The "Gunslinger Days" of buying property in Mexico are over. Banking
on the words "That's the way we do business here!", and trusting
"Thy Seller", have given way to U.S. Title Insurance and bonded
escrow accounts.
During the last ten years, property in Mexico has become a lucrative
and viable investment strategy, bringing with it a new breed of
sophisticated investors. U.S. title insurance, bonded escrow
accounts and comprehensive title searches are "in"... promises and
handshakes are "out".
Owning property in Mexico is easier and safer than ever, because now
there are established and well defined rules regarding non-Mexicans
owning land in Mexico. These rules are in place to protect your
ownership rights and to promote the sale of real estate to foreign
investors. The key is a safe, established and perpetually
renewable Mexican Property Trust called a "Fideicomiso".
What is a "Fideicomiso" or Mexican Property Trust?
With the advent of North American Treaty Agreement, the Mexican
Government recognized that it was critical to make foreign
investment in Mexico safer and easier than ever. Because the Mexican
Constitution prohibits foreigners from purchasing or owning real
estate within 60 miles of an international border or within 30 miles
of the Mexican Coast, a new, safe method of holding title was
created. This new instrument, modeled after the one in Monaco,
allows ownership through a Mexican Property Trust, called a
"Fideicomiso". This is a trust agreement, much like an estate
trust, giving you all the rights of ownership.
The Department of Foreign Affairs in Mexico City issues a permit to
a Mexican Bank of your choice, allowing the bank to act as purchaser
for the property. The bank acts as the "Trustee" for the Trust and
you are the "Beneficiary" of the Trust. This is not an asset of the
bank; they simply act as the Trustee to hold the Trust.
Much like Living Wills or Estate Trusts in the U.S., the Mexican
Bank, or Trustee, takes instructions only from the Beneficiary of
the Trust (You). The Beneficiary has the right to use, occupy and
possess the property, including the right to build on it or
otherwise improve it. The Beneficiary may also sell the property by
instructing the Trustee to transfer the rights to another qualified
owner, or bequeath the property to an inheritor. The initial term of
the trust is 50 years, and it can be renewed for an additional
periods of 50 years indefinitely, providing for long-term control of
the asset.
You have all the rights of a property owner in the U.S. or Canada,
including the right to enjoy the property, sell the property, rent
the property, improve the property, etc. This is not to be confused
with a "land lease." The property you buy is placed in a trust with
you named as the Beneficiary of the trust - you are not a lessee. If
the property you purchase is already held in a Trust, you have the
option of assuming that Trust, or having the property vested in a
new Trust.
How Long Does It Take To Get A Trust?
At Baja Homes for Sale, we work with Federal and State Notaries for
all our closings, and to secure your new Trust. (In Mexico, a
Notario Publico is much different than in the United States, more
like a Clerk of Courts.) On average, we can obtain your Trust within
60 days and in some cases, we have actually transferred title in as
little as two to three weeks. We oversee the entire process and make
certain you understand each and every step involved. We can even
provide you with an English sample Trust for you to review.
You would be amazed how many people have only a simple buy/sell
agreement between themselves and the seller as evidence of
ownership. This is not a safe method of ownership and is not
recommended by Baja Homes for Sale or Stewart Title Guaranty.
Rule Number 1: Always get your Trust.
When Do I Pay For My Property?
When you have clear title, exactly like you would anywhere else. By
using our U.S., bonded, third party Escrow service with Stewart
Title Guaranty, Houston Texas, your money is held in an individually
numbered, bonded and insured escrow account until your Trust is
complete and the property rights have been transferred to you.
We do not recommend that you release funds to a seller unless you
have received your Trust first. Purchasing property without
receiving a Trust is simply buying without receiving the title in
your name, which is risky and not recommended.
Fact: Until you have received your Trust, and rights to the
property have been transferred to you, the legal owner of record in
Mexico is still the previous owner.
Fact: You cannot bypass Mexican Taxes or fees by not getting
your Trust, even if you sell the property to someone else before you
have your Trust in place.
Do I Need Title Insurance?
Whether you buy real estate in the U.S. or Mexico, Baja Homes for
Sale recommends U.S. Title Insurance for every property you
purchase. You have insurance for your car, your home and your
health, why not purchase it for one of your largest investments,
your property. Baja Homes for Sale will not represent or sell
any property in Mexico that cannot be covered by a U.S. Title
insurance policy with Stewart Title Guaranty, Houston Texas.
Fact: U.S. Title Insurance is available for properties in
Mexico purchased by U.S. Citizens.
Fact: Just because you have a Trust does not ensure you have
free and clear title.
In a Stewart Title property search, the properties title is searched
all the way back to the Mexican Revolution. Most title searches to
secure a Trust only go back one or two owners of record.
How Can I Own My Property?
In the Trust document, you must name the Beneficiary or foreign
owner for the property. This can be you personally, multiple
partners, a foreign corporation, an estate trust, a living will, or
other entity. The Trustee of the Trust (the Mexican Bank) will take
direction from whomever you name as the Beneficiary.
Fact: You can name a U.S. Corporation as the Beneficiary of
the Trust. This is perfectly legal.
Fact: If you sell more than 25% of the shares in the U.S.
Corporation, you have created a real estate transaction in Mexico,
and all Mexican Taxes apply.
(This is Article 151 of the Mexican Revenue Code and is also
declared in the International Tax Treaty between the U.S. and
Mexico. If this is done, and you do not pay the Mexican Taxes, you
will have created a tax burden over the property for the new owner.)
Fact: You can own a property in a Mexican Corporation and
take title fee simple only if the property is for development or
investment purposes.
Fact: You cannot own property through Mexican Corporation to
by-pass the Trust process.
Fact: It is against the law for a foreigner to own property
in a Mexican Corporation for residential purposes.
If you are considering a real estate purchase in Baja, make sure
everything is done right by allowing Baja Homes for Sale to work for
you.
Our strength is in our commitment to safeguard the interests of our
clients. We offer no properties that cannot secure a U.S. Title
policy. No other real estate firm in Baja California is more
dedicated to ensuring a safe, secure transaction for both buyers and
sellers.
We never forget it's your money and your investment... it's our job
to protect it.
We know the rules, we know the laws and we know Baja Mexico. Baja Homes for
Sale...the safe, secure way to buy real estate in Mexico.
