• Can Americans own real estate in Mexico?
In most of Mexico, Americans or any other foreigners can own land outright. Prior to 1971, foreign ownership of land in the restricted zones—50 km. from the ocean and 100 km. from the borders—was prohibited. The Fideicomiso (Bank Trust System) was developed in 1972 for the specific purpose of allowing foreigners to buy residential property in the restricted zones.
• Must Americans have a Mexican partner?
Previously a corporation or partnership had to be established with a Mexican partner who owned at least 51 % interest. This is no longer the case. Under the Foreign Investment Law of 1993, a Mexican Corporation can be 100% foreign owned, and may buy property for business purposes with fee simple title, even in the restricted zones.
• How do I own residential property through a fideicomiso (bank trust)?
The law is very clear-cut about the real estate Fideicomiso. The Fideicomiso is designed specifically to permit non-nationals to own residential property in restricted zones. It provides, under the Mexican Constitution, the same legal rights of ownership as a Mexican would have. It bestows upon the owner of the trust absolute and irrevocable control over the property held in trust. The trust is set up for 50-year increments renewable in perpetuity. It can be bought, sold inherited & willed.
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• Does the bank own my trust?
No. The bank trust operates much the same way as a U.S. bank trust does. The bank only holds the trust for your ownership and protection under Mexican law. It does not own the trust. The bank serves as the owner's "employee". It operates solely under the instructions of the owner of the trust. The trust can be bought, sold, inherited & willed. The Fideicomiso acts much the same as a Deed of Trust does in the U.S., providing equity ownership.
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• Isn't a bank trust the same as a lease?
No. Under a bank trust, the beneficiary (buyer/owner) has all the rights of ownership, the right to use, borrow money on, make improvements on, and transfer. A lease grants only the right to use. If the tenant makes improvements, such as building a house on the property, that house belongs to the landlord, nor can the tenant sell the property or borrow money in it. A lease cannot contain provisions for future renewals, whereas a Fideicomiso is guaranteed renewable in perpetuity.
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FAQ'S
• Can the Mexican government take away foreigners' property at any time?
No. The Mexican government formed the Fideicomiso for foreigners through constitutional law and provides them, under the Mexican Constitution, the same legal rights of ownership as a Mexican would have. Secondly, the N.A.F.T.A. Treaty (1994) between Canada, Mexico and U.S. further put in place many requirements, including the provision of security from any of these governments’ arbitrarily seizing land from its rightful owner.
• What additional factors are causing this unprecedented demand and growth?
There are many factors causing this growth. Baja has the advantage of being adjacent to California, the 5th largest economy in the world. In addition to the expanded business and commercial growth, many Americans, and especially Californians, have discovered that they can buy a seaside home in Baja California for 1/3 of the price they would pay in the US.
• What are the advantages of retiring in upper Baja California?
Mexico is the number one location for U.S. citizens retiring abroad. This is due to the much lower cost of living.
• How does San Felipe compare with other locations such as Cabo San Lucas?
Many people say that San Felipe is the Cabo of the future, only better, because of its easy proximity to Southern California, only a short 2 hours away from the California-U.S./Mexico border. FONATUR, a division of the Mexican Secretary of Tourism, has just designated San Felipe a priority zone.
• What impact, if any, will this have on San Felipe?
Yes, it is true that FONATUR (National Trust Fund for the Development of Tourism) has just designated San Felipe as its next resort location destined for development. In the past, when FONATUR designated an area in which to implement a master developmental plan, the results were world-class resort locations such as Cabo San Lucas, Puerto Vallarta, Cancun, Acapulco and Ixtapa. All of these areas were transformed into world-renowned resorts, and there was a tremendous impact on real estate prices.
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• Why San Felipe?
San Felipe has grown to be a star on the Mexican Government’s tourism map because of its geographical location, natural beauty, its warm and friendly people, and the infrastructure it now has. Plans are under way to make San Felipe one of the top tourist destinations in the country. Today, San Felipe is a thriving community of more than 20,000 permanent residents, with an additional 10,000 seasonal residents from the United States, Canada and Europe. The town is of sufficient size that a significant variety of goods and services are enjoyed by the entire populace.