20 legal faq’s when buying in the Riviera Maya

20 LEGAL FAQ’S WHEN BUYING IN THE RIVIERA MAYA

LEGAL AND ADMINISTRATIVE

SERVICES IN THE RIVIERA MAYA

www.pelaezasociados.com

http://www.pelaezasociados.com/

INTRO

When buying a real estate in the Riviera Maya, it is necessary for non-Mexicanbuyers to work with the most qualified professionals to help ensure that theyminimize risks involved in buying in a foreign country, that will obey differentlaws and ordinances, which they may not be familiar with. Like anywhere inthe world, Mexico has its own administrative processes for buying real estate.This process is neither difficult nor simple, but a process where you need to besure that you are being thoroughly informed and advised.

This FAQ’S may help you to know the basics:


CAN NON-MEXICANS BUY REAL ESTATE IN THE RIVIERA

MAYA?

Yes, a person of any nationality is able to legally acquire, hold and/or

sell real estate rights in Mexico. In addition, buyers do not have to be

residents in Mexico to own property, hence there is no need to qualify

for resident status under immigration laws.


AS NON-MEXICAN, CAN I PURCHASE PROPERTY WITHIN THE

RESTRICTED ZONE UNDER A MEXICAN CORPORATION ENTITY?

Yes, a non-Mexican must purchase within the restricted zone either with

a bank trust (real estate rights) or under a Mexican Corporation (direct

purchase). If you want to acquire a property for residence purposes,

you need to acquire the real estate rights with a bank trust. If you want

to acquire for purposes other than residential, you can acquire via

Mexican Corporation with certain requirements and procedures.


WHERE IS THE MEXICAN RESTRICTED ZONE?

The Mexican Constitution defines the restricted zone as all land within

50 kilometers (30.5 miles) of Mexico's ocean coast line, or that land that

lies within 100 kilometers (61 miles) of any borders with other countries.


WHAT IS A BANK TRUST OR FIDEICOMISO?

If you are familiar with bank trusts or family trusts in the United States

then you will find bank trusts in Mexico to be very similar.

Bank trusts or Fideicomiso’s are not just for foreigners. Throughout

Mexico, many Nationals use this instrument as an estate planning tool

for the ease of passing property to individuals or corporations and

saving on Capital Gains taxes.


HOW DOES THE BANK TRUST FUNCTION?

The property is transferred via a trust to a Mexican bank, which will work

as the Trustee (administrator of assets). The Trust Agreement requires

the issuance of a permit issued by the Mexican Ministry of Foreign

Affairs. The purchaser is appointed as the Trust Beneficiary, which will

use and enjoy the rights that derive from the entrusted asset. The Trust

Title must be signed by all parties (Trustor-Seller, Trustee-Bank, Trust

Beneficiary-Purchaser), and executed before a notary public, who will

send it to the Public Registry for its proper record and filing.


WHO IS INVOLVED IN A BANK TRUST?

Three parties: The seller of the property is the Trustor (fideicomitente),

the bank is the Trustee (Fiduciario), and the buyer is the Beneficiary

(Fideicomisario).


IS THE BANK TRUST RENEWABLE?

Yes. According to the Foreign Investment Law, trusts can be renewable

for an indefinite number of successive 50-year periods.


WHAT ARE MY RIGHTS AS A BUYER?

The Trust is a legal substitute for fee simple ownership. As Beneficiary,

you have the right to rent or sell your property without restriction. You

may also transfer your rights to a third party or pass it on to named

heirs.


THE BANK TRUST ISN’T JUST A LEASE?

No, a bank trust is not a lease and confers on the trust-holder the same

rights as ownership in the United States or Canada.

The trust is the only vehicle that allows you to own the trust rights by

which -in practical terms- allows you to freely use, enjoy, rent, inherit,

and otherwise dispose of the property as you may want to. The lease

only provides you with a certain period of time to use and you are not

the owner of the rights to the property.


IS THE TRUST AN ASSET OF THE BANK?

No, the deed to real estate property is held by the bank for you. It is not

considered a Bank’s asset, thus, the property rights are yours.


CAN I WILL MY REAL ESTATE IN THE RIVIERA MAYA TO MY

FAMILY OR SOMEONE ELSE?

Yes. The Fideicomiso or bank trust gives you all the rights of free simple

ownership, including leaving the property to your family or friends.


IF LATER I DECIDE TO SELL MY PROPERTY, CAN ANYONE BUY IT?

