Pacific Mexican Renaissance

The coveted coastline of Mexico, now available for foreign investment, is experiencing a luxury development boom.

(PRWEB) April 8, 2005 -- The well kept secrets of Pacific Mexico's dramatic cliffs, coves and sand have long attracted the Hollywood set looking for a quiet escape. Since opening up to foreign investment, Mexico has seen an explosion in luxury residential resort development. The boom has brought world-class resort hotels, Mexico’s famed architects, a community of celebrity CEOs, and a massive outlay of infrastructure by the Mexican government.
The Mexican government is making the coastlines north and south of the Bay of Banderas a priority. Mexican President Vicente Fox recently inaugurated the Nayarit Tourist Corridor, a coastal infrastructure mega-project north of Puerto Vallarta. This plan is financed by state, federal and private interests. It is part of a plan proposed in the early '90s for appropriate sustainable development of the region.

"The development of Puerto Vallarta, Punta de Mita and the Nayarit coast is a special phenomenon for Mexico", says Alexis Burwell, partner of La Punta Realty in Punta de Mita. "The other tourist areas of Mexico are the result of direct federal mandate, risk and investiture. The growth of our area has happened privately without much government nurturing. The low density developments preserve the environment and create balance that is essential for the high end coastal lifestyle that people dream about. It is truly amazing what is happening here. There are many active developments to choose from along the North coast and the properties are selling well." (http://www.lapuntarealty.com/)

The government hopes to keep the infrastructure growing to accommodate the increasing number of new homeowners. Services like electricity, water treatment, telecommunications, airports and highways are completed by a major hospital, schools, commercial centers, an aerodrome, a 150 slip marina and a marine park similar to that of Xcaret (http://www.xcaret.com/). The idea is to dot the coastline with smaller, tasteful establishments, in the luxury boutique market.

The Mexican government has also changed some of the real estate laws. Now it is easier for foreigners to buy and develop property in Mexico. Many Americans have watched the values of their Mexican properties appreciate 10% a year the past five years.

The most exclusive luxury investments are taking place in the areas around Punta de Mita. (http://puntamita-realestate.com/) The real estate has a restricted occupancy rate. It can be as little as nine bedrooms per 2.5 acres. This will keep the number of landowners down and encourage development of high-end living. La Punta Realty, for example, offers private home site lots and luxury villas on land valued as much as $2 million USD per acre. Construction is in full swing, as Punta de Mita ended 2005 with record closed sale figures of just under $160 million USD, 60% more 2004 sales (by comparison, total Puerto Vallarta Multiple Listing Service sales for the same 2005 period came to $70 million.)

Premiere hotel branded developments include the world renowned Four Seasons Resort, the St. Regis Resort, the Rosewood Resort and a Deepak Chopra spiritual retreat. All have their own residential villas and condo projects.

The Bay of Banderas is earning its reputation as a premier golfers’ destination. The area has seven spectacular golf courses, designed by some of the world’s top architects, including Jack Nicklaus, Greg Norman and Tom Weiskopf. Planned are 5 more golf courses around Punta de Mita alone.

The Bay of Banderas currently attracts over 3-million tourists per year and has a population of about 325,000. According to FONATUR, (http://www.fonatur.gob.mx/) the Mexican tourist development bank, and the Banderas tourism board, the number of tourists in the next 20 years will exceed 6 million per year and the population will more than double.

"The market has just become prolific in Mexico, with about 1.5 million Americans now owning property there," says Mitch Creekmore, vice president of the Stewart Title Guaranty de Mexico office in Houston (http://www.stewart.com/) and one of America's foremost experts on Mexican real-estate acquisition. "Values in some markets have tripled in five years — far exceeding the rates of return you find in the United States."

To accommodate this new and fast growing market, U.S. banks Marshall & Ilsley, Sonada Financial Group and Collateral Mortgage, (http://www.collateralinternational.com/) now provide mortgages to American entities buying Mexican real estate.

