Job Discussion Forums

Guy Courchesne · Joined: 10 Mar 2003 Posts: 9650 Location: Mexico City

I'm curious about the restricted zones too, which are along the coasts and international borders up to a certain range (50 km I think?) We have the idea that perhaps in the future we could buy coastal property under our daughter's name since she is Mexican. Our bank manager says it is technically possible but there are some regulations with respect to her being a minor. Not in the immediate future for us anyway.

We (two Canadians on FM3s) dealt directly with a bank for a mortgage and used a lawyer tied to the bank for the paperwork. The paperwork required for the transaction is the biggest difference between Mexico and Canada I think- from what I'm told anyway as I've never purchased property in Canada - the previous owner needed to supply proof that there were no outstanding debts on the property, including gas, water, condo fees, taxes, etc. We needed permission from SRE (External Affairs Mexico) to purchase. When all was said and done, the lawyer handed us a very thick book that is the deed and numerous other documents.

Is this what you had in mind DL or some other aspect of the purchase?

Dragonlady · Posted: Fri Feb 18, 2011 1:01 am Post subject:

Dragonlady · Posted: Fri Feb 18, 2011 1:24 am Post subject:

Guy Courchesne · Joined: 10 Mar 2003 Posts: 9650 Location: Mexico City

amaranto · Joined: 02 Jun 2009 Posts: 133 Location: M�xico, D.F.

As one of the articles you posted a link to indicates, Dragonlady, foreigners circumvent the prohibition on purchasing land in restricted zones by setting up trusts with banks, which hold the titles.

We handle a lot of this type of trust at the firm where I work, and I've translated quite a few. Most of our clients are companies, however, but I would imagine setting up this type of trust would be relatively simple for an individual with a good lawyer.

Dragonlady · Posted: Fri Feb 18, 2011 2:27 am Post subject:

MotherF · Posted: Fri Feb 18, 2011 2:52 pm Post subject:

I'm afraid I don't have a lot of helpful information.

I bought my property solely on my own and my husband and I are married under bienes separados. So having a Mexican spouce was not relevant. My property is also well outside of the restricted zone, and in fact I was the second foriegner in the history of the municipality to have ever bought land. It took about six months to do the tramite with SRE, and then six months for the whole INFONAVIT tramite.
If anyone reading this wants to investigate an INFONAVIT credit, go to this page and enter your IMSS number to see how many points you have.
As for the interest rates they are constantly modifing their programs so it would depend on what conditions you qualified for. It's gotten a lot more flexible than it used to be and you can now use this credit to buy different kinds of homes, where it used to be you had to buy one of the big faccionamiento homes because a large part of the motivation behind the program is to stimulate the construction industry.

Tretyakovskii · Joined: 14 Aug 2009 Posts: 462 Location: Cancun, Mexico

We recently bought a condo in the restricted zone. Several banks offer the service of setting up a trust to hold legal title. The title being placed, in trust, in the name of the bank, and never in the name of the buyer, the transaction avoids the prohibition against foreign ownership.

We had to pay about $2,500 USD to initiate the trust, which included the first year's fee to the bank, and just over $1,000 official fee to the Mexican Government. Establishment of a trust for this purpose must be approved by the Ministry of Foreign Affairs: the approval process takes about two weeks, after which the title can be transferred to the trust, and the buyer can take possession. The initial term of the trust is 50 years, but can be renewed. The annual fee charged by the bank is $500 USD, adjusted for inflation.

The trust as established in our case names us trustees of the property, but provides that we have full rights to the present use and enjoyment of the property, including a right to rent the property to another, if we choose. We can assign our rights under the trust to another, or name them as successors in the event of our deaths. Should we wish to sell the property, and close the trust, the bank is obligated to transfer the title to the buyer, if the buyer has a right under Mexican Law to hold legal title.

In our case the duties the bank assumes are minimal, with the bank doing little more than offering its name to be used on the title document, and sending us an annual bill for the privilege. They refer to themselves merely as "fiduciary" in the documents.

In that this trust was established and funded by us, with the participation of the seller, who transferred title to the bank, and the bank, which agreed to hold title; and, in that we fully control it and benefit from it, we are the "owners" of the trust, it seems to me, as that phrase is used in U.S. Tax Law, making us fully responsible for all tax and reporting requirements that come with this form of ownership (Forms 3520 and 3520-A, among others).

The bank provided all the legal documents involved in the establishment of the trust, the transfer of the title and the documents recorded in the deed records of the state. A Notario Publico was involved in coordinating the logistics of the sale and transfer of title, at a cost of just over 1% of the value of the transaction: taxes and other fees collected by the Notario Publico brought the total to almost 5% of the value of the transaction. (This is in addition to the costs associated with setting up the trust.)
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On new property, here, the banks seem to be willing to loan about 70% to a foreign purchaser, according to what we were told.