This month we start a new feature: “Got Questions? Ask Bruce! Bruce Baldwin has been assisting people with real estate issues here in Rocky Point for nearly 20 years. As Founder and General Manager of Guardian Title and Escrow in Rocky Point, he and his staff field questions everyday about Mexican titles, bank trusts, escrow, subdivisions, LLCs, substitute beneficiaries, and many other topics. If you have a question, email it tobruce@RPGuardian.com.
QUESTION: My wife and I have our eyes on a waterfront home that was just listed. The realtor says the house does not have a bank trust. Being still green to the bank trust thing, I don’t understand. How can a house that is “owned” by a US citizen not have a trust? Would I expose myself to any risk by buying it and then securing a trust? I would greatly appreciate an independent answer. (S.S.)
Short Answer: For a non-Mexican, the bank trust is the title to the property. If a US citizen does not have a bank trust, he does not own the property. Somebody else does.
Longer Answer: Every piece of residential property in Rocky Point is owned by somebody. If you go to the Public Registry in Rocky Point and look up a property, somebody’s name is on the title. In the case of the waterfront home you’re looking at, the “owners” name is not on the title. Instead the property is owned by a Mexican citizen or company. You cannot acquire any rights to the property without the Mexican owner’s permission. If you pay the purchase price to the gringo “owner,” you will not be paying the person whose name is on the title.
There are a variety of reasons that a US citizen would seem to “own” a Mexican property and not have a bank trust. Many of these reasons should cause you to “run for your life.” There are a few cases, though, where the reason might be quite innocent and the property merits further investigation. To be absolutely clear, though, many of these situations are not innocent. Proceed with GREAT caution.
Ask your realtor this question, “If I pay cash, can I get a bank trust (the title) at closing?” Be sure you specify that you mean the word “closing” to be the point at which you pay for the property and sign the bank trust document. Sometimes the word “closing” is used rather loosely in Rocky Point and can be used to mean something else. Don’t be convinced to pay for the property upfront and be told, “You can apply for the title (bank trust) later.” You wouldn’t do that in the US, don’t do it here.
QUESTION: I have a bank trust on my condo. It’s in the name of an American LLC and I simply purchased the LLC from the prior owner and the condo came with it. Is this really legal?
Yes, it is completely legal under Mexican law and is a popular technique for owning property in Rocky Point. It is especially popular when multiple families want to go together to share ownership of a condo or beach house.
Two steps, however, are required when you buy Rocky Point property that is held by an LLC. First, certain legal filings are required in the US, and second, the Mexican bank holding the trust must be notified. Every Mexican bank requires a number of documents, each apostilled and translated to Spanish, when you make that notification. As long as both steps were carried out fully and correctly you have nothing to be concerned about.