The Bay of Banderas serves as the foreground for lush, tropical jungle, while the rugged Sierra Madre mountain range provides the backdrop. This is the vista that planners want to preserve. Luxury home buyers are gravitating toward ecologically sound and conservation-friendly communities, only a short distance away from the sophisticated dining, galleries, shopping, and night life of Puerto Vallarta.

Visit their website for photo tours of all their properties: http://www.lapuntarealty.com/

Punta Mita Answers Key Questions About Mexico's Hot Real Estate Market

Punta Mita Answers Key Questions About Mexico's Hot Real Estate Market

Wednesday April 12, 7:47 am ET

Upscale Resort Community Capitalizes on Growing Trend; Team of Real Estate Experts Makes Purchasing Resort Homes a Convenient, Personalized Process

PUNTA MITA, Mexico, April 12 /PRNewswire/ -- With a wealth of rich culture and history, combined with a picturesque setting, Mexico is quickly becoming the most sought-after opportunity for resort real estate. The luxurious gated community of Punta Mita has risen to the occasion and grown into the position of a much whispered-about destination among those in the know.

"Resort real estate purchases in the U.S. have been on the rise for the past few years, but some are starting to wonder if the market has peaked," said Lynne Bairstow, Marketing Director for DINE, the developer of Punta Mita. "Savvy buyers are starting to look beyond the U.S. border for new real estate options. Mexico, and Punta Mita specifically, are the ideal option for resort home ownership."

According to Bairstow, several factors have played an integral role in Punta Mita's popularity within the real estate community, including:

* Proximity and easy access. Punta Mita is served by the Puerto Vallarta
International Airport (28 miles), with hundreds of regularly scheduled
non-stop flights from top gateways in the United States. There are also
facilities for private aircraft adjacent to the airport.

* Pristine acreage and oceanfront property on virgin beaches

* Mexico's political and economic stability

* Excellent values compared to California, Hawaii and the Caribbean

While the area of Los Cabos has been an accepted and popular ownership destination for North American buyers in recent years, attention is now shifting to Punta Mita, Mexico's newest and most exclusive luxury destination, one that has much to offer buyers. Today, over 95% of Punta Mita's owners are American.

"Punta Mita has exploded onto the scene for many reasons, primarily because of the excellent values offered in a luxurious, gated, oceanfront community," said Bairstow.
In order to make the buying process as clear and understandable as possible, the Punta Mita Properties team is expert in all of the procedures involving the purchase of real estate in Mexico by non-nationals. This includes:

* Fideicomiso. Since 1973, foreigners have been able to purchase coastal
and border properties through a fideicomiso, which works much like a
trust in the U.S. The bank holds the legal title to the property, with
all rights and privileges of ownership (including use and enjoyment)
held by the Trust beneficiary.

* Title Insurance. All Punta Mita properties come with title insurance
issued by Stewart Title.

* Real Estate Taxes. Real estate taxes in Mexico have traditionally been
much lower than in the U.S., partially because they have never been
considered a source of governmental revenue.

* Financing. Companies such as C.S. Financial, GE Capital, First Capital
Mortgage and others have recently added loans for Mexican properties to
their services.

With a wide selection of ownership options -- including condominiums (starting at $575,000), town homes, villas and luxury beachfront estate lots (priced up to $5 million) -- investment in this hot destination offers options for everyone. To make resort home ownership even more appealing, full property management, rental and residential concierge services are available though Punta Mita Properties.

Punta Mita was chosen as the first Latin American location for the prestigious Four Seasons Resort (1999). By early 2008, there will be a St. Regis Resort & Residences, as well as the Chopra Center & Spa at Port Fortuna. A recent purchase by Strategic Hotels & Resorts will bring 70 hillside hotel suites, a spa, restaurant, pool and retail area with direct Pacific Ocean views adjacent to the Four Seasons Resort, also owned by Strategic.

Top-notch resort amenities include a Jack Nicklaus Signature Golf Course, with a second Nicklaus signature course under development (early 2008; a third course will be added in the future). A private Residents' Beach Club, with two more to be ready for 2008: the Kukuri Beach Club and the St. Regis Residents' Beach Club. Additional amenities under development include a yacht pier, expanded Tennis Center and equestrian facility.

