- - - Purchasing Property in Mexico - - -

Can You Safely Buy Residential Property in Baja ???

YES !

Virtually all of Baja is in what is known as the "restricted zone" (50 km. from a coastline or 100 km from the International Border). In this area you may acquire title to property through a 50-year renewable trust known as a "Fideicomiso". A fideicomiso is renewable for a second 50 years (100 total) and is transferable to your heirs. The trust is a legal substitute for fee simple ownership where you (the buyer) are the beneficiary and an authorized Mexican bank of your choice is the trustee. In this case, the trustee maintains your Titled Property for an annual fee (typically $300-$400 USD). This trust cannot be broken or modified in any manner except by you, your beneficiary or assignee.

As a trustee, the Mexican bank acts on behalf of the foreign beneficiary in transactions involving the property held in trust. However, the beneficiary retains the sole use and control of the property held in trust and makes the investment decisions with respect to the property. As beneficiary, you have the right to use, lease, improve or sell the property without restriction, to transfer your rights to a third party, or to pass the property on to named heirs. In essence, you have the same absolute rights to use and enjoy the property as if you owned it in fee. The legal title is held in trust by a Mexican bank, but the bank can never sell or change the property in any way unless it is approved by the beneficiary of the trust.

How the Trust Works

The three parties involved in the trust are the seller of the property (the Trustor), the buyer (the Beneficiary or Fideicomisario), and the Mexican bank (the Trustee or Fiduciario).

Establishing the Trust

A foreign person or company interested in purchasing real estate in the restricted zone selects a Mexican bank to act as trustee with respect to the property. The investor then furnishes certain basic information to the trustee that in turn applies to Mexico's Secretariat of Foreign Affairs for a permit authorizing the trust. Once the permit has been obtained, the trustee and other partiers involved contact a Notary Public to draw up a deed for the property. The trustee registers the trust with the National Registry for Foreign Investment. Then, individual lot or home buyers are simply designated as beneficiaries of the master trust.

Selling the Property

If at a later date you decide to sell the property, anyone can buy it. If the new buyer is also a foreign buyer, upon application, the buyer becomes the beneficiary of the trust for the balance of the term of the original trust without incurring the initial costs to establish the trust. If, on the other hand, you sell to a Mexican buyer, the bank can simply endorse the fee title in favor of the buyer.

 

For further information, contact the Pelican Reef Real Estate Center here.