“Trust Issues” a History Lesson:
This column is dedicated to educating both buyer and seller on the correct legal steps for foreigners to purchase or sell property in Rocky Point, Mexico.
The number one question I hear all the time is, “Can US citizens own real estate in Mexico?” The simple answer is, “Yes.”
“Owning real estate in Puerto Peñasco is a good investment when you buy and sell it right. Start with a licensed Realtor” is the advice of Mr. Rommel Bustamante, President of AMPI Chapter 51 Real Estate Association in Puerto Peñasco. AMPI is the largest real estate association in Mexico. AMPI works together with Federal, State and Municipal authorities, proposing new laws and amendments to existing laws and regulations directly related to the real estate activity.
To understand how you can own real estate in Mexico let’s first have a little history lesson on Mexico property law. In 1917 the Mexican constitution only allowed Mexican nationals to own property in Mexico. In 1973 the Foreign Investment Law amendment was passed which allowed foreigners to purchase real estate anywhere in Mexico except in restricted zones. Those restricted zones consisted of areas within 64 miles of international borders or within 32 miles of the coastline at high tide. In 1993 Mexico again amended the constitution to allow foreigners to purchase real estate within the restricted zone by means of a fideicomiso.
A fideicomiso is a bank trust wherein the bank (the trustee) holds the trust deed for the purchaser (the beneficiary). While the trustee is the legal owner of the real estate, the beneficiary retains all ownership rights and responsibilities and may sell, lease, mortgage, and pass the property on to heirs.
The bottom line is with a properly recorded bank trust foreigners may legally purchase and sell property in Mexico. Ownership is only legal when the deed is prepared by a Mexican Notario, signed by the representative of the trustee bank and registered with the local public registry. The bank is required to check ownership and insurance, and to verify that the property is free of liens. A trust can be granted for a 50-year period. The trust is renewable at any time (for another 50-year period) by submitting an application to the bank.
In Cholla Bay and other communities around Puerto Peñasco there are many properties that have not been properly recorded. Of the 1,500 properties in Cholla Bay there are approximately 700 properties that do not have a legal bank trust on file according to local real estate and document services experts at Mexico Doc U Prep & Services. Of those 700 properties missing legal bank trust titles, 200 properties have been recently rectified and identified as being ready to complete the bank trust process. These properties just need the owners to step forward to complete the process to secure a legal bank trust title. “When done properly, buying and selling real estate in Mexico is a safe and secure investment” assures Mr. Jose Antonio Venegas, Bank Trust expert and Senior Attorney with Mexico Doc U Prep & Services of Puerto Peñasco. “The key is a knowledgeable team to help you navigate through this process.”
In the beach community of Las Conchas foreigners who own property must renew their bank trust soon because the master trust for this community expires in November 2017. According to Ginger Beauchamp, President of Las Conchas HOA, “It is important for each homeowner to understand the status of their trust and make a decision on how to move forward. Our HOA leadership is here to inform and educate the homeowners.” Mr. Ricardo Borquez, Attorney for Las Conchas HOA and Attorney for AMPI VP Legal, feels time is of the essence for Las Conchas property owners, “Act rapidly to get your bank trust processed. The sooner the better.”
In the next issues of Buying & Selling Real Estate in Mexico 101 we will look in-depth at the step by step process from making an offer to funding the deal for foreigners buying or selling property in Mexico.
Links for our local experts in this issue will be made available on MexicoRealEstateResources.com and RPTimes.com.