| OWNERSHIP TIPS: Foreign ownership of properties in Mexico can be done by trust or
direct deed
TRUST:
If the property is located within the restricted zone of 50 Km (30
Miles) from the coast line or 100 Km (60 Mile) from the border, then you have no choice
but to acquire the property through a Trust. Many foreigners and even Mexican nationals
prefer the ownership through a Trust even if it were not required because of the
flexibility afforded by this mechanism.

The procedure is relatively simple whereby an approved bank holds
the title to the property with you, or anyone you name, as beneficiary. The advantage of
this mechanism is the flexibility of changing beneficiaries especially in cases of second
marriages and ownerships through a foreign corporation with shares owned by varying
shareholders.
EXAMPLE FLOWCHART OF A TYPICAL TRUST
DIRECT DEED:
This is the traditional mechanism of property ownership. Anywhere in
Mexico outside the restricted zone, permanent residents or foreigners on temporary visas
can own property with no restrictions. Foreigners are only required to "advise"
the Department of External Affairs of the property acquisition .
The reason for the restricted zone which was defined in the Mexican
constitutional amendment of 1917,was to alley the ears of Mexican against foreigners
carving out more of the land in the wake of the border disputes with the United States.
The various administrations have since enacted new measures to make
it easier for foreigners to own property. From no ownership to ownership through trust.
The trust term was stretched from a mere five years to 5o years now. While understanding
the sensitivity of this political issue, it appears that it is a matter of time before
this restriction is totally abolished.
CONCLUSION/TIPS:
TIP #1:When to use a Trust:
1-in case of a couple on their second or subsequent marriage who
wish to name several beneficiaries on both sides.
2-ownership of a property away from where you can use and check on
it. Undeveloped land out of town, or a house with infrequent use.
3-several persons with several beneficiaries at various proportions
who wish to own one property. In this case it is recommended that a foreign corporation is
formed in the country of the group. That way the shares can be proportioned and changed in
your country in a simple manner with an advisement to the Trustee through a letter.
It is interesting to know that the requirement to "advise"
External Affairs only appeared in the official gazette in March 1998 and was enacted
shortly after. They call it an advisement but it is actually a permit because it costs
time and money and you can not proceed without it.
TIP#2:
Please make sure you listen to your professional real estate agent
and take his recommendations when it comes to hiring a notary for the closing. Not all
notaries are as knowledgeable or as efficient in getting you a clean title.
TIP#3:
According to the Mexican Labor law, if the owner of the property
selling out did not pay termination and compensation to the gardeners or cleaning lady,
then the new owner is responsible to either keep the employment of the staff or pay their
severance.
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