Boasting an infrastructure held to U.S. standards, Punta Mita features a secure water supply, on-site medical center, fiber optic cable phone service, ecologically sound wastewater treatment plant and more.

All this, and the community is still early in its development cycle, which equals many additional opportunities for investors.

Questions regarding ownership, taxes, liabilities, expenses and more are answered expertly and quickly at Punta Mita Properties. Call us toll-free at (888) 647-0979 and visit our website at http://www.puntamita.com.mx for a glimpse of paradise on earth.

About Punta Mita

This master-planned resort and residential community boasts 1,500 acres on a peninsula surrounded on three sides by white sand beaches. Gated and low- density, the development was planned and designed in accordance with the highest quality of international real estate development and environmental standards. Currently home to a Four Seasons Resort, a Jack Nicklaus Signature Golf Course and various residential homes, a St. Regis Resort & Residences is currently under development, slated to open in early 2008. The master design calls for up to four luxury boutique hotels, a variety of exclusive residences and estate lots. Three championship golf courses, a tennis center, beach clubs, spa and wellness center, yacht pier and a small commercial village will complete this exclusive community. DINE, Mexico's premier real estate development company and a subsidiary of DESC, is the owner and developer of Punta Mita. DESC is one of Mexico's largest corporations with interests in four highly important business sectors.

What's Doing In Puerto Vallarta

What's Doing In Puerto Vallarta
By TIM WEINER
October 7, 2001

Puerto Vallarta first appeared as a dot on the map of Mexico in 1918, and for two generations thereafter remained a little village. Then Elizabeth Taylor and Richard Burton showed up.

They quickly became the world's hottest couple. He was starring in John Huston's film of Tennessee Williams's ''Night of the Iguana,'' and Huston, who loved Mexico, brought cast and crew down here in 1964 -- followed by the paparazzi. They put Puerto Vallarta on the map of the world, and it has been booming ever since -- so much so that it is close to bursting at the seams.

It sits at the center of one of the hemisphere's biggest and deepest bays, Bahía de Banderas, with 100 miles of beaches and coves, and some of its side streets are as charming as any on Mexico's west coast. But with success have come the Hard Rock Cafe, hamburger chains and a host of cookie-cutter monuments to the hospitality industry. ''Puerto Vallarta is still a very beautiful place, but it's growing so much that if we don't watch it we could destroy the place,'' said John McCarthy, who heads Mexico's national tourism board, Fonatur.

There are two ways to enjoy Puerto Vallarta: to spend a few days picking and choosing the culinary, artistic and sensory pleasures the town offers, which are considerable, and to use it as a jumping-off point for the untrammeled beaches an hour or more away. Puerto Vallarta's center has, among other things, one of Mexico's best restaurants, one of its finer selections of Huichol Indian art, an extremely pleasant jazz cafe and other trappings of civilization to soothe and stimulate the senses of those with only a day or two to spend. One can even stay at the pleasure dome that Dick bought for Liz in 1964, now a bed-and-breakfast overlooking the bay, with rooms named for the films they made together -- though the ''Who's Afraid of Viriginia Woolf?'' suite is recommended only for secure couples.

Those seeking total tranquillity can head along the coast to any number of beachfront bungalows or cabanas in towns so far unmarred by tourism, like Sayulita, a hour north of Puerto Vallarta, or Chamela, two hours south. Several rather more sophisticated lodgings within fairly easy reach offer peace and quiet in an untouched setting. Either way, you'll be on Mexico's Pacific coast, which despite the pressures of development remains pretty exquisite -- at least where the hand of man is not in your face. The fishing is legendary, the sunsets are sublime.

The city's tourist office, (52-3) 223-2500, in the Plaza Principal in the heart of old Vallarta, open weekdays, 8 a.m. to 4 p.m., is an indispensable source of information, maps and guides, and a place to book spur-of-the-moment sightseeing trips. The state tourist office has an equally useful Web site, puertovallarta.net. Two others are www.vallartaonline .com and www.go2vallarta.com.

