The safe way for foreigner’s to purchase Real Estate in Mexico Purchasing real estate in Mexico is different from what we have become accustomed to in other parts of the world. It is not necessarily better or worse.... it’s just different! It makes sense to understand some of the basics when considering purchasing Mexican Real Estate including Los Cabos and Cabo San Lucas Real Estate. Article 27 of the Mexican Constitution prohibits foreigners from owning residential real estate within the “restricted zone” which is thirty miles (50km.) from any coastline and/or sixty miles (100 km.) from the border. This includes all of Los Cabos Real Estate. In 1973, with a failing economy, the Mexican Government recognized that many foreigners would enjoy owning a retirement or vacation property in Mexico, and it would bring much needed dollars into the country. The problem was how to change the Mexican Constitution. The Mexican Government came up with an idea that solved this problem. Foreign citizens, who wished to buy property within the restricted zone, could do so through a Mexican Property Trust called a Fideicomiso. The way it works is the Mexican Government issues a permit to the Mexican bank of your choice which allows the bank to act as the purchaser or “Trustee” for the property. You, as the buyer, are the “Beneficiary” of the Trust. Your rights as the “Beneficiary” are similar to Living Wills or Estate Trusts in the U.S. The “Beneficiary” has all the rights that an owner of property in the U.S. or Canada has, including the right to rent the property, improve the property, enjoy the property etc… The bank, acting as the “Trustee” can only take instructions from the “Beneficiary”. The “Beneficiary” may also sell his “beneficial rights” to the property and instruct the Trustee to transfer the property to another buyer. The initial term for a new Trust or Fideicomiso is 50 years and the Beneficiary can renew for an additional 50 years. This process can be continued indefinitely, providing for long term control of the asset. For their services, there is an annual fee paid to the bank. Rates vary from $300 to $550 dollars per year, depending on which bank you choose to work with. It’s also important to note that the beneficiary may name substitute beneficiaries upon death of the primary beneficiaries, thus avoiding probate in Mexico. Care must be taken however, in establishing the wording and terminology so that it is in conformance with applicable Mexican law. Your real estate company can recommend an attorney and notary to competently handle your Los Cabos Real Estate transaction. |