Los Cabos Real Estate and Community News

Dec. 27, 2023

Closings For Buyers

An example from "The Settlement Company", is their Closing Fideicomiso Application for Buyers.

These are the steps which generally need to be followed after your offer has been accepted.

Step 1

Buyer and seller submit personal information and information about the property to be transfered.

Review and approve the Estimate of Costs for the transfer. Wire transfer the funds required for the initial part of the closing process.

Step 2

Choose your Transaction:

Bank Trust (Fideicomiso)
Pronounced “fee-day-co-miso”, this is the trust document that is required for non-Mexicans who purchase property in the “restricted” zone; along the coasts and borders of Mexico. FOR FURTHER DISCUSSION OF THE BANK TRUST CLICK HERE.

Assignment of Rights
When the property being purchased is already in a trust the Seller of the rights in the trust may simply transfer his/her rights in the property. Trust remains with the same bank and expiration date for the term of the trust does not change.
Purchase in Fee Simple
Property may be acquired by a foreigner in the interior of Mexico in a direct deed without the need for a bank trust (fideicomiso). Non-residential property in the coastal and border areas may also be acquired by a Mexican corporation with 100% foreign capital in a fee simple deed, without the need for a bank trust.
Mortgage
This transaction may take place if you obtained a loan on a Mexican property from a Mexican or foreign individual or corporation.
Extinguish Current Trust and Create a New One
In the event you do not wish to acquire the rights in an existing trust (through an Assignment of Rights), we can request cancellation of the old permit and obtain a new one with a term of fifty years.
Trust with Pledge Guarantee
This takes place when the seller or an independent lender makes a loan secured by the property. Buyer receives title and possession, subject to payment of the remaining balance to the seller or the lender.
Change Trustee Bank
Among other rights you have under a Mexican Bank Trust (Fideicomiso), is the right to change the trustee (the banking institution) in the event you decide to do so.
Other
You may have a need for one of many other services which we may be able to provide for you. Please e-mail us a description of your needs as fully as possible. We will be pleased to provide you with information and/or suggestions as to how to resolve your situation.

Step 3

Sign registration and consent to fax forms.
Sign Settlement Instructions.
Request a title investigation.

Step 4

Certificates and permits are ordered.

Step 5

Appraisal is ordered.

Step 6

All documents, including bank instructions to the Notary Public are reviewed for accuracy.

Step 7

Verify Seller’s Capital Gains Tax. Inform Seller and Buyer of the amount to be set aside for this purpose.

Step 8

Review the draft of the deed. Coordinate the signing of the deed by the Seller and the bank. Order title insurance. File preventative notice with the Public Registry office.

Step 9

Deed is registered in the property tax and public registry offices. Final accounting of all funds handled through The Settlement Company is prepared. This is sent to the Buyer, together with the deed, a translation of the pertinent parts, and, hopefully, a check for the overage.

Posted in Closing for Buyers

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Dec. 8, 2023

Escrow Los Cabos

What is escrow?

An Escrow Company acts as an intermediary to your transaction. As an independent third party, they hold funds in escrow pursuant to the terms of your escrow agreement. The escrow service allows you to securely settle your transaction once it has closed. They disburse your funds quickly and securely according to your written instructions.

What kind of information must I provide in order to establish an escrow account?

It requires basic identifying information from the entity or individual who opens an escrow account with our company. They will need to verify the name, physical address, date of birth or formation, and tax identification number. They may also require copies of photo IDs and business formation records.

What is the benefit of escrowing funds for a transaction?

The process assures buyer and seller that their funds are held securely pending satisfaction of the provisions of a purchase and sale agreement. Sellers have the added assurance that the buyer has verifiable and available funds to consummate a transaction.

Posted in Buying a Home Los Cabos Mexico

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Dec. 8, 2023

Fideicomiso Los Cabos

Introduction

What Is a Fideicomiso?

When you’re trying to buy property in Mexico, there are terms that get thrown around casually like “ejido” and “fideicomiso”—as if everyone should be familiar with their meaning.

For this reason, it can be difficult for expats to navigate the ins-and-outs of the Mexican real estate market.

What Is A Fideicomiso?

