Bank
Trust. Foreigners
must use a bank trust (fideicomiso) to purchase any property
in what the Mexican Government has designated as the restricted
zone, any property within 100 kilometers (62 miles), from
the borders and 50 kilometers (31 miles) from the coast.
This is part of the Mexican Constitution.
What
is a Bank Trust? The bank trust system or fideicomiso
was created to facilitate the purchase of Mexican property
in the restricted zone by non-Mexican citizens. Cancun,
Playa del Carmen and all the Mayan Riviera fall under
these rules. This system has worked well for over 30 years.
This is how I purchase Mexican beachfront condos.
Is it risky? Not at all. Consider that Banamex, the bank
I use, is now US Citibank you actually have a legal relationship
with a US Bank and US corporation. The bank, holds the
property in trust for you. You the owner enjoy full ownership
rights and legal protection of a property owner. You may
rent the property and sell it for profit just as you would
in the US.
Are there any disadvantages to the Bank Trust System?
There is an annual bank trust fee paid to the bank for
maintaining the trust of approximately 1% of the assessed
value approximately 50% of the actual market value) and
there is a charge to initially set up the trust, included
in the closing costs. The duration of the trust is 50
years and can be renewed for a nominal charge. These charges
are certainly offset by the lower cost of taxes and maintenance
fees for Mexican properties compared to the US.
What
is a Notary? A notary is a public government
official appointed by the State Governor. Unlike a US
notary (who is essentially a clerk) a Mexican notary is
a lawyer specializing in property transfers. He is an
independent official representing neither the buyer or
the seller directly but whose actions actually protect
the buyer. How so? The notary is responsible to research
the property and make sure that the property is "free
and clear" unencumbered by loans, liens or debts.
The public notary (Notario publico) has the capacity to
attest and certify documents and business and legal transactions
that require authenticity. He also provides for strict
security of original records and documents. A notary must
meet the following criteria before being considered for
appointment by the State Governor. He must be a Mexican
citizen, at least 35 years of age, have a law degree,
at least 3 years experience working in the office of a
notary and must pass a legal examination.
In Mexico all legal documents, such as deeds, wills, powers
of attorney, constitution of corporations, establishment
of trusts and other legal transactions must be made before
a notary public in order to be valid. If the document
is not notarized by a Mexican notary public it is not
legal.
Before making any property downplay take a copy of the
deed (scriptural) which any seller should be willing to
provide if everything is in order to the notary public
to check the deed's validity. Insist on making all real
estate transfer agreements before a notary public. The
notary that we exclusively work with and have a trusted
relationship with is Notary #26.
Documents
you will need? The notary public will need from
both parties to the transaction: proof of full names,
marriage certificates, proof of dates and place of birth,
official identification with a photograph, such as a passport
or drivers license, and your visa to prove that you are
in Mexico legally.
Documents needed from the seller.
The notary public will need from the seller: the property
deed, tax receipts, utility bills and maintenance fee
bills and any other public utility bills paid up to the
date of sale. Since there are no Mexican Title companies,
the notary performs this function. After the notary's
research finds the property is "free and clear"
and able to be sold, the notary then prepares all the
necessary documentation for the transfer. The notary frequently
sets up a meeting with the Bank the buyer has chosen for
the Bank Trust ( I have had excellent service from Scotia
Bank) and a new bank trust is created.
As mentioned the trust duration is 50 years and at the
end of that time the owner may renew the trust for another
50 years. The notary performs the function of an attorney,
title research company and closing officer. We have notaries
that we recommend due to their expedient work and fair
prices. Ask us for a referral for a notary.
All payments including: reservation deposits, 2nd. Payments
and final payments must be made to the escrow account
set up in the name of Notary #26.
All bank trusts that are not financed but are cash deals
will take place at Scotia Bank.
