Common Questions
We have collected some common questions over the years and we hope this can help you take the first step into buying the right property and investing with the best benefits.
This type of trust is an agreement entered by and between a Mexican person (legal entity or individual), a Trust Bank and a Beneficiary. In said agreement, the Mexican person transfers the ownership of a real estate property to the bank, so that it holds title on the property and allows the beneficiary to enjoy the real estate in almost any form as the actual owner. The beneficiary is entitled to use the property for residential purposes.
Restricted Zone is all the land or constructions comprised within a stripe 50 kilometers (aprox. 31 miles) wide next to the seashore or 100 kilometers (aprox. 62 miles) along the borders.
It is needed since the Mexican Constitution on his 27 provides that only Mexicans are entitled to acquire direct ownership of land within the “Restricted Zone”.
Can it be for an undefined term? According to the law, this type of trust can be established to last up to 50 years. A few months before said term expires, a renewal for another 50 year period can be requested to the government. As a consequence, there are no trust to last for an undefined term.
The process has many details that we will not specify in this space, but as an overview we can mention that it starts when the involved parties provide certain information and documentation to the bank, along with the corresponding fees, so that it can request a permit before the SRE (Foreign Affairs Secretary). Once that the permit is granted, the bank sends it to a notary public, for him/her to prepare the deed to form the trust. After the text of the deed is approved, an appointment to sign it is set amongst the parties.
There are many obligations, but the main of them are: To use the property for residential purposes only. The beneficiary has the obligation to consider himself/herself as a Mexican in relation to the property and he/she are not entitled to ask for the protection of his/her government for any dispute arisen in regards to such real estate; under the penalty of losing the rights on the trust in the benefit of the Mexican nation. It is also an obligation to pay a yearly service fee to the bank. Other obligations are derived from using and taking advantage of the property, such as paying the corresponding taxes or fees for services (water, electricity, telephone, propane or any other service required buy the beneficiary) or abiding by the Condominium Regime (in its case).
The main rights for the beneficiary are: To use the property for residential purposes, for himself or his relatives or his friends at his sole discretion, observing the law and the corresponding condominium regimes (in its case). To designate one or more substitute beneficiaries, to take the beneficiaries’ place after his/her passing away.To build on the land, according to the local and federal laws, as well as to those condominium rules, if applicable. To remodel the existing constructions (when permitted by the authorities in accordance to the laws and condominium regimes, if it is the case). To sell the property or to assign the rights derived from the trust, by means of a duly formalized agreement with the participation of the bank