Southern California agents, listen up: new opportunities may await you just over the border.
Americans have had little opportunity to view Mexican coastal properties as anything other than vacation spots. Since California’s annexation in 1846, Mexico has banned foreign ownership of both coastal property and property within 62 miles of the international border.
A new bill proposes to lift that ban. The bill passed the lower house of Mexico’s Congress, but still faces resistance in Mexico’s senate.
In the meantime, it is still possible to buy beachfront property in Mexico — sort of. The only way to do so is to structure an agreement through a Mexican bank trust, known as a fideicomiso. Essentially, a foreign buyer pays for the property and the Mexican bank holds title to the property in a renewable 50-year, irrevocable trust. The buyer is the beneficiary of the trust.
Of course, there are fees involved. Owning property via a bank trust is more expensive than direct ownership. Further, a foreign buyer purchasing within the restricted areas (coastal and borderlands) acquires the usufruct of the property.
Usufructory property rights allow a group or an individual the use, enjoyment and ability to profit from someone else’s property. In this case, the trustee (the bank) technically owns the property and the buyer owns the right to its use.
Sound too risky? Many swear by the safety and ease of ownership, not to mention the insanely low cost of luxury coastal living. Nonetheless, entering into an agreement with a Mexican bank promising to hold title to your home just doesn’t sit well with most California buyers.
If the bill passes, the opportunity becomes much more tangible. The droves of Baby Boomers approaching retirement are looking for their slice of paradise on the cheap. Don’t stand idly by as they run for the border.
Mexico could be a very risky investment if you do not follow the rules. Most of the people that purchased in Rosarito did not follow the rules. You can not own ejido property unless is released from the ejedido and recorded as an individual parcel. If you buy land or house in Mexico specifically in Baja Ca if you are a foreigner you must purchase a Fideicomiso , pay the annual fee for the Fideicomiso and pay your annual property tax. The risk comes with dealing with the individuals on a buyer to seller transaction, most sellers do not know the correct way of selling their land. Now days there are many knowledgeable Real Estate Agents and Title companies.
BEWARE!! Mexico is a very risky place to put your money in real estate and the history of their fraud is solid. As an example. San Antonio Shores was a LEASE development in the late 1960s/1970s. Once the large tract just outside Rosa Rita Beach was near capacity with sales of the 99 year leases, and expensive homes built, it was nationalized, the leases CANCELED, the homes confiscated. An ex-attorney general for the State of Washington was one of the front men in the fraud where so many lost so much to a corrupt nation. Beware investing in Mexican real estate. You have no legal recourse.
Is there an online resource to differences, if any, between Mexican and California law on the use and operation of options? If by state, then Baja vs. Calif. As an alternative to say Miller & Starr for Calif., then equivalent [in English I hope] for Baja?
Bill