Events

The main events in Puerto Vallarta involve the sun, the sea and the food. The city's gourmet festival (52-3) 222-3228, runs from Nov. 9 to 17, and serious eaters are advised to book now.
The festival will feature 22 chefs from around the world working out of 22 hotels and restaurants, cooking classes, wine tastings and the immense culinary energy of the festival's president, Thierry Blouet, a Frenchman born in Puerto Rico whose restaurant, Café des Artistes, is sensational. Tickets are available at www.festivalgourmet.com.

The International Sailfishing Tournament runs from Nov. 16 to 19. The waters of the Bahía de Banderas have a reputation for excellent sportfishing; the big ones include black marlin and tuna. The tournament's Web site offers reservations: www .fishvallarta.com, or call the Club de Pesca de Puerto Vallarta at (52-3) 225-5467. Fishing information can also be found through the state and city tourist offices.

Another Hemingwayesque attraction, bullfighting (the bull is spared in the Mexican version), is staged every Wednesday at 5 p.m. from Nov. 7 through June. The bullring, La Paloma, is on the main highway midway between the airport and the center of town; (52-3) 224-2457. Tickets, $26.50 at 9.4 pesos to the dollar.

Nov. 22 is St. Cecilia's Day, and she happens to be the patron saint of mariachis. The best bands from many miles around congregate all day at the Plaza Principal and the Templo de Guadalupe, the lovely church opposite the plaza. And that is where Mexico's patron saint, the Virgin of Guadalupe, is celebrated as fervently as anywhere in the country. Her day is Dec. 12, but the processions, parades and celebrations in Puerto Vallarta begin Dec. 1 and grow in intensity for two weeks.

Sightseeing

The city tourist office offers a wide array of generally reputable day cruises on vessels ranging from water taxis to private yachts. An ecologically minded group, Sierra Madre, operates an outlet at 732 Paseo Díaz Ordaz, the main beachfront street, and offers advice on how to see the sights without trashing them. E-mail: asmupc@infosel.net.mx.

The most attractive and isolated beaches are on the south side of the bay and can be reached by bus and water taxi. They include Playa de las Ánimas (Beach of the Spirits) and Quimixto, where one can hire a pony or hike up trails into the hills.

The most popular cruise destination is Yelapa, a cove with many restaurants and tourist attractions such as parasailing.

Horseback riding has a lot less impact on the land than jeeps and vans, and several stables offer trips ranging from a stroll along the beach, suitable for children, to a trot up and down a jungle trail or an all-day ride up into the mountains. They include Rancho El Charro, Calle Vicente Guerrero 499, Colonia Playa Grande, (52-3) 224-0114; Rancho Palma Real, Calle Juárez 20, Las Palmas, (52-3) 221-1236; and Rancho Manolo, Carretera Barra Navidad, kilometro 12, Mis Malloya, (52-3) 228-0018. The rate is $12 an hour and up.

Mexico's Huichol Indians, most of whom live to the north in the state of Nayarit, have an artistic style that might be described as psychedelic. Done in traditional media including beads and yarn, their graphic art creates a magical animistic world, and one does not have to have been a Deadhead to appreciate it. Two of the best places showing and selling Huichol art in the center of town are Arte Mágico Huichol, at Corona 179, (52-3) 222-3077, and the Huichol Collection Gallery, Morelos 490, (52-3) 223-2141. Each is usually open from 10 a.m. to 9 p.m. .

A thriving arts community supports a number of galleries in town. Among the better ones are Galería Uno, Morelos 561, (52-3) 222-0908, in an old adobe house in the center of town; Galería Rosas Blancas, Juárez 523, (52-3) 222-1168, just off the central plaza downtown; and Galería Pacífico, in the old town at Aldama 174, (52-3) 222-1982 just up from the Malecón's new ''fantasy'' sculptures.

