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Your Mexico Real Estate Connection BUYING REAL ESTATE IN MEXICO By Fabiola Thebaud-Kinder


Are you considering a retirement or vacation home? Mexico’s close proximity to the U.S. is a great benefi t to the


vacationer or retiree. T e lower cost of living, availability of quality resort homes at lower prices compared with the U.S., and top-notch medical facilities like Scripps, make living in Mexico more attractive. T ere are many fl ights that can get you to desti- nations such as Cabo and Puerto Vallarta in less than two hours. Destinations such as Manzanillo are attracting more fl ights. One can also fi nd beautiful resort properties within a two-hour drive from San Diego.


What types of ownership can a foreigner have in Mexico, and what is the acquisition process? On the Mexican mainland, a foreigner can purchase property


fee simple (direct deed); except, when the property is located in the restricted zone: 50 kilometers (31 miles) from the shoreline or 100 kilometers (62.5 miles) from the borders. Residential properties located in the majority of the Baja Pen-


insula, and coastal and border areas within the restricted zone, may only be acquired through a Mexican bank trust called a Fideicomiso. T e bank, for an annual service fee of $300-$400, serves as a trustee, which holds the legal title to the property for up to 50 years. T e cost for the permit to establish a bank trust is less than $1,000 US. To purchase through a Fideicomiso, a foreigner must fi rst register at the Secretariat de Relationes Exteriores for a permit to establish the trust. Upon receipt of the permit, the trustee bank sends instructions to a Notario (a governor appointed attorney), who prepares the deed (Escritura) to the benefi cial rights. Applicable taxes are paid (2% of purchase price), then the deed is recorded in the local municipality. T e foreigner, as a benefi ciary of the Fideicomiso, has the right


to use, improve, lease, sell, mortgage and will the property. Should a foreigner die, his estate becomes the benefi ciary. Also a second- ary benefi ciary to the trust can be named on a Fideicomiso so as to


avoid probate. Upon expiration, a Fideicomiso may be extended indefi nitely in 50-year periods when one pays the renewal fee. Aſt er 100 years, the property remains with the foreigner's heirs, but a new trust must be created. Commercial or non-residential property in the restricted zone can be purchased fee simple with 100% foreign capital as a Mexican corporation, without the need for a Fideicomiso; however,one must go through an application process through the Secretariat de Relationes Exteriores. Escrow arrangements in Mexico do not typically exist as in


the US. Some American-based real estate companies work with a hybrid type of escrow, incorporating the closing customs of Mexico and California for U.S.-based buyers.


Where can we fi nd fi nancing to purchase homes in Mexico? In Mexico,most residential real estate is purchased on a cash


basis and fi nancing of homes is customarily done through a home equity loan on a U.S. buyer’s primary residence. Developers usually off er some type of fi nancing and some will carry back a portion of the note. Mexican banks and fi nance companies are also off ering loans to foreigners.


Should we buy a title insurance policy? Absolutely! Questions of title may be resolved through the


title company rather than through the Mexican Courts. In the US things may go wrong with title, and in Mexico as well, so it is prudent to get a title policy. T e Title insurance policy is- sued for Mexico is 99% similar to an ALTA policy. T ere are diff erences in the law and the language, for example there is no Spanish equivalent of “marketability.” Ejido rights and agricul- tural reform have a part in the Mexican policy. In addition, in Mexico, mineral rights belong to the federal government, not to the owner of the land. Fidelity National Title and Stewart Title of Texas are a couple of US-based companies off ering title policies in Mexico.


Fabiola T ebaud-Kinder is a licensed real estate agent in Laguna Beach, California, with 11 years in the business and 18 years of management experience at several major international hotel companies. Her specialty is hospitality and resort real estate. If you are interested in learning more about real estate in Mexico, please contact Fabiola at (949) 246-2327, or email fabkinder@gmail.com.


T e above is provided as general information and is not guaranteed. As laws are subject to change and not all details can possibly be metioned in this article, we recommend that you seek legal and tax advice from a qualifi ed professional.


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