A fideicomiso is a bank trust that you need to form in order to invest in or own property in Mexico. This trust is set up with a trustor, a trustee, and a beneficiary.

Basically, this trust acts as an intermediary between you and the Mexican government, because you aren’t technically allowed to own property in Mexico. (Don’t worry, we’ll get to that in the next section.)

In effect, the bank owns the legal title to your property as your legal trustee. The job of the trustee is to represent your interests as you see fit. That means, the bank cannot use your property in any way, or place liens on it, or use your property for their financial interests beyond the pre-established fees as written in the contract.

But why do we even need a fideicomiso?

Why Do I Need A Fideicomiso?

If you’re wondering, Why do I even need a fideicomiso?—you’re not alone. It all goes back to the Mexican Revolution and the ejido.

I won’t go too much into the history of ejidos, but, to put it in a nutshell, they are reserved plots of land owned by the government, specifically set aside for the people to farm and live off. After the Mexican Revolution, the new constitution outlawed the selling of land to foreigners—to protect these land rights. There have been many ups and downs in the implementation of ejido law in Mexico over the years which are covered in our other article.

However, in 1992, then Mexican president Carlos Salinas de Gortari ratified a change in the constitution that allows for a Mexican bank to act as an intermediary between foreign investors and the Mexican government. (Yes, it may have opened the door to foreign corporatization of Mexico, but it was also a necessary step in modernizing the country. We’ll leave that philosophical discussion for another day.)

A fideicomiso is basically a loophole that allows you to buy property in Mexico because it’s not actually you that’s buying Mexican property, your trustee is buying it—that is to say, a Mexican bank is buying the property in Mexico. This allows foreigners to buy property in Mexico, while still satisfying the conditions of the Mexican constitution.

Before you panic, you should know that you have guaranteed rights as a beneficiary of a fideicomiso trust in Mexico.

How Long Does A Fideicomiso Trust Last?

What Is a Fideicomiso?

You have rights as the beneficiary of a fideicomiso trust in Mexico. The Mexican property is yours until the fideicomiso expires. After that, you have the option to renew it or sell your property.

Before you get too worried, you can set up fideicomiso trusts in Mexico that last up to 50 years. Once the fideicomiso trust is set up, the trust deed allows you to improve, sell, encumber, bequeath, or lease your property as you see fit.

Rights And Restrictions Of A Fideicomiso Trust

A fideicomiso has rights and restrictions that are stipulated by Mexican law. However, there are basic things that you should be aware of if you’re thinking about investing in Mexican property:

Perhaps The Most Important Thing To Know Is That Every Document Needs To Be Certified By Notarios—Or The Mexican Equivalent Of Public Notaries, Though More Niche. Notarios Are A Specialized Section Of Lawyers, And The Government Only Allows So Many. For This Reason, Notario Licenses Are Often Passed Down To The Following Generation—And If You Want To Get Anything Done, You Have To Go Through Them.
There Are Restricted Zones (Such As Within 30 Miles Of The Mexican Coast). These Are Very Difficult To Purchase. It Can Be Done, But You Basically Need The Permission Of The Ejido And The Mexican Government. It’s Very Hard To Get And Costly As Well. Realistically, If You Want To Purchase Land In Restricted Zones, You’ll Have To Become A Mexican Citizen.
You Are Entitled To Leave Your Mexican Property To Any Other Alternate Beneficiaries Of The Fideicomiso Trust As You See Fit.
You’re Entitled To Use The Property As You See Fit Until The Fideicomiso Trust Expires. Then You Can Either Sell Your Property, Or You Have An Option To Renew The Fideicomiso.
If You Set Up A Guaranty Trust, Then You Are Legally Allowed To Mortgage The Property As An Estate Asset.

Conclusion

In short, a fideicomiso is a trust set up with a Mexican bank that allows you to purchase Mexican land or invest in property in Mexico without having to become a Mexican citizen first. They are relatively simple to set up, and over one million foreigners have set up fideicomiso trusts in Mexico since December of 1993. It’s a routine part of being a homeowner in Mexico, but it’s nothing that can’t be done.

Posted in Fideicomiso Mexico

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