Where to Stay

High season usually starts in October or November and continues through April
Casa Kimberley, Zaragoza 445, telephone and fax (52-3) 222-1336, Ms. Taylor and Mr. Burton's love nest, was the scene of epic drinking and brawling in those days, a guest house to Hollywood luminaries from John Wayne to Rock Hudson. The casa is still a temple of cinematic high camp on a quiet bend of road in the neighborhood known as Gringo Gulch, five minutes from the center of town and its beaches, Playa Olas Altas and Playa de los Muertos. The Cleopatra suite, with a commanding view of the ocean and a pink whirlpool bath, is the most expensive of the nine bedrooms, $100 off season, $200 in high season..

The 291-room Fiesta Americana, Carretera Francisco Medina Ascencio, kilometer 2.5, (52-3) 224-2010, fax (52-3) 224-2108, fiestaamericana .com, part of the Fiesta chain with hotels throughout Mexico, is near the center, with six restaurants and bars, volleyball and basketball courts, and 24-hour physician service. The décor is Mexican. Doubles, $86 off season, $168 high season.

Hotel Molino de Agua, Ignacio L. Vallarta 130, (52-3) 222-1907, fax (52-3) 222-6056, www.molinodeagua.com, is one block from the bay on the south bank of the Río Cuale. It is quiet and calm, with pleasant gardens shielding its 58 simple but attractive rooms. Suites range from $150 in high season, $95 in low season.

Budget:
Hotel Alegre, Francisca Rodríguez 168, telephone and fax (52-3) 222-4793, www.alegre-pv.com. It's a block from the beach, with 27 clean, functional, family-friendly rooms and two necessities: a pool and air-conditioning. Double in high season, $60, low season $50.
Luxury: The new Four Seasons Resort Punta Mita, (52-3) 291-6000, (53-3) 291-6015, www.fourseasons .com/puntamita, 25 miles north of the airport, has a spa, golf and the usual deluxe features. The 140 stylish rooms feature eye-pleasing handicrafts. Because tourism slowed down after the terrorist attacks in the United States last month, the hotel has extended its summer rates -- $360 for an ocean-view double, $700 and up for a suite -- through Dec. 21.

Where to Eat

Café des Artistes, Guadalupe Sánchez 740, (52-3) 222-3229, is a sumptuous, elegant place. The grandfather of Thierry Blouet, the proprietor, managed the Hotel George V in Paris; Mr. Blouet's parents were also hoteliers in France, and these bloodlines show. The marriage of classic French cuisine and Mexican ingredients includes prawn and pumpkin soup, shrimp and lobster risotto with wild mushrooms, filet mignon wrapped in blue agave with foie gras, shallots and a pasilla chile sauce; superb cheeses and desserts. A three-course dinner for two, with wine, is about $90. Reservations, which can be made online at www .cafedesartistes.com, are suggested.
Los Arbolitos, Lázaro Cárdenas and Camino de la Rivera 184, (52-3) 222-4725, perched three flights up on a veranda overlooking the Río Cuale, is a good place for breakfast, lunch or dinner. A $45 seafood platter for two, the costliest dish on the menu, included red snapper, lobster, grilled shrimp, prawns, oysters and the bay's superb octopus. A hearty Mexican combination plate was $12 with a beer. Open 11 a.m. to 11 p.m.

Archie's Wok, (52-3) 222-0411, Francisca Rodríguez 130, is south of the Río Cuale near the Playa de los Muertos pier. Like Puerto Vallarta's fame, Archie's Wok dates back to ''The Night of the Iguana.'' Founded by John Huston's personal chef, Archie Alpenia, this popular pan-Asian place is strongest on Chinese, Thai and Philippine dishes, such as stir-fried vegetables or fish in a red chilie curry. Dinner for two with beer, about $25. Closed Sunday.

At Le Bistro Jazz Café, (52-3) 222-0283, on the tiny island in the Río Cuale near the heart of town, the setting is lush and tropical, a lovely place to relax with a drink, listen to traditional jazz and have a light meal or dessert. Shrimp cocktail, $9; Irish coffee, $7, a fresh-fruit daiquiri, $4. Reopening for the season Oct. 15.

