In Mexico the sale and purchase of properties to people from other countries within Mexican coasts is very simple and is based on a contract for the purchase of real estate (trust) for foreigners between the owner (seller) and the buyer (foreign buyer ) supervised a Financial Institution (trust administrator) who acts on behalf of the foreign person acquirer in accordance with the laws that regulate these rights on real estate in this country.
By choosing one of our Playa Investors Managers they will help you accomplish your investment goal through this process and for the benefit of our customers when buying an investment property, will not charge fees on document management, and also we have trust delegates in major cities, whose signatures are authorized on trust operations for an efficient paperwork.
Understanding Real Estate in Mexico
RESTRICTED AREA TRUST
A Restricted Area Trust, formally known as transferring ownership or property, is the only legal form through which foreigners can acquire the right to use and enjoy a residential property located within restricted areas of the country as are Mexican coasts and border areas.
PARTS OF A RESTRICTED AREA TRUST
• SETTLOR.- Owner of the property that provides the Property Trust. (SELLER)
• FIDUCIARY.- Financial Institution that acts on behalf and at the request of the Trustee. (TRUST ADMINISTRATOR)
• TRUSTEE.- Foreign person who acquires the right to possession and use of the property. (BUYER | BENEFICIARY)
• SUBSTITUTE TRUSTEE.- Heir of rights of use to the death of the trustee. (RECIPIENT SUBSTITUTE)
• The Restricted Areas are located within a range of 100 kilometers along the border and 50 kilometers off the coast.
• The Border Region, in contrast and in accordance with Circular 2,019 of Banco de Mexico (Central Bank), is also a strip of 20 kilometers parallel to the border in the north, considered the entire territory of the states of Baja California and Baja California Sur.
-Article 27 of the Political Constitution of the Mexican United States, states that foreigners are barred to acquire direct ownership of lands and waters in areas determined as restricted.
-The Foreign Investment Law provides that only trust companies may acquire rights to real property located in restricted areas through a trust that allows the use and exploitation of such property without constituting real rights.
-The Ministry of Foreign Affairs (SRE) allows to the Trust Company ( Financial Institution) a permit to acquire ownership of a property in the restricted area for a foreigner (individual or company) or a Mexican Company with the clause on admission of foreigners as long as the building is intended for residential purposes.
-If the property has over 2,000 sqm surface, a “Letter Investment Commitment“, signed by the Trustee, must be attached to the permit application.
-The Trust Company always retain the ownership of the property, up to a maximum period of 50 years, which can be extended for another 50 years. The Restricted Area Trust must be recorded in a legal Public Record.
-The Law on Foreign Investment in its Regulation provides that such trusts must register with the National Registry of Foreign Investments (RNIE), under the Ministry of Economy.
-The trust may end with the fiduciary institution because of fiduciary substitution or transfer of the property to a third party with legal capacity to acquire it, among other causes.
-The Trustee is required by law to give notice to the SRE RNIE on any modifications made in this type of trusts.
SERVICES & COSTS INVOLVED
• Permit from the Ministry of Foreign Affairs (SRE) – $ + VAT
• National Register of Foreign Investment (NREN) – NOT APPLICABLE
• Document Management – $ + VAT
• Honorary Trustees
– Acceptance: $ + VAT
– Annuity: $ + VAT
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