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2: Zona Restrictiva
The Mexican Constitution regulates the ownership of the land and
establishes that'... in a zone of
100 kilometers
along the border or
50 kilometers
along the coast, a foreigner cannot acquire the direct ownership
of the land'. These areas are known as the "Restricted or
Prohibited Zones". Nevertheless, the latest Mexican Foreign
Investment Law, which became law on December 28, 1993 , makes the
allowances mentioned above.
3: Fideicomiso
Any foreigner or Mexican National can constitute a Fideicomiso (the
equivalent to an American beneficial trust) through a Mexican bank
in order to purchase real estate anywhere in Mexico, including the
Restricted Zone. To do so, the buyer requests a Mexican bank of
his/ her choice to act as a trustee on his/her behalf. The bank,
as a matter of normal course, obtains the permit from the Ministry
of Foreign Affairs to acquire the chosen property in trust. The
Fideicomiso can be established for a maximum term of 50 years and
can be automatically renewed for another 50 year period. During
these periods you have the right to transfer the title to any
other party, including a member of your family.
The bank becomes the legal owner of the property for the exclusive use of
the buyer/beneficiary who has all the benefits of a direct owner,
including the possibility of leasing or transferring his/her
rights to the property to a third party or to a pre-appointed
heir. During this period, the foreigner is considered as a Mexican
National. The trustee is responsible to the buyer beneficiary to
ensure precise fulfillment of the trust, according to Mexican Law,
assuming full technical, legal and administrative supervision in
order to protect the interests of the buyer/beneficiary.
Fideicomisos are not held by the trustee as an asset of the bank.
For practical purposes, even in unrestricted zones many foreigners and
Mexican Nationals, for that matter, prefer to hold their property
under a Fideicomiso.
La
Industria de Bienes Raíces
1: Estatus
The real estate industry in
Mexico
is similar in many ways when compared to that of the
United States
, which is most probably the most advanced in the world. It is
developing quickly taking advantage of today's technology.
However,
Mexico
seems to be paralleling the system as it exists in the
U.S.
The only national professional real estate organization in
Mexico
is the "Asociacion Mexicana de Profesionales
Inmobiliarios" or "A.M.P.I." (Mexican Association
of Real Estate Professionals) with 24 chapters in 38 cities. This
organization is somewhat similar to the National Association of
Realtors (NAR) in the
United States
.
2: Licencias
At this time, there are no Government license laws regulating real estate
brokerage and sales in
Mexico
. Anybody can, in effect, offer properties for sale and,
therefore, caution should be taken to search out for an
established and reputable real estate company. A potential buyer
may want to check with the local Chamber of Commerce Associations
or prominent law firm.
3: Financiamiento
Historically, due to lack of capital markets and high Mexican interest
rates, most transactions were made in cash. In 1993 and 1994, the
Mexican economy picked up to such an extent that annual inflation
went down to one digit and interest rates were more or less
accessible.
Banks introduced attractive mortgage programs and, consequently, sales
proliferated throughout
Mexico
. Due to the devaluation in December 1994, the present situation
has reverted and the few banks that offer mortgages do so at such
high variable interest rates that very few buyers are in a
position to take advantage of them.
The future of financing in
Mexico
is moving towards a secondary mortgage market, which should open
up international financing resources to possible desirable
mortgages at reasonable rates. For foreign investors, however,
this devaluation has created some excellent values for real estate
purchases utilizing foreign funds. We expect during the next year
or two that outside financing will be brought into
Mexico
for financing purposes.
4: Título de Seguro y Seguro de Propiedad
It is the Notario Publico who, in effect, acts as a 'Holding agent"
for the involved parties and for this reason there are few escrow
companies in
Mexico
.
At the present time there is no general use of title insurance in
Mexico
, although some American companies are providing coverage in some
resorts areas of the country.
On the other hand, insurance companies do provide full home coverage
throughout
Mexico
.
5: Búsqueda
To find the required property, be it for lease or for purchase, it is
advisable to contact a reputable real estate company. Otherwise,
be prepared to go house hunting by combing the desired areas on
the lookout for lease signs or by going through all classified
advertisements in the newspapers.
Compra-Venta
1: Proceso
Most real estate transactions are 'opened" after a written purchase
offer is accepted by the seller and when a purchase-sale agreement
(promissory contract) is signed by both parties. In most cases, a
deposit is required by the broker in order to transmit the offer
to the seller. If the transaction is being conducted directly with
the seller, it is highly recommended that a real estate broker or
a lawyer be consulted before signing any papers or handing over
any money.
In some areas it is common practice to deliver to the seller, as an
advance payment, the equivalent to a 20-50% (including the initial
deposit) of the total price upon signing the purchase-sale
agreement which should contain a penalty clause applicable in case
there is a breach of contract by any of the parties. Normally,
when signing the escritura or official deed, which needs to be
certified by a Notario Publico or notary public, the balance is
paid and the property is delivered. This should not take more than
45 days. In certain resort areas the custom of using
"escrows" is being implemented.
2: Notario Publico
The Notario Publico is a government appointed lawyer who processes and
certifies all real estate transactions, including the drawing and
review of all real estate closing documents, thus insuring their
proper transfer. Furthermore, all powers of attorney, the
formation of corporations, wills, official witnessing, etc. are
handled and duly registered through the office of the Notario
Publico, who is also responsible to the government for the
collection of all taxes involved. In connection to real estate
transactions, the Notario Publico, upon request, receives the
following official documents, which, by law, are required for any
transfer:
1) A non-lien certificate from the Public Property Registry based on a
complete title search.
2) A statement from the Treasury or Municipality regarding property
assessments, water bills, and other pertinent taxes that might be
due.
3) An appraisal of the property for tax purposes.
3: Cerrando Costos
It is common practice that the buyer pays the transfer or acquisition tax
as well as all other closing costs including the Notario fees and
expenses, and the seller, pays his capital gains tax and the
broker's commission.
Since January 1, 1996 , the federal law regarding the real estate
transfer tax, which was 2% for all the
Republic
of
Mexico
, was modified in order to allow each of the Mexican States to
determine its own tax. The range may be from I-4%, of the tax
appraisal value, generally less than the sales value.
The rest of the closing costs, which exclude the transfer cost mentioned
above, may vary from 3-5% of the appraised tax value or more,
depending on the particular State. These percentages are applied
to the highest value of the following:
1) The amount for which the property is sold. 2) The value of the
official tax appraisal.
4: Costo de
Fideicomiso
Based on a present tariff, the bank charges the person desiring the
Fideicomiso an initial fee (approx. $500.00 US) for the drawing up
of the agreement and establishment of the trust, plus a percentage
according to the value of the property. In addition the bank
charges an annual fee (depending on the value of the property) to
cover its services as a trustee.
5: Impuestos Capitales
In
Mexico
, the concept of capital gains tax does not apply in the sense in
which it is determined in the
United States
. Here, the gain from the sale of the property is considered as
normal income at a tax rate of up to 35%. In order to determine
the gain, the following costs and expenses are deducted from the
amount for which the property is officially sold:
1) The original land cost and the depreciated construction cost, based on
the number of years the property was held and adjusted for
inflation according to the official consumer price indexes.
2) Additions, modifications and improvements, but not maintenance, made
on the property (construction), adjusted as above.
3) Commissions paid to real estate brokers by the seller.
4) The closing costs, including all expenses, taxes and fees paid by the
seller.
The Notario will retain the calculated gain after deductions forwarding
it to the Mexican tax authorities
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