La Bodeguita del Medio, Paseo Díaz Ordáz 858, (52-3) 223-1585, is a son of the original in Havana, with cousins in Mexico City, Guadalajara, Paris and Milan. With the live music, usually Cuban and first rate, minty mojitos ($4), the world's best rum, the Malecón (the beachfront promenade) and the ocean right outside the door, focusing on the plate before you may be difficult. A Cuban paella, with shrimp, pork and chicken, at $12, is the priciest item on the menu, except for the cigars.

Original article at the NY Times website

Valuation of Property in Mexico

Valuation of Property in Mexico

Valuing a Property for Tax: If you own a house in the USA, Canada or Europe, you are required to pay tax to the government, usually based on a rate-able value of the property.

In Mexico, the Rate-able value is known at the Catastro, and is set by an officer of county; no onsite inspection is required. The Catastro value will vary depending on the area in which you intend to buy, and can be a fraction of the commercial value of the property.

This Catastro is used by the Notary Public to assess the value of the annual equivalent of the "Council Tax", known in Mexico as the Predial. The Predial is payable annually, on January 1st or soon after. You don't get a bill; you just know you have to pay it in January, and you show up to do so each year. You will find the Predial is very low (and could border on insignificant) when compared to say, property taxes (even at the lowest rates) in Europe or the annual rental value of the property. This is one of the reasons why cost of property ownership is low in Mexico.

Although the Catastro is an essential number for working out tax liabilities, in practice it serves of no use in assessing the commercial value of a property.

Commercial Valuation: House prices tend to be regional, and if you live in the UK especially, you are probably used to valuations of a property based on the number of bedrooms and whether the property is terraced, semi or detached, etc - not the square footage being bought.

In Mexico, values are not determined or measured on number of bedrooms; as a measure of value people instead look at a price per square metre of land and then per square metre of construction on that land as they do in the USA, Canada and Continental Europe. For example, you could have a 300 square metre plot with 500 square metres of construction. The garden is likely to be small, or even, just a patio, in this scenario. "Construction" is based on outer measurements, wall-to-wall and includes garage, covered patios and out-houses or other buildings, not just the main living areas.

Some Common Valuation Models:Here are some of the more common ways in which properties can be valued:

Investment Value: This is deduced by determining how much the property would fetch monthly from a rental (based on similar rentals in the neighbourhood / area) and multiplying by a factor. This factor is usually calculated by taking into account the cost of maintenance and applicable property taxes. If you wanted to see a return in 6 years (which is about average) then your formula would be: (Monthly Rental x 12 + Annual Maintenance (Including Service Fees) & Taxes) multiplied by Years (6).

Similar Recent Sales: If you are buying in a neighbourhood where houses / land plots are similar, then you may be able to get an indicative commercial value from prices paid for similar size and type properties in the area during the last 12 months. An estate agent would be able to guide you in this respect.

Replacement Value: Another way of determining the commercial value of a property is to take the commercial value of the plot (land), and add to it the cost of construction, should you build it today (this is usually expressed in cost per square metre of construction) and depreciate this value according to the age of the house. You would then add on the value of any special features.
Features that can Add Value: Values of property can escalate when the following features exist on or near the property (remember that features attached to the property are subject to depreciation factor, mentioned above):

Property is well served by local infrastructure (e.g. good roads, airport)

The property is near a body of water; river, lake ocean (but watch out for rising water levels!)

The property has good panoramic views of the area

Property is in good condition and requires little or no immediate maintenance

Property has a swimming pool / whirlpool

Good landscaping, driveways, garage, water pressure system, parabolic satellite system

Any furniture: Homes in Mexico are often sold fully furnished, but not always; check.

Local security - for example in gated areas - where all residents in the community pay a small annual fee to a security management company for 24x7 vigilance

Any features which make the property unique and added to the cost of construction and / or take up additional land; e.g. a large ornamental fountain.

