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 Mexican Real Estate Law

The following information is provided as a general and informative background to Mexico, and should not be considered legal advice or your sole source of information. Wherever possible you are encouraged to utilize the services of a professional, such as listed below.

Q: Are the permits that Article Twenty Seven requires of foreigners hard to get?

A: The foreigner applying for permission to buy land must prove his immigrant status in Mexico. Non-residents and tourists can buy land through a trust. If the foreigner resides in Mexico, he can acquire directly the property as long as it is not within thirty-one miles from seashores or sixty-two point five miles from the borders.

Q: What about condominiums or houses located in Acapulco, Puerto Vallarta, Cancun, or any of the resorts of Mexico'?

A: The Constitution forbids direct ownership by foreigners inside thirty-one miles from the sea or sixty-two point five miles from the borders. However, they have always been permitted to buy on a trust basis. In this type of purchase, a bank is the trustee, or owner, of the real estate. The beneficiary, having all the rights to use, enjoy and sell, is not considered the owner of record. This is not a violation of what the constitution forbids. The trust is established for thirty years and can be extended for one additional thirty year period.

Q: Are time shares legal to obtain by foreigners in Mexico?

A: It is legal for the foreigner to obtain a time share as long as he does not reside in that time share permanently. The foreigner must obtain a copy of the property ownership when he buys the time share and club memberships are illegal.

Q: What happens if a foreigner decides to sell after some years?

A: He may do so, and he should profit by an increasing value.

Q: Can the foreigner rent or sublet his apartment in these condominiums or trusts?

A: Yes, he may rent to anyone he desires, keeping the rent for periods not exceeding ten years.

Q: What happens if the beneficiary dies?

A: At the time the trust is set up, a substitute beneficiary is named. This person has the same rights as the first beneficiary in case of his death. No Will need be probated in this case.

Q: How is a trust set up?

A: The trust agreement is drawn up before a notary public. The Ministry of Foreign Affairs and the Commission on Foreign Investments must have approved the operation, with the trustee requesting this authorisation. The participants in the transaction are the seller who must have clear title to property, the bank as trustee, and the buyer or beneficiary of the true, or his representative.

Q: How much does it cost to buy properly in a trust?

A: There are expenses for the authorisation from the Ministry of Foreign Affairs, the registration in the Registry of Foreign Investments, and the fees of the notary public. The bank charges one percent of the amount of the transaction for the preliminary studies and the drawing up of the agreement. The total expenses for the transaction should be between 11-1/2 percent and 12-1/2 percent. In addition, there is a yearly fee of one percent of the property value charged by the bank for its services as trustee.

Q: What are the responsibilities of the beneficiary?

A: He must pay the trust annual fees punctually. Also, he must pay property taxes, water, and other utility bills when due.

Q: Is it true that the new law that regulates foreign investment is against new investments?

A: Not at all. The new law is not only fair, but even positive in the sense that now everybody knows where he stands. In the long run, it is going to create a better atmosphere for mutual respect and understanding. Prospective foreign investment from now on will require permission from the Commission of Foreign Investments.

Q: Can foreign investors come to Mexico and buy an established industry?

A: As long as they acquire forty-nine percent (49%) of that corporation, there is no required permit.

Q: What activities are reserved to Mexican citizens?

A: The new law dictates that in radio and television, urban and inter-urban transportation, gas distribution, and forestry, only Mexican individuals, or Mexican corporations with a clause that forbids any foreigners to own shares, can participate.

Q: Which are the activities where capital is welcome?

A: In almost every thing else.

Q: Are the percentages to be owned by foreigners inflexible?

A: No. In those fields where foreign investment is permitted the National Commission on Foreign Investment might decide to increase the percentage if it is in the national interest.

Q: What happens with investments already made by foreigners not linked with foreign centres of decision?

A: Foreign residents not linked with foreign interests or with foreign centres of decision are considered equal to Mexicans with respect to investments and are not subject to any percentages.

Q: What should you do when buying a home?

A: After you make the decision to buy, a first-class notary public of your choice should take charge. It is customary for the buyer to select the notary public. The Public Registry of Property has to be checked to ascertain if the property in question has any liens or encumbrances and if the title is in good legal standing. The notary does this and also presents the application to the Ministry of Foreign relations when a foreigner is the buyer. If everything is clear, then the sale proper takes effect. It is also recommended that you hire an attorney to review the contract.

Information provided by the Law Offices of Jaime B. Berger Stender,
Tijuana, Baja California, Mexico.

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