HOW TO BUY IN MEXICO WITH A TRUST

Can I buy a property in Tulum and Riviera Maya as a foreigner?

Foreign citizens can buy land in Mexico. If the property is not in a restricted area (within 50 kilometers from the coast to 100 kilometers of the border) the property can be deeded to the foreigner. If the land is within the limits of a restricted area, then the foreigner will be able to become owner of the property through a Trust or a Mexican Corporation or LLC.
There are two ways to have titles of property for foreigners in Mexico. These are: The TRUST or through a MEXICAN CORPORATION.
The following information explains a Title of property by means of a
TRUST.

What is a TRUST and what is required of a property TRUST?

As of 1973, a constitutional amendment to the Law of Foreign Investment allows non Mexican Nationals to acquire property along coasts and borders by means of a TRUST settled with a Mexican Bank. The TRUST assures the foreign buyer all the rights and privileges of possession, and it is required to own properties within the “restricted areas.”
Any property located within 50 kilometers (32 miles) of the coast, or 100 kilometers (64 miles) of the borders is in the “restricted area,” as established in article 27 of the Mexican Constitution of 1917.
As of 1994, the Law of Foreign Investment states that the TRUST must be a term of 50 years, and that renovation during its existence be done with the simple request. The beneficiary can at any time rent, sell or transfer the real estate property.
Anyone buying real estate properties by commercial proprietors will be happy knowing that the amendment of 1998 to the Law of Foreign Investment provides opportunities of direct property for foreign buyers looking to buy real estate properties in the Zone Prohibited for commercial intentions. Provided the commercial intention is not limited by the Law of Foreign Investment and with compliance to the current legislation and regulations.

Once the buyer has decided to buy the real estate property, it is necessary to review the right to the real estate property.
The system of Mexican registry is not equal to or as easy to use as the registries in the United State. Some registries have been computerized, others still must be completed by hand and require local experts to find them. All the transactions of real estate properties must be registered with the Registry of the capital or any other big city within the State in where the real estate property is located.
In order to review the rights to the real estate property, the buyers must obtain copies of the title from the proprietor of the property. Copies of the titles can be obtained in the Registry office of the area in which the land is located. Most urban residences and land will be registered. A lack of registration is usually a bad sign. The real estate property can be registered in one of the two sections of the Registry.
The land registered in the section only reserved for possessions; this means that the single proprietor cannot necessarily demand possession of the property. The other registry can mean that others can reclaim the property, and in the best case they can do it, but it’s difficult to sell in the future.

Why use a Fideicomiso Property TRUST (Fido)?
The Mexican government established the agreement of the TRUST to protect the foreigners who have properties in Mexico. By means of the TRUST there is an automatic authorized review of the transaction to make sure that it is legal. Before the buyer signs the agreement, the bank must corroborate the information of the salesman, like for example the authentic possession, the insurance, and the right to retain the property until the debt is paid. Everything is Guaranteed for the protection of the foreign proprietor.

How does the TRUST work?
The bank, in this case the fiduciary, retains the title for the buyer, who in this case is the beneficiary.
The property is not part of the bank’s assets and it cannot be subject to retaining the property that has not been paid for, or has become attached to the obligations that the bank has. While the bank is the technical proprietor of the real estate, it has statutory obligations to accept the instructions of the beneficiary concerning the property and can only act regarding said property by such instructions only.

What rights does the beneficiary have with respect to the property?
The beneficiary has all the property rights and can sell, rent, mortgage, transfer as inheritance or perform any other legal act they wish to with regards to the property. The beneficiary can share, transfer or assign his beneficial interests to any person and keep the gains from the sale of the property. Gains, of course, and sales proceeds are subject to the applicable tax and income laws of the State and the Country.
The property retained under the TRUST can be transferred to the heirs without inheritance tax. This is carried out by naming them as beneficiaries in case of death.

How long is the TRUST for?
The TRUSTS are granted in periods that extend to 50 years. Originally they were 30 years, and when acquiring a property that is with a TRUST it can establish a new period of 50 years or the existing TRUST can be assigned.
The TRUSTS are renewable at any time with a simple request.

How much does the quota of trustee cost?
The costs for the establishment of a TRUST vary from one bank to another. The approximate costs start from 2,300 dollars for the establishment, and $300 to $500 per year for administration of the TRUST.
These fees are paid directly to the bank that holds the TRUST via transfer or credit card.

How is a TRUST established?
The TRUST is established with any authorized bank by means of a public notary who also requests the necessary Authorization from the Ministry of Foreign Affairs. There are a great number of foreigners who are owners of properties in Mexico, so the notaries public use standard forms and are well versed in the procedure, more so in Tulum and Riviera Maya.

Trust Overview
As stated previously, the buyers that buy  real estate properties in the Restricted Zone for residential intentions must buy through a Trust. The seller (the “otorgante or fideicomitente”) transfers the title of the real estate properties to a TRUST FIDEICOMISO created for such purposes by a Mexican financial institution that acts as the administrator in a Trust that will be used for the intentions indicated by the “fideicomitente”, in favor of the buyer, or buyers and the person(s) indicated by the buyer as the beneficiary or the beneficiaries in case of permanent absence. The buyers in any agreement of Trust are free to negotiate most of the terms and conditions of the agreement.

The Seller Fideicomitente
The seller transfers the title of the real estate property the buyer Trustee “Fideicomisario”) under the agreements and conditions established in the trust and the regulations of the current legislation. The agreement also establishes that the Trust is IRREVOCABLE and that the seller has no further rights over the property. In other words, the seller/fideicomitente WILL NOT retain any rights regarding the Trust or the property in the trust at no time and under any circumstances.

The Trustee
The Trustee administrates the Trust as an owner with owner rights from the moment of the establishment.

The Contract of Trust, the Registry, and the Expenses
As previously stated, the buyer can negotiate most of the terms and conditions of the contract of Trust except those mandatory by law and regulations. The contract of Trust must be executed by a Mexican Notary, who is registered in the Public Registry of Properties. )


Conclusion
Although the purchase of real estate properties through a Trust can appear complicated, the process is mostly handled by the Public Notary and the Bank Officials. Currently there is an enormous amount of foreign investments in Mexico through purchases of residences for foreigners in real estate properties in the