Yes. If the buyer is also a foreigner, you simply assign beneficial rights,

through a Trust Assignment. If the new buyer is a Mexican, you can

instruct the bank to assign the title in favor of the buyer.


CAN I ASSUME SOMEONE ELSE'S TRUST RIGHTS AND/OR

OBLIGATIONS WHEN I BUY A PROPERTY?

Yes. The Buyer may elect to be the assignee of the rights of the seller's

existing trust. Typically, this is done if there is a substantial number of

years left on the sellers trust. This process is called an Assignment of

Rights (Cesión de Derechos).


CAN THE MEXICAN GOVERNMENT SEIZE MY LAND?

Foreigners often worry about their land being expropriated by the

Mexican government. Under the North American Free Trade

Agreement (NAFTA), Mexico may not directly, or indirectly, expropriate

property except for a public purpose. This is the same as "Eminent

Domain" in the U.S., where it is necessary to expropriate land, swift and

fair market compensation together must be paid.


CAN I HIRE AN ATTORNEY FROM MY COUNTRY OR I NEED TO

HIRE ONE FROM MEXICO?

We always recommend all investors the guidance of Mexican legal

counsel when contemplating any real estate investment. Mexican laws

and practices regarding real estate differ from those in the United

States or Canada.


WHAT IS THE ROLE OF A NOTARIO?

The Notario Publico (Notary Public) has an important role in the purchase of

real estate, much greater than in most other countries. The Notario Publico is

a government appointed lawyer who processes and certifies all real estate

and corporate transactions.

The Notario is ultimately responsible to the government for the collection of all

taxes involved. It is extremely important to remember that a Notario cannot

represent you in your real estate transaction (unbiased party); he may offer

advice, but he does not, and cannot, represent you.


WHAT IS AN EJIDO LAND?

Ejido is common land owned by a community. Buying with this legal

figure is very delicate; strongly seek guidance from an attorney.


DO I ALWAYS NEED LEGAL COUNSEL?

It is highly recommended and many people opt to get legal counsel

because many of the legal contracts and paperwork involved in

buying a home in Mexico are complex and can be confusing to the

public, many people prefer to work with an attorney. An attorney can

review contracts, review clear title, conduct your due diligence and

make you aware of special considerations and potential problems,

and can also coordinate and accompany you to the closing (or even

execute a Power of Attorney on your behalf).


DO I NEED A POWER OF ATTORNEY?

If you are a foreigner and would like to conduct a transaction, such as

an Assignment of Trust Rights or a direct sale and would like to avoid

the hassle of coming to the country; special attorneys that are

knowledgeable of International Law can help you draft a Power of

Attorney that complies with International Treaties (e.g. 5 de October

1961- Haye Treaty). That way either by getting a POA apostilled (US,

FRA, ITA) or legalized (Canada), you can conduct swift and expedite

business.


BY LAST

The Riviera Maya is awash with real estate agents, brokers, builders,

developers, promoters, advertising posters, flyers, reviews, magazines,

etc. All trying to sell or tell you that their real estate is the best. As in any

important purchase, it is essential that you feel comfortable with the

people you are working with and that you feel confident that they are

working in your best interest; hence, do not feel rushed into making a

decision in which you are not comfortable.


RENDERING SENSIBLE ADVISE

In Pelaez & Asociados we have the experience and the competenceto advice you through the entire process of acquiring real estate in theRiviera Maya.

Contact us now if you require assistance, our legal team can provide:

A personal briefing to explain the process and answer questions

Organization of due diligence performed on the property

Verification of zoning and construction permits

Organization of services for closing

Access to our legal resources

Qualified, experienced and trustworthy staff

Follow up- hand on hand- at the notary’s offices at closing

An English translation of the deed of title (Fideicomiso) if required


BONUS LEGAL TIPS

How can I confirm who is the owner and additional information about a property Iwant to acquired?

You have to go to the Public Registry of Property and Commerce, correspondingto the location of the property and request a process called free encumbrancecertificate on the property.

If I want to know if the property has debts of property tax, what should I do?

Requiring an updated balance at the City Hall, for which you will be

required with the Cadastral Code number (government asset identification

number).


CONTACT

www.pelaezasociados.com +52 (984) 106 4263

+52 (556) 415 1932

Edificio Plaza Paraíso Caribe Of. C-37Av. 10 sur, esq. calle 5 sur, Playa delCarmen, Q Roo.

[email protected]

[email protected]

Facebook.com/attorneyspelaez

@attorneyspelaez

http://www.pelaezasociados.com/

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20 legal faq’s when buying in the Riviera Maya

Real Estate

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