Here are some guidelines for success in a real estate acquisition in Mexico:
1.Bank Trust (FIDEICOMISO) This is all set up in a 50 year renewable trust as stipulated by the Foreign Investment Law. This says that you cannot be turned down for renewal and will run in perpetuity (forever) provided that it is renewed within the terms established by law. Protected by the Federal Government against bankruptcy banks, therefore, bank trusts are backed by the government. Due to this fact, many foreigners buying land outside the restricted zone choose to set up a trust for the added security. Title insurance has been available in Mexico since 1993. With American companies such as Stewart Title, First American Title, and Fidelity Title, the risk of losing your home and investment is no longer a concern. With these major companies confident in doing business here they have taken the perception of risk away and have instilled confidence in Mexican real estate.
2. Choose the Notario that you like and are referred to. They have a standardize fee structure, so fees do not vary greatly.
3. Do not provide the balance payment for the property until the Notario has signified that the seller has conveyed the property over to you. The escrow officer should have the responsibility to release the payment. 4. Ensure the purchase price is the recorded price in the public registry. While the seller wants to minimize his capital gains tax and might ask you to record the purchase at a lower price, you will be stuck when you sell the property at a later date. Your lower basis will result in high capital gains taxes
Forming a Mexican Corporation: General information for each shareholder: (minimum TWO shareholders) - full legal name
- nationality
- date and place of birth
- marital status
- occupation
- address in the United States or Canada
- photocopy of current passport
- Corporate purpose of the company. This refers to the main activities to be performed by the organization. This is required so that the by-laws can be prepared correctly.
- Initial Capital Stock: (the minimum amount is $50,000.00 MN), and the percentage of shares for each stockholder. Also, the kind of stock and the amount to be issued.
- Corporate address.
- Names and positions of the members of the Board of Directors of the Company, as well as the name of the commissioner (“spy”) for the corporation (We suggest that you appoint a Mexican Accountant as the commissioner) The corporation may have a Sole Administrator instead of the Board of Directors, if preferred.
- Five possible names for the corporation, listed in order of preference. If a Mexican Corporation already has the name you suggested the Foreign Affairs Ministry will then move too next name on your list. If all five names have been already used it will be necessary to submit a new list.
- Name and positions of the officers of the company and the powers to be vested in them.
The presence of least two shareholders will be required at the time of signing the deed of incorporation before the Mexican Notary Public.
Restricted Zone
The Mexican Constitution of 1917 created “the restricted zone” which is the land area within 100 kilometers of México's international land borders and within 50 kilometers of México's ocean front. This zone was to prevent foreigners from owning land which they could create a starting point from which to invade México.Within the Restricted Zone, foreigners can not obtain direct title to land or property. In areas outside the restricted zone, foreigners can receive fee simple title to the property. In 1971, México decided to increase tourism and foreign investment, so it created a legal structure in which foreigners could own the land - a fideicomiso, which is very similar to a living trust in the United States.
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