|
|
|
|
Information you should know:
Now is the time:
36 beaches within a
Tel. (958) 587 04 40
Calle Flamboyan No. 216, 1er.
Piso, La Crucecita |
Home Page |
|
In December 1993, following the approval of the North American Free Trade Agreement, investment regulations were liberalized even further and approved as law by the Mexican legislature. The new Foreign Investment Law allows international investors to play an even more active role in the Mexican economy, allowing the unrestricted flow of foreign investment into activities totaling nearly 80 percent of Mexico's economy. Regarding the tourist industry specifically, foreign investors are now allowed to own real estate in Mexico's previously restricted coastal and border areas. The new Foreign Investment Law approved at the beginning of the year 1994 allows 100 percent foreign direct ownership to travel agencies, cruises and restaurants. This is a significant change from the previous law, which did not allow foreign investors to own a majority interest in any commercial enterprise or tourism project.
REAL ESTATE INVESTMENT IN THE RESTRICTED ZONE UNDER Under Article 10 of the new Foreign Investment Law, Mexican corporations with foreign participation are now allowed to directly acquire real estate in "restricted zones"of the Mexican Republic, as defined in Article 27 of the Mexican Constitution (the area within 100 kilometers of the border and 50 kilometers of the coast), provided that the real estate is acquired for non-residential purposes and that the acquisition is registered with the Foreign Ministry. Article 11 of the new Foreign Investment Law provides that Mexican corporations with foreign participation, foreign business entities and foreign nationals may, with Foreign Ministry approval, indirectly acquire restricted-zone real estate for residential purposes through a 50-year extendible trust with a Mexican financial institution acting as trustee. DEFINITION OF A TRUST Foreign investors may acquire real rights of property for residential purposes in the "restricted zones" through a trust. A "fideicomiso" or bank trust, is defined for real estate purposes as a transaction between a Mexican bank and a foreign individual or firm investing in the restricted areas, with the bank serving as trustee or legal owner of the property, and the investor serving as the legal beneficiary, who retains the exclusive right to the use and control of the property. Only Mexican banks can serve as trustees. As a trustee, the bank acts on behalf of the beneficiary (buyer) in transactions involving the property held in trust. However, the beneficiary controls and makes investment decisions regarding the property, including the decision to transfer, assign or otherwise dispose of his or her interest in the property. This can include the decision to transfer such property to another foreign or domestic investor. The trust is essentially a contractual arrangement, which, in most respects, is identical to the type of the trust commonly used in the United States. PROCEDURES TO ESTABLISH A TRUST A foreign person or company interested in purchasing real estate in the restricted zone for residential purposes selects a Mexican bank to act as trustee with respect to the property. The investor must furnish the following basic information to the trustee: A description of the real
estate to be purchased. The Mexican Bank then applies to Mexico's Ministry of Foreign Affairs for a permit authorizing the trust. Once the permit is obtained, the trustee, as well as the other parties involved contact a notary public (who functions as a closing attorney in Mexico) to draw up a deed for the property. The trustee then registers the trust with the National Registry for Foreign Investment. EXPIRATION OF THE TRUST After a period of 50 years, the trust may be automatically renewed for successive 50-year terms indefinitely. After expiration of the trust, or when instructed to do so by the trust beneficiary, the trustee will sell the property to a person or entity. Typically, this would be a Mexican national or business who is allowed to own real estate in the restricted zone, or another foreign investor using a different trust. One can cede the rights to another foreign investors, rather than the new investor being required to set up another trust, a savings for the investor when buying a property in an existing trust. Otherwise, if you sell to a Mexican nationalist or a coporpation, the trust must be cancelled. A typical trust fee payable at closing is approximately $3,000.00 usd. This information was provided by Fonatur and Scotiabank Inverlat, translated by Ideal Properties, Inc. These facts may be subject to change according to Mexican law.
|
Tel. (958) 587 04 40 Fax 587 09 33
Calle Flamboyan No. 216, 1er. Piso, La Crucecita, Bahías de Huatulco, Oaxaca C.P. 70989
e-mail: contact@huatulcorealestate.com
