You have decided to purchase real estate in Los Cabos, or are thinking about it. You'll be joining the ranks of hundreds of families that realize home ownership offers a number of benefits including building equity, saving for the future, and creating an environment for your family, in addition to having a great place for vacationing or retirement.
When you own your own home in Los Cabo, your hard-earned dollars contribute to your mortgage. The equity you earn is yours. Over time, your home will increase in value.
For Sale - Modern Residence on top of the Hill at Pedregal, the closest it can be from the Pacific Ocean
This is how the buying process for foreigners must be carried out in Los Cabos and all of Baja in Mexico known as the "Coast line or restricted zone."
The Mexican Constitution prohibits direct ownership of real estate by foreigners in what has come to be known as the “restricted zone”. The restricted zone encompasses all land located within 100 kilometers (about 62 miles) of any Mexican border, and 50 Kilometers (about 30 miles) of any Mexican coast line. However, in order to permit foreign investment in these areas, the Mexican government created the “fideicomiso” (FEE-DAY-E-CO-ME-SO) To apply in Los Cabos which is, roughly translated, a real estate trust. Essentially this type of trust is similar to trusts set up in the United States, but a Mexican bank must be designated as the trustee and as such, has title to the property and is the owner of record. The Mexican Government created the fideicomiso to reconcile the problems involved in developing the restricted zone. This enabled foreigners, as beneficiaries of the trust, to enjoy unrestricted use of land located in the restricted zone without violating the law.
A fideicomiso is a trust agreement created for the benefit of a foreign buyer, executed between a Mexican bank and the seller of the property in the restricted zone. Foreign buyers cannot own real estate in the restricted zone due to Constitutional restrictions. The Bank acts on behalf of the foreign buyer, taking title to real property. The bank, as trustee, buys the property for the foreigner, and then as fiduciary obligation to follow instructions given by the foreigner who is the trust beneficiary. The trust beneficiary retains and enjoys all the rights of ownership while the bank holds title to the property. The foreigner is entitled to use, enjoy and even sell the property that is held in trust at its market value to any eligible buyer.
RENEWAL OF THE TRUST:
The new regulations, set forth by the president of Mexico in May, 1989, provide for the establishment of trusts through Mexican banking institutions to be authorized by the Secretary of Foreign Relations.
A real estate investment trust will have a life of 50 years and may be renewed automatically within 45 working days of application for additional periods of 50 years if requested prior to the expiration of each successive trust period. If the terms and conditions of the original trust remain unchanged and the trustee remains the same, title to the trust property will be renewed accordingly, thus avoiding transfer costs and income tax liabilities. It should further be noted that the beneficiary has the right to order the sale of the property in question to a legally qualified person, at any time during the term of the trust.
Rivera Realty team