Most real estate transactions in Mexico have at least two contracts: First, an offer of acceptance (oferta) and/or a promissory agreement (contrato de promesa), and second, a purchase-sales agreement (contrato de compraventa). The first two agreements are preliminary agreements containing the basic transactional information. They are not the instruments by which title to the property is transferred to the buyer. The second contractual document is the agreement to be protocolized by the notario that will transfer title to the buyer. This document may have several different forms:--a real estate trust agreement (contrato de fideicomiso), a reserve title agreement (contrato de compraventa con reserva de dominio) or an assignment of real estate trust rights (contrato de cesion de derechos fideicomisarios).
The Civil Code defines an agreement (convenio) as an accord (acuerdo) between two or more persons to create, transfer, modify or extinguish obligations. Specifically, the Civil Code defines a contract as an agreement that produces or transfers obligations and rights. In general, real estate contracts in Mexico must be "protocolized" before a notary public and, to be binding on third parties, they must be filed with the public registry of property. Once there is a written acceptance to the offer, it is recommended that the buyer's attorney draw up the sales contract or promissory agreement. Since this agreement is the single most important document the buyer will execute with the seller, and the agreement's contents will determine the terms and conditions of the transaction, the buyer should insist that his attorney perform this responsibility.
Tuesday, March 13, 2007
Frequently Asked Questions (FAQ's)
Q: Is it legal for foreigners to own property in Mexico?
A: Yes! Under Mexican law, specific requirements exist for foreign ownership of property in the restricted zones. The Bank Trust is the primary and 100% secure way for foreigners to own land. The bank trust holds the deed of property and states the foreigner as the beneficiary. Trusts are good for 50 years and are then renewed.
Q: Can the Mexican Government confiscate my land?
A: Foreigners often worry about their land being expropriated by the Mexican government. Under the North American Free Trade Agreement, NAFTA, Mexico may not directly, or indirectly, expropriate property except for a public purpose. This is the same as "Eminent Domain" in the U.S. Where it is necessary to expropriate land, swift and fair market compensation must be paid, together with accrued interest. If a property is owned / leased via a Bank Trust it is not Ajido or public purpose loan so an not be expropriated by the Mexican government.
Q: In the event the holding Bank should ever fail, be bought by an unauthorized Bank, etc., what happens to the Fideicomiso?
A: The Fideicomiso will be transferred to another authorized Bank. The Bank does not own the Fideicomiso, you do!
Q: Can my family inherit my property?
A: Yes! Inheritance in Mexico is actually easier than in the U.S. since the property can be inherited directly without the delays and expense of probate as long as a will is in place. There is no inheritance tax in Mexico as long as a will exists.
Q: Can I legally own property without a bank trust if I have an FM2?
A: No, the only way a foreigner can own property in Mexico without a bank trust is to become a Mexican citizen or to have a Mexican Corporation.
A: Yes! Under Mexican law, specific requirements exist for foreign ownership of property in the restricted zones. The Bank Trust is the primary and 100% secure way for foreigners to own land. The bank trust holds the deed of property and states the foreigner as the beneficiary. Trusts are good for 50 years and are then renewed.
Q: Can the Mexican Government confiscate my land?
A: Foreigners often worry about their land being expropriated by the Mexican government. Under the North American Free Trade Agreement, NAFTA, Mexico may not directly, or indirectly, expropriate property except for a public purpose. This is the same as "Eminent Domain" in the U.S. Where it is necessary to expropriate land, swift and fair market compensation must be paid, together with accrued interest. If a property is owned / leased via a Bank Trust it is not Ajido or public purpose loan so an not be expropriated by the Mexican government.
Q: In the event the holding Bank should ever fail, be bought by an unauthorized Bank, etc., what happens to the Fideicomiso?
A: The Fideicomiso will be transferred to another authorized Bank. The Bank does not own the Fideicomiso, you do!
Q: Can my family inherit my property?
A: Yes! Inheritance in Mexico is actually easier than in the U.S. since the property can be inherited directly without the delays and expense of probate as long as a will is in place. There is no inheritance tax in Mexico as long as a will exists.
Q: Can I legally own property without a bank trust if I have an FM2?
A: No, the only way a foreigner can own property in Mexico without a bank trust is to become a Mexican citizen or to have a Mexican Corporation.
Ownership in Mexico - Separating Fact from Fiction
Many rumors are constantly floating around about foreign investors being scammed out of all their money on Mexican real estate.
Owning land in Mexico is no longer sketchy like it was back in the old days. Due to established and well defined rules regarding non-Mexicans owning land, owning property in Mexico is easier and safer than ever. The rules protect foreign ownership rights, and promote foreign investment.
