TULUM REAL ESTATE FIDEICOMISO
Tulum Real Estate Fideicomiso
FIDEICOMISO - The Mexican Trust System
While many aspects of buying a home in Mexico look and feel like buying in the United States (U.S.) you should remember that you are purchasing property in a foreign country. The manner in which you will purchase in Mexico is different from that which you are accustomed to in the U.S.; it is not better or worse, it is just different.
There is no doubt that you have heard of and been confused by the trust system that prevails in Mexico, namely the Mexican "fideicomiso", and the so called "restricted zone". To clarify any explanations you might have received in the past, a "fideicomiso draft, which matches with an American trust agreement". Also you might be at the time knowledgeable that the so called "restricted zone" is a strip of land 60 miles from the border front and 30 miles along Mexico’s coastline. Nevertheless, the following clarifications might be of help for you:
For historical reasons, the Mexican Constitution of 1917 prohibits any and all foreigners from holding direct title to land residing within 60 miles of its border or 30 miles of its coastline. Amendments to the Constitution in 1994 altered this prohibition by allowing foreigners to own direct title of property for commercial purposes, but still restricted direct title ownership for residential purposes. The Mexican trust system was designed and encoded into law to permit foreigners to purchase "restricted zone" property for residential purposes only in a manner consistent with Constitutional provisions.
Usage of Mexican trust, a "fideicomiso", allows non-Mexican nationals to purchase property in the "restricted zone" by placing a property into a bankruptcy remote trust recorded in a Mexican Trustee’s name. The Mexican trustee is a bank’s trust department and the property remain off balance from bank.
The trust agreement that governs the manner in which your property is managed stipulates that, while the owner of record of the property is the Mexican trust, the "ownership rights" of the property belong to the trust’s beneficiary. The beneficiary of the trust is the purchaser of the property: you are the beneficiary. Trustees are paid an initial fee for recording the property in their name and are subsequently paid an annual trust maintenance fee. The trustee is prohibited by the trust agreement and by Mexican law from transferring the property or the beneficiary rights to the property, without the written permission of the beneficiary.
To place residential property in the "restricted zone" into a trust, one has to first obtain a permit from the Mexican Foreign Affairs Ministry (Secretaria de Relaciones Exteriores. SRE). We will submit the request for the SRE permit on your behalf.
Many people erroneously refer to the trust arrangement in Mexico as a leasing transaction. Do not be confused by misinformation. The home that you will buy will be put into a trust with you being the beneficiary of the trust; you are not a lessee. You have all the rights that an owner of property in the U.S. has, including the right to enjoy the property, sell the property, rent the property, transfer it through last will, etc.
Bank Trust fee: Each bank has different fees. Some have a fixed rate and some others calculate it according to the appraised value of the property.
You can expect yearly fee between $700 USD and $1,500 USD. Cost constitution of trust with the bank approximately $ 3,000 USD. Legal and notary fees depend on the value of the operation.
The contracts are valid for 50 years and renewable for another 50 years so do lifetime contract.