Costa Maya Real Estate - Foreign Ownership

OWNERSHIP FOR FOREIGNERS

History of property ownership rights In 1917, a new Constitution was drafted. There was a provision that created what is called the Restricted Zone. The Zone is 100 km (62 miles) from the borders and 50 km (or 31 miles) from the coasts. In this Restricted Zone, only Mexicans could own the land. This was done for their own protection, and at the time, it made sense.

However, in the 70's Mexico realized it was losing alot of foreign investment. So in 1970, a Bill was passed, which created a legal loophole. This Bill stated that a trust, called a 'Fidecomiso' could be set up, with a foreigner as the beneficiary. Since a Mexican bank is the trustee and administers this trust, it satisfies the prohibition against a foreigner owning land in the restricted zone. Because of the 1970 Bill, major foreign investment flowed into Mexico and we saw not only Cancun, but also Cozumel, Acapulco, Puerto Vallarta, Ixtapa, etc. take off.

There are however, limitations to the Trust system. For each additional property you purchase, you need a separate trust. The cost for each trust or Fidecomiso (the Spanish word for Trust) is about 1% to 1.5% to set up (that percentage based on the purchase price of the land). In addition, there is an annual "administration" fee to the Bank of $600-700, for doing nothing more than holding the deed on your behalf as your trustee.

In 1994 new legislation was passed, applying to Restricted Zone property. Under this new law a Mexican Corporation, owned by foreigners could be set up to hold title to the property. Now you can own your corporation and hold all the papers to it. This means you and not your trustee gets to possess the deed.

Also, there are no annual fees to the bank and your corporation can own more than one property (you do not need to form a new corporation for each property). If you want to sell your property you can either sell the corporation or sell a property from it. Also, you are permitted to file a dormancy election, which means your company is "asleep" until you decide to activate it.

	The government has made it very easy for foreigners to own land in Mexico. So much so that in 1998, revenues from the industry of foreign investment & tourism surpassed the revenues from the oil & gas industry. The Mexican government welcomes your participation.

Title Insurance vs Notario Publicos

In Mexico, you can and should receive free and clear title. There is no reason to settle for anything less. Title searches are performed by Notarios as the government requires. The government employs Notario Publicos to record the transfer of title at the time of closing. Much different than the term "Notary Public" in the US. Notarios are highly specialized government appointed attorneys that are licensed and closely regulated. Only they can affect a legal transfer of title.

Notarios specialize in transferring real estate and have handled many countless transactions before they are considered for appointment. They must be recommended by their peers, the community, and scrutinized by the government before they are appointed. Similar to the european system of real estate transfers, all transactions in Mexico must go through a Notario to be legal and binding. Even if a person could get title insurance on their property, the transaction would not be binding unless it is handled by a Notario and has his official stamp on your deed.



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