Investing in Mexico

While foreigners can own property fee simple in the interior of México, including valuable sites in such tourist meccas as Guadalajara and Cuernavaca and the capitol of México itself, they are technically prohibited from holding title to property in the so-called “Prohibited Zone along the nation’s coasts and borders.

This restricted area, which was established under the Mexican Constitution, extends 100 kilometers (about 62 miles) deep along the coasts. This means that virtually all of Baja California is included in the “Prohibited Zone”.

The Reason the Bank Trust Was Created

The Mexican Constitution does not allow foreign ownership in the Prohibited Zone because of the old fear of invasion by sea or by horse. Of course, invasions are not conducted that way today, so the Bank Trust was created as a vehicle to allow this ownership method without changes to the Constitution.

Tourism is the third largest industry for México. This law has been in effect now for 29 years with amendments to make your confidence more secure for your investment in order to continue attracting the tourism dollars

 

The Mexican Bank Trust (Fideicomiso)

The Mexican Bank Trust was created in 1971 to promote tourist and retirement investments along popular coastlines by Mexican President Echeverria, which authorized the 30-year Bank Trust program. This is the most secure method to hold real estate in Baja California.
Your Bank Trust must be established at an authorized Mexican Bank in their Trust Department.

In 1989 President Salinas mandated the 30 year Trust be extended for an additional 30 years. Then, December 27, 1993, President Salinas extended the Trusts from 30+30 year arrangement to the new 50+50 year time period. Bank Trusts are perpetually renewable.

The property you hold in a Bank Trust is yours to improve, build, sell, leave in your estate, etc. You’ll enjoy all the same rights you have in your U.S. fee simple real estate via the Bank Trust.

There are several Subdivisions in the area that were set up as a Master Bank Trust by the developers years back. Two of those subdivisions were San Antonio Del Mar and Las Gaviotas. They both are the original 30 year Trusts. They are in their last remaining years on their Trusts and soon the Homeowners Associations will assist in obtaining their first renewal period of their Trusts, which will be under the new 50 year Trust Law.

When you decide to sell your home, in all probability, another foreign person will be purchasing your Trust Rights. Your buyer will have the required documents from you to instruct the Bank of the sale and the name will be changed that also includes your beneficiaries. Your Real Estate broker should assist in making g this name change after the closing has occurred.

If you sell your Trust Rights to a Mexican National, he has the option to take title in his name in the Trust or remove the property from the Trust and take title in “Escritura” (Mexican National form of Ownership). Sometimes the Mexican National will opt to pay the annual Trust fee and stay within the Master Trust, especially, if his most likely buyer would be another foreigner. Once he removes the property from the Master Trust, it is more expensive for the property to be placed in a New Trust for the buyer.

 

 

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