Do you dream of buying property in México, but are a bit confused about how a Bank Trust works? The bank trust, which is also known as a Fideicomiso, is required if you are not a Mexican citizen in order to buy land in México near the coast or border. While a bank trust may sound complicated, you can rest assured the process is not as complex or time consuming as you may think. Read below to learn more about the Fideicomiso/bank trust process in México. Before you know it, you too can be well on your way to owning Mexican real estate in paradise!
Bank Trusts/Fideicomiso Definition
In order to get around the law that states foreigners cannot own property along the coastline or near the border of México, foreigners can legally hold title through a “Fideicomiso” which is also known as a bank trust. In fact, it is a legal way that allows non-Mexican citizens to purchase Mexican real estate, even along the restricted coast and border. The only difference is that instead of the property deed being in your name, the title for the property is held through a bank trust. National citizens on the other hand, can purchase real Mexican real estate outright which is also referred to as “fee simple,” or without any limitations or conditions of ownership. For foreigners who want to invest in Mexican real estate, it is possible when the property is held in a trust through a Mexican bank. The bank itself is the trustee, but you are the beneficiary who enjoys the same property rights as Mexican citizens. In addition to being the beneficiary for your property, you can also designate substitute beneficiaries for when you pass away.
Bank Trust Terms and Renewals
The bank trusts are elaborated through a “Notario” or notary public, and are active for a term of 50 years. Only a notario can create a bank trust of property or Trust Deed. A bank trust can be elaborated for various reasons besides purchasing property, and those situations could be elaborated by the bank. For property purchases, the bank trust is automatically renewed for another 50 year term when the original term ends. However, individuals should not be concerned that the bank trust is a lease. Originally, bank trusts for foreigners investing in Mexican real estate were effective for 30 years. Right now, there are many bank trusts that are currently in the process of being renewed to the new 50-year terms. In addition, the process to renew your Fideicomiso term is relatively simple and not very expensive. An added feature of the bank trust is that in the event of death of the beneficiary, the heirs are not required to go through probate since the property is already in a bank trust. Since they are already designated as the substitute beneficiaries, the probate process is avoided completely which is a nice benefit to having a bank trust for your Mexican property.
Mexican Real Estate Offer and Escrow Process
Are you interested in making an offer on Mexican real estate to find that second home you’ve been searching for? The offer process is similar to real estate transactions in the United States or Canada, but the escrow and title processes are a little different. In terms of making an offer, most real estate brokers now use a dual-column bilingual format so that the purchase contract is in English and Spanish. This is very helpful for foreigners that do not speak Spanish. However, it is important to note that the Spanish side of the contract will prevail under Mexican law in case of any disputes or issues. In addition, the counter-offer process if needed is very similar to that of real estate deals in the United States, although in México back-up offers and multiple offers do not come into play. In México, once an offer has been agreed to by all parties, an escrow account is opened and an earnest money deposit is placed in escrow with a reputable title company. However, the escrow company can be optional and is not obligatory. In fact, Garza Blanca does not use an escrow company for property transactions as real estate purchases are directly paid to the developer. Around town in Puerto Vallarta at other properties, the majority of property sales are direct purchases as well. Sometimes the buyer hires an escrow company, but it is not something that it is required as part of the “process of the sale”. In Puerto Vallarta and around the rest of México, some real estate purchases are done with a “certificate check” paid to the notary. In México, the escrow company does not control the monies, but the notary can. After the signature of the title by both parties, the notary delivers the check to the seller. As far as down payments go, at Garza Blanca the down payment is typically 25% of the purchase price, and the rest is due on a predetermined date or the date of signature of the deed. At that time, the title company will then disburse the funds according to a mutual agreement that is signed by both the buyer and the seller.
Mexican Mortgage Loans
Many people purchase Mexican real estate with cash as loan interest rates tend to be much higher in México than in other countries. However, if you need to secure financing to purchase your Mexican property, the mortgage lender will require either a mortgage against your property which is called “hipoteca” in Spanish, or a “fideicomiso en garantia” which is a guaranty trust in English that will need to be established. As a result, the lender will be set as the first beneficiary and the borrower will be listed on title as the secondary beneficiary. Buyers who require a mortgage loan to buy property still have the power to select their substitute beneficiary. Another important factor is that you can select anyone to be your substitute beneficiary and they do not have to be blood relatives. Do you have a charitable heart and want to list a charity or nonprofit as your secondary beneficiary? You can do that. There is additional documentation that is required to facilitate this, but it is possible. The notary or notario will clarify what specific paperwork is needed in order to give the bank sufficient time to review and approve the documentation. In general, the entire Mexican real estate purchase process takes between 30 days to 60 days. Holidays when government offices are closed can cause further delays. One huge benefit to purchasing Mexican real estate at Garza Blanca is that they do offer in-house financing direct with the developer. Check with the Real Estate division today to see if you qualify for this attractive advantage to ownership at Garza Blanca.
Your real estate agent will work hand in hand with the Notario Publico, or notary, to ensure that your Mexican real estate purchase process is smooth as possible. Are you ready to buy your new home in México? Consider beachfront residences at the luxurious and exclusive Garza Blanca. With high end developments in Puerto Vallarta and Cabo San Lucas, your dream of living in paradise can become reality. Visit Garza Blanca’s website today at www.garzablancarealestate.com to see which of their incredibly stunning and luxurious oceanfront residences are still available. Their excellent in-house Real Estate division team is ready and willing to make all your dream home visions come to life.