Real Estate FAQs
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Q. What is Ejido land?
A. In the 1930's the Mexican government distributed large land holdings in the form of cooperative farms called Ejidos. Ejido members could work the land, live on the land and profit from the land but they did not own the land nor could they sell the land. In 1992 the Ejido owners were allowed to remove the property from the National Agrarian Registry and place in the public land registry. This allowed the Ejido to parcel and sell their communal properties.
It is ILLEGAL for foreigners to own ejido land and is VERY dangerous for you, with the risk of losing the land. This is often construed as “foreigners losing their property to the Mexico government”, when in fact, it is illegal for them to even own it. If you “pay” for ejido land without getting either a titulo or escritura, you have in effect paid for the "use" of the land and have no legal right to it or interest in it.
Q. Can I get U.S. Title Insurance for Mexican property?
A. Yes. There are now at least two U.S. title companies insuring investments in Mexico.
Q. What exactly is a Mexican Fideicomiso?
A. The Fideicomiso or Mexican Bank Trust is a mechanism that enables foreign persons or companies to purchase property in Mexico.
Only Mexican banking institutions authorized and regulated under Mexican laws can serve as trustees of the fideicomiso. The beneficiary of the trust, (the property buyer) retains complete use and control of the property held in trust and is solely in charge of making any and all investment decisions pertaining to the property held in the trust. This includes the ability to decide to transfer your property interest to another buyer, in simpler terms, it allows you to sell the property and transfer the title in trust.
Fideicomisos are established initially for a fifty-year period and may be renewed indefinitely in the future for additional 50 year periods. Property held under a trust can be passed on to future generations, and, there is no inheritance tax in Mexico.
Q. What requirements are necessary to form a fideicomiso?
A. A copy of the real estate title or deed indicating the exact location and legal property boundaries, a draft of the property, the name(s) of the beneficiary(ies), nationality, complete address, phone number, email address, and the mutually agreed upon property purchase price.
Upon receiving the information and documents, the bank , in turn, applies through the Mexican Foreign Affairs Ministry, for the Fideicomiso Permit.
Q. What is a trustee?
A. In México, there are banks which are authorized to open fiduciary accounts and conduct trust operations on behalf of foreign investors. The bank, as “Trustee” holds legal title to the real estate property through the fideicomiso, throughout the term of the Mexican trust contract.
Q. What fees will the trustee charge for a fideicomiso?
A. The fees as quoted by the trust division of Scotiabank shows an initial Trustee acceptance charge of $500USD, payable upon execution of the fideicomiso contract plus $500USD per year for trust administration.
Q. What is the cost per square foot for construction in Mexico?
A. The cost of construction in Mexico differs by region but on average you can expect a range of $75usd to $105usd per square foot. When obtaining a quote it is also important to make sure it is a complete quote. Many quotes do not include items such as permit fees and items we take for granted in Canada and the US such as air-conditioning, ceiling fans, door handles, fixtures, etc. There is a difference between homes finished to Mexican standards versus US standards…be sure you know your builder and what you are meaning in your contract.
Q. Can foreign property can be purchased in a self directed IRA?
A. Yes, it can be done and is being done in Mexico. But you need to keep a few things in mind to avoid disappointment and frustration. To hold foreign investment property in your IRA, you need to notify the custodian of your IRA account.
Q. What is “buyer’s broker” real estate service?
A. Most real estate agents work for the seller, negotiating the best possible price and terms for the person who is selling the property. A buyer´s broker works for the property buyer, helping them find the best property, negotiate the best possible terms with the seller‘s agent, find you the best loan, and hold the buyer’s hand from start to finish.