Over the last decade property in Mexico has become a practical investment strategy. Long gone are “promises and handshakes.” Investors are now protected by U.S. title insurance, bonded escrow accounts, extensive title searches, and “Fideicomisos.”
Americans and other foreigners may obtain direct ownership of property in the interior of Mexico. They can indirectly own property in the “restricted zone” through the use of real estate trusts called "Fideicomisos."
Fideicomisos are the number one way foreign investors are protected. A Fideicomiso is a safe, almost forever renewable Mexican property trust, which was established especially to protect foreign investors.
What is a Fideicomiso?
A Fideicomiso (FEE-DAY-E-CO-ME-SO) is a trust created to enable foreigners to enjoy unrestricted use of land located in the restricted zone without violating the law. It roughly translates to mean a real estate trust. It is similar to trusts set up in the United States, but a Mexican bank must be designated as the trustee and, as such, has title to the property and is the owner of record. Foreigners are set up as beneficiaries of the trusts.
There are two ways for foreigners to hold title to property in Mexico. They are a Fideicomiso ( “Trust”) or through a Mexican Corporation.
· What is a trust and who needs a trust ownership?
Since 1973 a constitutional amendment know as the Foreign Investment Law has allowed non-Mexicans to acquire coastal and border property through a “trust” called fideicomiso,established with a Mexican Bank.This trust assures the foreign buyer of all right and privileges of ownership, and is needed to own properties which fall into the “restricted zone” by article 27 of the 1917 Mexican Constitution. As of 1994 the Foreign Investment Law dictates that the trust be established for a term of 50 years, renewable at any time during its existence by simple application
· Why trust ownership?
The trust arrangement was established by the Mexican government as a way of protecting foreigners who own property in Mexico by means of the trust there is an automatic authoritative review of the transaction to ensure it is legal and unencumbered prior to the trust agreement being signed by the purchaser, the bank must confirm the seller’s information; i.e. proper ownership, insurance any liens or indebtedness against the property. All of which provides protection to the foreign owner.
· How does the trust work?
The bank know as the “trustee” holds the Deed for the purchaser, known as the “beneficiary” This property is not part of the Bank’s assets and cannot be subject to a lien or attached to bank obligations. While the bank is the technical owner of the property, they have a statutory obligation to follow the beneficiary’s instructions concerning the property.
· What rights does the beneficiary have to the property?
The beneficiary has all ownership rights to the property and may sell, lease, mortgage, pass to heirs or do any other legal act with the property. The beneficiary may transfer or assign his beneficial interest to any person and keep the profits from the sale of the property subject to applicable tax laws and expenses for the sale. Property held under a trust can be passed on to heirs and there is no inheritance tax. This is accomplished by naming them as substitute beneficiaries in the event of your death.
· How long does the trust last?
Trust are granted and now extended in 50 years periods. The original periods were 30 years and if you purchase property currently held in a trust, a new 50 year period can be established or the existing trust can be assigned. Trusts are renewable at any time by simple application.
· How much are trustee fees?
The costs to establish a fideicomiso trust vary from bank to bank. The typical range is approximately$1,500U.S.to $2,000U.S. for trust set up and about $500 to $550U.S. each year for management of the trust. These fees are paid directly to the bank that has your trust.
· How are these trust established?
The fideicomiso trust are established by a Notary Public following the receipt of a permit by the Ministry of Foreign Affairs. There are a large number of foreign-owned properties in Mexico, especially Cancun standard forms are utilized by local Notary Public.
Owning land in Mexico is no longer sketchy like it was back in the old days. Due to established and well defined rules regarding non-Mexicans owning land, owning property in Mexico is easier and safer than ever. The rules protect foreign ownership rights, and promote foreign investment.
Over the last decade property in Mexico has become a practical investment strategy. Long gone are “promises and handshakes.” Investors are now protected by U.S. title insurance, bonded escrow accounts, extensive title searches, and “Fideicomisos.”
Americans and other foreigners may obtain direct ownership of property in the interior of Mexico. They can indirectly own property in the “restricted zone” through the use of real estate trusts called "Fideicomisos."
Fideicomisos are the number one way foreign investors are protected. A Fideicomiso is a safe, almost forever renewable Mexican property trust, which was established especially to protect foreign investors.
What is a Fideicomiso?
A Fideicomiso (FEE-DAY-E-CO-ME-SO) is a trust created to enable foreigners to enjoy unrestricted use of land located in the restricted zone without violating the law. It roughly translates to mean a real estate trust. It is similar to trusts set up in the United States, but a Mexican bank must be designated as the trustee and, as such, has title to the property and is the owner of record. Foreigners are set up as beneficiaries of the trusts.
