What is a Fideicomiso?
A Fideicomiso is a real estate trust held on your behalf by a Mexican Bank. You choose the bank, for example HSBC, ScotiaBank, Santander, Banamex, Bancomer. You and whomever you designate are beneficiaries of the Trust and have complete control over it. The bank acts as the Trustee. You determine the use of the property and make all the investment decisions. It is NOT a lease, you have irrevocable control over your property, in order to use, rent, sell, make improvements, and bequeath. It is established for a period of 50 years and is renewed annually.
Why is a Fideicomiso required?
The Fideicomiso was instituted to allow foreign investment in Mexico. Mexico had long endured massive land loss throughout history and its constitution took measures to ensure the protection of land, especially in prime areas like at the borders or beaches, called the Restricted Zone. Rather than amending the constitution, the provision of a Fideicomiso was instituted. Foreign investment is secure and your trust is not an asset of the bank, rather solely the beneficiary's property.
What is the Restricted Zone?
The Restricted Zone is any land in Mexico within 62 miles (100 km) of the border and 31 miles (50 km) of the coastline.
What function does an Attorney and Notary serve?
In the legal process of purchasing property, your real estate company, an attorney, the bank, and the notary all have important roles, each ensuring that the transaction is legal. Your attorney will represent you and protect all your transactions. A legal sales contract is written by the licensed Mexican attorney in English and Spanish. A Mexican Notary (Notario Publico) is a licensed attorney and a government official who is certified by the Mexican government to act as the official representative in your closing. A Mexican Notary is very different from a notary in the US with far greater responsibility and has passed stringent exams required by the government. They provide strict security of records and documents, and record transactions with the Public Registry. Their role is taken very seriously in Mexico, where they can be held liable for any discrepancies in the documents. The duties include:
Ensure the legality of the transfer of title
Calculate and retain the seller's capital gains
Collect the buyer's acquisition tax
Coordinate appraisals
Verify Certificates of No Liens and No Debts
Request all required permits
Record the transaction at the Public Registry
Record the transaction at the Cadastral (tax) office
How much are closing costs?
The total closing costs include taxes, the Notary's fee, setting up your escrow account, appraisals, origination fees, applications, establishment of the trust and obtaining the necessary permits. This costs approximately 5%-7% of the sales price. There are set fees, established by government regulations, which make up 4% of the total cost. Those are 2% acquisition fee, 1% recording fee, and 1% Notary fee.
Can the government take my property?
It is a common misconception that the government in Mexico can seize property. It is false. Under the North American Free Trade Agreement (NAFTA) Mexico may not expropriate land except for a public purpose such as building a road. In the extremely rare case that the land where your home is needs a road through it, the government pays market value for the property. It is the same process as Eminent Domain in the US, Expropriation in Canada or Compulsory Purchase in the UK.
Will my property have Title?
Absolutely. The property will only close if the title is free of any claims, judgments, liens or legal issues.
Do I need Title Insurance?
Title Insurance has been available in Mexico since 1993 and the purchase of it is optional. Your attorney and the Notary both verify that the title is clear and legally transferrable.
Have the agents of Coastal Homes Riviera Maya purchased property?
Yes! We have done it all! We have been through the entire process and are familiar with every aspect of a property purchase in Mexico.