purchaser).

The bank owns the real property rights, and the beneficiary owns the personal  rights to use, rent, modify or transfer his rights to a third party. Ownership of these personal rights is evidenced through a deed prepared by a Mexican Notary, signed by the representative of the trustee bank and duly registered with local authorities.

The Foreign Investment Law of 1989 stipulates a term of 50 years for the Trust with opportunity for multiple renewals, upon filing an application with the bank. By requesting renewals every 50 years, a property may be held by a family or business entity for generations.

Since by law Mexican banks enjoy government protection against bankruptcy, the Trust is indirectly guaranteed by the government. As a practical matter, even in unrestricted zones many foreigners prefer to hold their property in Trust.

NEVER ASSUME ANYTHING

A good understanding of the Trust issue can provide a second protection mechanism to the foreign buyer. In certain instances, the property to be purchased is located in a subdivision marketed to foreigners, for which the developer has an umbrella or Master Trust with a Mexican bank for the combined properties of the development. Many foreign investors believe it is beneficial to remain in the Master Trust, hoping to derive protection through the developer's influence in the industry and locally. We recommend the placement of the property in an Individual Trust for which the buyer is alone responsible. This "fresh" legal basis avoids any legal or financial complications in the event the developing company declares bankruptcy or is dissolved, and allows the buyer complete freedom to advance his property's interest.

Remember, almost anybody can offer property for sale: abuses and misrepresentations are common. Mexico's real estate industry is underdeveloped, with few licensing laws regulating real estate brokerage and sales. Again, it is always wise to remember, NEVER ASSUME ANYTHING!

PROTECTION OF THE PURCHASERS INTEREST

All real estate transactions are processed through the office of a "Notario", a qualified government appointed lawyer who acts on behalf of the government to ensure the proper transfer of all real estate transactions. Among this official's many important duties is registry with the appropriate government agencies of the deed for transfer of rights of the beneficiary. This is the single most important step in protecting a foreigners investment in Mexico, since it remains the ultimate proof if ownership if a property ever becomes a question.

The purchase/sale document, which includes either deed of rights, or transfer of rights of beneficiary in a property, is generally valid between the parties to a transaction. It most likely contains a description of the property, price to be paid to the seller and any special terms or conditions of the sale. IT WILL NOT, however, provide valid notice to third parties unless it is recorded in the Public Registry office of the municipality in which the property is located.

Until the buyer is formally named as a beneficiary in a public document before a Mexican Notary, title to the rights in the property remain with the last legally registered owner, which would be the seller. While the seller holds title to the property it is his asset; he may mortgage it or sell it again; it may be attached in satisfaction of a judgment; he may die without a will. In such a situation, there may not be any remedy for the purchaser who neglected to correctly register his deed - his interest, his investment may be lost.

To ensure proper registry of the property, an official appraisal of the property, notarized bank instructions, a property tax certificate, and no-liens certificate must be obtained. Sellers Capital Gains Tax and Buyer's Acquisition Tax must be paid and the deed transferring rights to the buyer must be registered and stamped by both the tax office (Treasury) and the Public Registry. If this process is not completed the buyer is not fully protected.

¿Pueden los extranjeros adquirir propiedades de playa en México?

La ley mexicana permite a extranjeros ser propietarios de bienes raices en o cerca de la playa a través de un Fondo Fiduciario del Banco de México o "Fideicomiso". Todas las tierras dentro de 30 millas de la costa mexicana y 60 millas de una frontera nacional están reguladas mediante el uso de un Fondo Fiduciario del Banco, para los inversionistas extranjeros. Los Bancos mexicanos son las únicas instituciones que pueden tener y administrar el fideicomiso de la escritura para los compradores extranjeros.

¿Qué es un Fideicomiso México?

El Gobierno de Mexicano expide un permiso al Banco de su elección, que le permite adquirir el título de propiedad y el comprador tiene la titularidad de los derechos de beneficiarios (la mayoría de los bancos mexicanos son propiedad o están asociados con bancos norteamericanos o europeos). El banco actúa como administrador y usted es el beneficiario del fideicomiso. El administrador sólo toma las instrucciones del beneficiario o comprador extranjero.

¿Qué derechos y obligaciones obtiene el beneficiario?

Le da todos los derechos de propiedad como el derecho a ocupar, utilizar, vender, alquilar y construir o mejorar la propiedad. Es posible que también tome una hipoteca de bienes raíces y dar instrucciones al Banco para transferir el título a otra persona o empresa. Usted estará obligado a pagar impuestos de propiedad, los servicios públicos y las tasas de mantenimiento del condominio, si procede, y la cuota anual por administración de fideicomiso que varía de banco a banco.

¿Qué sucede con el fideicomiso, si vendo mi propiedad?

Tras la venta de bienes en virtud de un fideicomiso, la Secretaria de Relaciones Exteriores está obligada por ley a expedir un nuevo permiso de fideicomiso al comprador o si la propiedad se vende a un mexicano, el fideicomiso puede ser terminado y la propiedad puede ser adquirida directamente.

¿Cuál es la duración de un fideicomiso?

La duración inicial del Fideicomiso es de 50 años. Es renovable por un período adicional de 50 años en el último año de cada período de 50 años y esto puede continuar indefinidamente.

¿Qué pasa si el beneficiario muere durante el período legal del Fideicomiso?

El beneficiario tiene derecho a nombrar un sustituto beneficiario (s) que recibirá todos los derechos y obligaciones que se derivan del fideicomiso, si el beneficiario muriese. Sus herederos no tendrán que seguir ningún procedimiento de legalización ante los tribunales mexicanos. Ellos sólo tienen que dar aviso al Banco Depositario y mostrar el certificado de defunción e identificaciones. El Banco los registrará como los nuevos beneficiarios del fideicomiso sin costo alguno.

¿Qué requisitos son necesarios para abrir un fideicomiso?

Los agentes profesionales estarán a su lado para guiarlo a lo largo del camino, sin embargo estos son los requisitos básicos:

1.   Copia de su identificación con fotografía, acta de nacimiento y certificado de matrimonio, visa o permiso de turista

2.   Su dirección, ocupación, número de teléfono y dirección de correo electrónico

3.   Nombre, nacionalidad, dirección y número de teléfono del beneficiario sustituto en caso de muerte

4.   Copia de la escritura de bienes raices y el certificado de libre gravamen (realizada por el vendedor)

5.   Acuerdo del precio de compra

¿Qué gastos están involucrados?

El gasto total de la apertura de un fideicomiso es de entre 5% y 6% del precio de venta. Esto incluye lo siguiente: la cuota inicial para crear el fideicomiso, la obtención del permiso de la Secretaria de Relaciones Exteriores, el registro de la Escritura en el Registro Nacional de Inversiones Extranjeras, el avaluó bancario, y la primera cuota anual para el manejo del fideicomiso y la prestación de servicios del Fiduciario (banco).

¿Cuánto tiempo se tarda en conseguir un fideicomiso?

El Notario Público se encargara de todo el procedimiento, se puede obtener el fideicomiso en un promedio de 30 a 60 días.

En México un Notario Público es muy diferente a EE.UU. Ellos son los abogados designados por el Gobierno del Estado y son los únicos autorizados para validar el proceso de transferencia de título. El documento resultante se registra en el Registro Público de la Propiedad.