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What About this “Fideicomiso” You’ve Heard About?

by 2seasWP on April 24, 2018
What About this “Fideicomiso” You’ve Heard About?
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To understand how Cabo real estate ownership in Mexico works, one needs to know a bit of the history of property ownership here. Amendments made to Mexico’s Constitution in 1994 permit foreigners to purchase and own real estate in Mexico located within the “restricted zones” which is all land within 60 miles of a national border and within 30 miles of the Mexican Coast, the latter of which particularly applies in our state of Baja Sur where most of the developable land falls inside that 30 mile limit on both shores. This Law permits ownership through a land trust or “Fideicomiso”.

A “Fideicomiso” is a Mexican Trust. The Mexican Government issues a permit to a Mexican Bank that you choose, allowing the bank to act as purchaser for the property. The bank acts as the “Trustee” for your Trust, and you are the “Beneficiary” of the Trust. The “Beneficiary” rights are very similar to Living Wills or Estate Trusts in the U.S.

The trustee bank takes instructions only from the beneficiary of the trust (the foreign purchaser) and the beneficiary of the trust has the right to use, occupy and possess the property, including the right to build on it and improve it. The beneficiary may also sell the rights and instruct the trustee to transfer title to a qualified owner.

Many people incorrectly refer to the trust arrangement in Mexico as a “lease agreement”. This unfortunate error arose from some widely discussed stories of properties being seized many, many years ago. Do some additional reading, or talk to your 2Seas luxury real estate expert, and you’ll find that Cabo homes for sale purchased via the federal, legal fideicomiso process and have had proper title searches made are really quite safe and secure.

The home or property that you buy will be put into a trust with you named as the beneficiary of the trust – you are not a lessee in any way. You have all the rights that an owner of property in the U.S. or Canada has, including the enjoyment of the property, the ability to sell the property, rent the property, improve the property, etc.

The initial term of the trust is 50 years. An investor can renew the trust for an additional period of 50 years within the last year of each 50-year period, and this process can be continued indefinitely, providing for long term control of the asset.

Investing in Cabo Real Estate and Growth

The Mexican government has stated that it aims to double the number of foreign tourist arrivals into Mexico, representing foreign exchange revenue of $5 billion plus annually. A key to achieving the government’s goal of ten million visitors a year is to develop new tourist destinations with modern facilities and infrastructure. The Los Cabos region is a priority area for this targeted growth, which is burgeoning and improving every year!

Let us at 2Seas Los Cabos show you how fabulous life here can be.  Our paradise awaits your arrival!

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