The "Gunslinger Days" of buying
property in Mexico are over, having given way to U.S. Title
Insurance and bonded escrow accounts. During the last ten
years, property in Mexico has become a lucrative and viable
investment strategy, bringing with it a new breed of sophisticated
investors. U.S. title insurance, bonded escrow accounts
and comprehensive title searches are the norm, making owning
property in Mexico easier and safer than ever. US-based
mortgage conduits are entering the marketplace allowing
Americans to leverage the substantial equity found in their
primary US residence to collateralize the purchase of a
second home in Mexico. Today, there are established
and well defined rules regarding non-Mexicans owning land
in Mexico, put in place to protect foreign ownership rights
and to promote the sale of real estate to foreign investors.
The key is a safe, established and perpetually renewable
Mexican Property Trust called a "Fideicomiso".
With the advent of the North American Treaty Agreement,
the Mexican government recognized that it was critical to
make foreign investment in Mexico safer and easier than
ever. Because the Mexican constitution prohibits foreigners
from purchasing or owning real estate within 60 miles of
an international border or within 30 miles of the Mexican
Coast, a new, safe method of holding title was created.
This new instrument, modeled after the one in Monaco, allows
ownership through a Mexican Property Trust, called a "Fideicomiso".
This is a trust agreement, much like an estate trust, giving
the buyer all the rights of ownership.
The Department of Foreign Affairs in Mexico City issues
a permit to a Mexican Bank of your choice, allowing the
bank to act as purchaser for the property. This is not an
asset of the bank. The bank acts as the "Trustee"
for the Trust. A Fideicomiso is not to be confused
with a "land lease”. The property you buy is
placed in a trust with you named as the Beneficiary of the
Trust - you are not a lessee. If the property you purchase
is already held in a Trust, you have the option of assuming
that Trust, or having the property vested in a new Trust.
Much like Living Wills or Estate Trusts in the U.S., the
Mexican Bank, or Trustee, takes instructions only from the Beneficiary of the Trust (you). The Beneficiary
has all the rights of a property owner in the U.S.
or Canada, which include the following:
• To use, occupy and possess the property.
• To build on the property or otherwise improve it.
• To rent the property.
• To sell the property (by instructing the Trustee
to transfer the rights to another qualified owner).
• To bequeath the property to an inheritor.
The initial term of the trust is 50 years, and it can be
renewed for additional periods of 50 years indefinitely,
providing for long-term control of the asset.
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