Part I. TRUST
Are you considering investing in properties in Mexico? If so, you may be wondering if you can buy a property as a foreigner. The answer is a resounding yes! The process is relatively straightforward, but it’s important to work with a competent professional who can guide you through the process.
If you’re interested in investing in real estate in a restricted zone, like the Riviera Maya, Mérida o the Yucatecan Coast, you’ll need to understand what that means. According to Article 27 of the Political Constitution of the United Mexican States, the restricted zone includes a strip of 100 km along the borders and 50 km from the coastline. Foreigners are not allowed to acquire direct ownership of property in these territories and can only obtain permission to use and enjoy the property through the establishment of a trust.
What is a trust (fideicomiso)?
It’s a tripartite contract involving a trustee, a fiduciary institution, and the buyer, also known as the trustee. The trustor, or seller, transfers ownership of the property to the fiduciary institution for the use and enjoyment of the trustee. The process must be done through a Public Notary.
Who is involved in a real estate trust?
Trustor: He is the one who transfers ownership of the property in question; under other conditions, could be known as “The Seller”.
Fiduciary or Trustee Bank: It is the banking institution that receives the property of the trust to enforce the purposes established by the trustee.
Trustee: Is the person who receives the benefits of the trust object (The Buyer).
How much does it cost to establish a trust?
To establish a trust, the bank must request a permit from the Secretary of Foreign Relations, which currently costs approximately MXN 20,000. It’s important to note that the bank will also charge fees for the procedures, which may vary from bank to bank. Additionally, each year, a fee must be paid for the administration of the trust. In total, you should consider about USD 2,500.
Can I process my trust with any bank?
No. Currently, only some banks offer the service, including Banco del Bajío, Intercambió, and Monex. The delivery time of the permit for the establishment of a trust is five business days, according to the website of the Secretaria de Relaciones Exteriores. However, since the process is handled by a fiduciary institution, the waiting time may vary.
How long does the trust establishment process take?
According to the times indicated on the website of the Secretaria de Relaciones Exteriores (Foreign Affairs Ministry), the delivery time of the permit for the establishment of a trust is five business days. It is important to emphasize that, since it is processed by a fiduciary institution, the waiting time may vary.
Does the trust have validity?
Yes. A maximum of 50 years, which may be renewed for identical periods.
What are the requirements to establish a trust?
- Current official identification of the trustee, that is you.
- Information on substitute trustees.
- Immigration form, also yours.
- Same documents of the trustor, that is, of the seller.
- Title of the property you want to acquire.
Also, the fiduciary institution will require you to fill out various forms with personal information.
Now knowing this. What is the process to be able to purchase a property?
So, now that you know the process of establishing a trust, here are the steps to follow to purchase a property:
- Choose the property you want to purchase.
- Choose a notary and request a quote for total closing costs.
- Make a formal written offer to purchase with all the conditions of the possible purchase.
- Once the offer is accepted, sign the trust establishment promissory contract.
- Send the complete file to the executive of the fiduciary institution so that they can request permission from the SRE.
- Wait for the permit to be issued.
- Once the permit has been issued, the file will be sent to the notary you have designated.
- The notary will then work on the deed, and when it’s ready, the bank will be requested for their approval.
- Once approved, everything will be ready for you to sign the deed.
- Go to the place indicated for signing the deed on time and with your current IDs.
- Congratulations! You now own a little piece of paradise in Mexico.