1. - Can I as a foreigner
acquire Real Estate Property in Mexico?
Yes, you can acquire Real Estate
Property as a Foreigner in Mexico.
Property in Mexico can be legally
owned by foreigners. If you buy Real Estate property outside
of the restricted zone (which is defined on article 2 fraction
VI of the Foreign Investment Law as the area of the national
territory located a hundred kilometers from the borders and
fifty kilometers from the coastline) you are allowed to own
the property and hold title on your name without a Bank Trust
(Fideicomiso) or a Mexican Corporation.
This grants you nearly the same
rights you receive when you purchase property in many parts
of the world.
2. - What happens if I
want to acquire Real Estate Property in the restricted area?
for example beach property?
However, the Mexican Constitution
prohibits foreigners from directly owning property in the
so called restricted zone; Foreigners can acquire real estate
property in such area through a REAL ESTATE TRUST (FIDEICOMISO)
or a MEXICAN CORPORATION (articles 10 and 11 of the Foreign
Investment Law).
3. - When do I use a REAL ESTATE TRUST (FIDEICOMISO)
to acquire Real Estate Property in the restricted area ?
Real Estate Trusts are formed
only when the investor has residential purposes.
There are three parties that
form this contract: The Trust Founder/Grantor (seller), the
Trustee (Fiduciary, any Financial Institution in Mexico) and
the Beneficiary (Buyer). The Real Estate property is transferred
to the Trustee; the Beneficiary obtains the right to "use"
the property and to obtain all the products and benefits from
it.
To form a Real Estate Trust
it would be necessary to apply for a special permit from the
Foreign Affairs Ministry which takes approximately two weeks.
The duration of a Real Estate
Trust is 50 renewable years. Also as part of the contract,
substitute beneficiaries (heirs) are designated. They will
assume the remaining time of the initial Real Estate Trust.
If Initial Real Estate Trust is set to expire, a new Real
Estate Trust will have to be established.
The Real Estate Trust allows
the beneficiary to sell the property rights to another foreign
or Mexican
The annual obligation of a Real Estate Trust is reduce to
pay a yearly fee to the Trustee, which varies from one Bank
to another. Most Financial Institutions will send the annual
bill to the address provided when Real Estate Trust is established.
There are different kinds of Real Estate Trusts on which the
Trustee's fee varies depending on the time the Bank has to
spend administrating the Trust.
4. - What are the benefits
of REAL ESTATE TRUST?
- The Beneficiary acquires the right to use
and enjoy the Real-Estate subject-Matter of the Trust.
- The Beneficiary shall have the possession
of the Real-Estate with all authorities to occupy it.
- Alternate Beneficiaries may be appointed
for the event of death, who shall enjoy the benefits in
a simultaneous or successive manner.
- The Beneficiary shall have the right to
transfer its rights and to freely agree upon the contribution
or payment.
- The Beneficiary shall have the authority
to instruct the Trustee to transfer the Real-Estate Property
to individuals or legal entities with legal capacity to
acquire them.
5. - When do I use
a MEXICAN CORPORATION to acquire Real Estate Property?
Mexican Entities are incorporated
only if the buyer has commercial purposes which include of
course, the acquisition of a Real Estate property.
Under the 1993 Foreign Investment
Law of Mexico, a Mexican business company is considered Mexican
under said law, even if all the shareholders are foreigners.
Thus, foreigner can acquire real property in the restricted
area. This, however, is only for non-residential property
(used for non-residential purposes), such as:
- Promotion and sale of timeshare rights
of use to real estate (here no ownership of real estate
is given but rather rights of use);
- For industrial, commercial or tourism activity
that may simultaneously contain a residential component
for the subsequent buyer;
- Real estate acquired by credit institutions,
financial intermediaries, and auxiliary credit organizations
to recover debts owed to them and in the ordinary course
of business;
- Real estate used by entities in the course
of their business consistent with sale, development, construction,
subdivision and other activities included in the development
of real estate projects, until these are sold to third
parties that use them for residential occupation; and
- Generally, real estate destined for use
in commercial, industrial, agricultural, cattle, fishing,
forestry, or service related activities.
It is a violation of the mentioned
Mexican Foreign Investment Law to place a retirement or vacation
home in the name of a Mexican corporation (since it will be
used for retirement or vacation of the owner). It will also
be more costly than a trust due to periodic tax declarations
and taxes on corporate assets.
6. - What's the information
and documents needed to form a Mexican Corporation?
- Complete names of at least two shareholders,
including their middle name to avoid any future identity
problems (Entities are as well allowed to appear as shareholders,
though different information may be required).
- Marital Status, Nationality, Occupation,
Address, Place and Date of Birth, telephone and fax number,
cell phone and email.
- Three options in order of preference to
name the Mexican Corporation.
- Purchase price (if any).
- Percentage of ownership of each shareholder
in the corporation.
- Main purpose of the corporation.
- Administration of the corporation
(who will be its legal representative).