Frequently Asked Questions
What price range are the condos selling for?
Prices start at $250,000
What is a trust Institution?
In México, a Trust Institution includes those banks authorized to open fiduciary accounts and conduct trust operations. The trustee (Bank Institution) holds legal title to the real estate property during the term of the trust and is empowered to achieve the objectives of the contractual agreement creating the trust.
What are the characteristics of the trust agreement?
In the trust deed, the present owner of the land would appear as the settler or trustor (fideicomitente) and would thereby deliver title of the real estate to the trustee (the Bank), who would hold the property during the life of trust (50 years). The buyer would appear as the Beneficiary (Fideicomisario) with absolute use of the property.
The legal effect of the trust deed is that the trustee keeps temporary ownership of the real estate to comply with the law (Article 27 of the Mexican Constitution) that prohibits foreigners from full ownership of residential real estate located within 50 Kilometers of the coastlines and 100 Kilometers from the border areas of México.
As a foreigner you can not records title to land within these zone, but can own the beneficial interest to such land. It is, in a way, like owning 100 percent of the shares of a corporation which in turns owns a farm. It is for practical purposes like owning the farming fee simple but through an intermediary.
What requirements are necessary?
You or the seller provide to the bank the following documents an information:
- A copy of the real state title or deed indicating the exact surface area, meets and bounds (these documents are provided by the seller).
- Your name, nationality, occupation, address and phone number.
- The name(s), nationality, address(es) and phone number of the substitute beneficiary(ies) in case you become deceased during the life of the trust.
- The agreed purchase price.
Upon receiving the information and documents above, the bank shall produced to apply to the Foreign Affairs Secretariat (Secretaría de Relaciones Exteriores) for the permit authorizing the trust deed.
Upon obtaining the permit, the bank shall proceed to formalized and legalize the trust deed before a Notary Public.
Notaries in México have far greater legal status and competence than those in the United States: The Notary Public is an Attorney at Law who is authorized by the State Government to give final formality to the title transfer process in the official register (protocol book). The resulting document taken from this book is registered at the Public Registry of Properties, and it gives evidence of title in the name of the buyer.
In the event you cannot be present at the signing of the trust deed before the Notary Public, a letter is required stating you accept the terms of the trust agreement.
What rights and obligations does the beneficiary assume upon the completion of the trust deed?
As the beneficiary, you will have the full use and sole possession of the property; that is, you may live on the land and undertake any alterations and improvements. You also have the capacity to instruct the Trustee to mortgage the real state rent it, sell it, incorporate it, or perform any legal act derived from ownership. If you sell the property to another foreigner, you may assign your beneficial interest to the new purchaser. This new assignment of rights must be formalized before a Mexican Notary Public, prior to the payment of any federal and local taxes and fees that arise from the transfer of beneficiary right. You will have the obligation to pay any duties connected with the land, i. e; real state and water service taxes, as well as the trustee’s annual fee.
What happens if the beneficiary should die during the legal period of the trust?
The beneficiary has the right to appoint substitute beneficiary (ies) who will receive all the rights and obligations that arise from the trust if the beneficiary dies during the life of the trust.
What will happens at the expiration of the trust?
On May 16, 1989, a presidential decree was issued establishing, new regulations for Law to Promote Mexican Investment and Regulate Foreign Investment (Reglamento de la Ley para promover la Inversión Extranjera).
According to Article 20 of the Regulations, the Foreign Affairs Secretariat shall allow the renewal of the trust upon expiration of its term (generally 50 years) provided the following requirements are met:
- That beneficiaries, terms, conditions and purpose of the real estate in the new trust are the same as those of the expired trust.
- That the renewal be request 180 days prior to the expiration if the original term.
Furthermore, the Foreign Affairs Secretariat may authorize a new trust over any real estate transferred from one trust to another for period up to 50 years when the beneficiaries of the original trust are different.
If you have any doubt regarding this information please contact us, and we will gladly answer your questions.