There are two ways for foreigners to hold title to property in Mexico. They are a Fideicomiso ( “Trust”) or through a Mexican Corporation.
· What is a trust and who needs a trust ownership?
Since 1973 a constitutional amendment know as the Foreign Investment Law has allowed non-Mexicans to acquire coastal and border property through a “trust” called fideicomiso,established with a Mexican Bank.This trust assures the foreign buyer of all right and privileges of ownership, and is needed to own properties which fall into the “restricted zone” by article 27 of the 1917 Mexican Constitution. As of 1994 the Foreign Investment Law dictates that the trust be established for a term of 50 years, renewable at any time during its existence by simple application
· Why trust ownership?
The trust arrangement was established by the Mexican government as a way of protecting foreigners who own property in Mexico by means of the trust there is an automatic authoritative review of the transaction to ensure it is legal and unencumbered prior to the trust agreement being signed by the purchaser, the bank must confirm the seller’s information; i.e. proper ownership, insurance any liens or indebtedness against the property. All of which provides protection to the foreign owner.
· How does the trust work?
The bank know as the “trustee” holds the Deed for the purchaser, known as the “beneficiary” This property is not part of the Bank’s assets and cannot be subject to a lien or attached to bank obligations. While the bank is the technical owner of the property, they have a statutory obligation to follow the beneficiary’s instructions concerning the property.
· What rights does the beneficiary have to the property?
The beneficiary has all ownership rights to the property and may sell, lease, mortgage, pass to heirs or do any other legal act with the property. The beneficiary may transfer or assign his beneficial interest to any person and keep the profits from the sale of the property subject to applicable tax laws and expenses for the sale. Property held under a trust can be passed on to heirs and there is no inheritance tax. This is accomplished by naming them as substitute beneficiaries in the event of your death.
· How long does the trust last?
Trust are granted and now extended in 50 years periods. The original periods were 30 years and if you purchase property currently held in a trust, a new 50 year period can be established or the existing trust can be assigned. Trusts are renewable at any time by simple application.
· How much are trustee fees?
The costs to establish a fideicomiso trust vary from bank to bank. The typical range is approximately$1,500U.S.to $2,000U.S. for trust set up and about $500 to $550U.S. each year for management of the trust. These fees are paid directly to the bank that has your trust.
· How are these trust established?
The fideicomiso trust are established by a Notary Public following the receipt of a permit by the Ministry of Foreign Affairs. There are a large number of foreign-owned properties in Mexico, especially Cancun standard forms are utilized by local Notary Public.
Wednesday, March 7, 2007
CHACALA REAL ESTATE
Nayarit coastal properties (sometimes called the Mexican Riviera) appreciated 50 to 100% last year. Prospective buyers are looking and buying now, because they know the coast properties will be out of their reach in the future. Buyers are comparing coastal properties worldwide. They are attracted to property in Mexico, because of the close proximity to the U.S., the foreign ownership laws, the warm climate and in particular ecological protected areas like Marina Chacala, a gated community. Chacala Proper lots start at $30,000.00 and Marina Chacala (a luxury gated community) offers properties starting at $200,000.00. If you are a newcomer and are interested in visiting Chacala, it will exceed your expectations. To the many visitors who know Chacala, come. We now have an Internet phone with a U.S. number, which is 1-760-300-3908. Website: http://www.casapacificachacala.com/cre_sayulita_real_estate.htm .
Saturday, March 3, 2007
A Full Variety of Chacala Vacation Rentals
From small casitas in the village to large waterfront villas accomodating families up to 20, CHACALA VACATION RENTALS can handle your needs. Karla Lawler is available with her select pool of vacation rentals to meet any and all needs. A full inventory of rental properties can be found at http://www.casapacificachacala.com/cre_nayarit_property_rentals.htm . We have provided the visitor with descriptions, pricing and availability (on-line calendars). There is also information about excursions, transportation and activities.
Whats up with Chacala, Nayarit, Mexico?
Chacala continues to evolve into a popular destination for visitors and property owners. While still maintaining the quality of the beaches, clean ocean waters, the gentle unpolluted trade winds and the friendliness of the people, there is a building boom going on. Every year new buildings are replacing the old or are springing up on virgin lots. The Mexican government has targeted Chacala as a growth area. For example, Chacala has a new water system. The townspeople, the scholarship students and Chacala visitors have created a comprehensive garbage program. Telmex has brought broadband to Chacala. We have cell phone service as well. To some of us locals who remember the Chacala of only a few years ago, these changes seem like Scottie beamed us to another planet. While we enjoy the new conveniences, we all hope that the integrity of our beloved Chacala will be sustained.
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