How to own land in Rosarito
One of the first questions many people ask is how foreigners own property in Baja, Mexico. The rumors of Americans losing their land and the Mexican government evicting them are stories of the past. Mexico has made significant strides forward and improved the foreign investment laws to protect and enhance foreign investors.
Ways to Hold Property in Mexico
• BANK TRUST: Fideicomiso (Pronounced Fed-e- co-mi-so) The latest Mexican Foreign Investment Law, ratified on December 23, 1993, gives the right to foreigners or foreign corporations to obtain rights of ownership through a fiduciary trust, which is equivalent to a U.S. beneficiary trust. Foreigners can acquire ownership rights to property through this 50-year renewable and transferable Bank Trust called a “Fideicomiso”. The Bank Trust is provided specifically for non-nationals to own property in areas once considered restricted zones (100 km from border or 50 km from beach). Foreign investors now also have the security of title insurance.
• LAND LEASE: A land lease for more than 10 years is not legal and never has been. If you enter into a 10 + 10 + 10 agreement with a Mexican landowner and at the end of the first 10 years the landowner decides he does not want to recognize that second ten-year lease you thought you had, he does not have to do so. You have no recourse, because you entered into that agreement which was designed to circumvent Mexican Law, thereby giving you no legal status to use the Mexican Court System. If you lease land, the lease should be 9 years and 11 months to stay with in the lease land laws. It is possible and perfectly legal for the Mexican land owner to give you a new 9 year 11 month lease at the end of your first 9 year 11 months and so on
How long is the Bank Trust valid and what does it cost:
The Fideicomiso is valid for 50 years and may be renewed for additional periods of 50 years indefinitely. It is transferable, and you can sell it, rent it, or bequest it, or do as your wish. Currently, it costs $500 to renew the trust.
You have all the rights of a property owner in the U.S. or Canada, including the right to enjoy the property, sell, rent, and/or improve the property, etc. This is not to be confused with a "land lease." The property you buy is placed in a trust with you named as the Beneficiary of the trust - you are not a lessee. If the property you purchase is already held in a Trust, you have the option of assuming that Trust, or having the property vested in a new Trust
What is a Notario:
Notario means notary. However, in Mexico, the natario’s role is very different than one in the USA. A notario is an attorney, who is required to pass two comprehensive exams beyond those normal requirements or qualifications. The Governor appoints the notarior as a state officicial for life. He/she must be a Mexican citizen, at lease 30 years old, have a law degree, and at least three years experience in a notario’s office. A notario is obligated to give detailed information to clients. He is to receive, interpret, and put into legal form a client’s will and consent, and has the authority to draw up the proper documents to make a transaction legally binding.
When purchasing property in Mexico, a notario’s services are required to make the transaction legally binding. It is the duty of the buyer to choose a notario who will do a title search and organize the necessary documents. The notario is present at the closing to verify your full name, civil status, domicile, occupation, immigration status, and date and place of birth. The notario will ensure all necessary documents are filed after the purchase to register you a the proper owner.
FAQs:
a. What kind of finance is available in Mexico? Some developers offer financing. There are a number of US lenders already offering US interest rates. The interest rate will depend on the property, the deposit and the finances of the buyer.
b. Is Title Insurance a good idea? Mexico has many different kind of titles so it easy to get confused. If the property you want to buy does not qualify for Title Insurance it might not be the best idea to buy it. Stewart Title is insuring several developments now and if a developer tells you there is Title Insurance, ask to see the policy and ask for the contact details of the Title Insurance representative. If the agent selling the property tells you Title Insurance is not necessary, walk away
c. What documents should I ask for when considering purchasing a property? You need to see the title, the last tax bill and a bank trust, if available
d. What are the property taxes in Baja Mexico? Your yearly property taxes will run you about ¼% (25%) of the total purchase price of Baja California real estate
e. Is there such a thing as Escrow in Mexico? Mexico does not have traditional escrow but you can find developers that are using a Title Company to hold money in escrow. Be careful of any developer that wants you to give an unsecured deposit
f. What are closing costs going to be? Closing costs are higher here than in the US. Between 4% and 6% is normal