Negotiating / Bartering: Try to find out (from the Agent if you are using one) what the history of the property is: who owns it, for how long and why are they selling? Are they in a hurry? Do they need cash fast? How far would they be willing to negotiate or barter - especially if you can close quickly. How much discount you can negotiate will depend on each individual situation. However, you should not offer the asking price and be prepared to walk away (and show that you will) - at the risk of losing the house - if you cannot get a deal that you think represents value. Even in Mexico, some people are sitting on property they paid too much for: make a cold, accurate assessment, and if necessary, politely say "no, gracias".

Ultimately, the value of real estate / property, like the value of anything, is what someone is willing to pay for it. If you fall in love with a particular plot or house, you may be willing to pay extra for it. If you can, keep emotion out of the equation, and if you can't, certainly make sure that you don't show any emotion as it will be immediately sensed and will erode your negotiating position.

Buy or Build, or "Fixer-Upper"?

Buy or Build, or "Fixer-Upper"?

Buying land and commissioning a house on it will provide you with much better value for your money: The price of land and construction will be less than an equivalent house bought built.
The downside of this, of course, is that you have the additional time, effort and expense of project managing a build. You would do well to be in Mexico for the duration. Architectural firms can be hired who will design, build and finish your house for you. They usually work on a multi-stage payment basis, and guarantee that the price they have quoted you is the price you'll pay, or within 10% (either way) min/max.

The choice of whether to buy or build will again be a personal one, and probably also based on what you are looking for and what is available: you may need to build in order to get what you want!

When you do the maths, you'll probably find that you'll get more for your money than by buying something built, but keep in mind the additional effort you'll need to invest.

A special note about buying land: Be sure, if you buy land, that it served by a reliable water source. Ideally, your plot should have a mains feed, but if not, it could include a well, or water from a neighbouring plot - if it does, make certain that this arrangement is in writing and that the additional costs, if any, are clearly stated. Land without water has very little value.

The Fixer Upper (an American English term, now used as "Spanglish" in Mexican estate agent speak) is a shell house in need of serious maintenance. These enable you to buy the property at the 'shell' value, and create a home, almost from scratch. Some "Fixer Uppers" include old colonial buildings, that can polish up into magnificent homes - if you have the time and resources to dedicate to them. These days, the people who own these 'shell' homes do not underestimate the value of the property once it is renovated - they have learned from previous experience - so unless the seller is desperate to sell, you may not be able to buy your 'shell' property as inexpensively as you may think or hope! Shop around and think carefully about the costs you don't know that you don't know about when embarking on this kind of project.

Building Regulations & Standards

There are no official "builder's guild mark" or similar standards for buildings and property in Mexico.

If you are buying a property that's built, then you should hire a good surveyor to check the place out thoroughly before agreeing to buy or handing over any money.

If you are having your house built, ask the architects to show you examples of their previous work - and go to the places to see them - don't just look at the photographs. Once again, a professional survey to assess the quality and state of the architect's previous buildings will b shrewd.

In areas near to the coast, and in regions containing a large proportion of volcanic rock, a soil survey may also be a good investment - especially if you are buying land to build on... your architect may provide assistance in this area.

Outline Property Purchase Procedure

Outline Property Purchase Procedure

If you have hired a lawyer (which is recommended but not compulsory) then he/she will likely act as an intermediary between you and the Notary Public / Seller.

The exact process will vary in each case, but you (or your lawyer) will follow a process that goes along these lines:

Find a property you like; agree a price verbally

Agreement to sell/buy, with detailed costs, inclusions and exclusions, as well as deadlines, is set out in an initial "Convenio de Compra/Venta" (sale agreement), at which point a deposit (5-10%) is paid by the buyer and cancellation penalties are set (usually equal to the deposit) if either party pulls-out.

If the property is inside the 50/100km coastal/border zone, you will need to set up a trust.
Next, you seek permission from the Foreign Secretary's office (a formality) to buy land. You will be asked to sign the "Calvo Clause", which states that you will not seek foreign jurisdiction in dealings with your property transaction.

If you are buying from a developer (e.g. a new housing estate) advise the Notary Public who will ensure the developer's permits are in order

Get a copy of the Land / Property Deeds from the seller. The Notary Public will check these out.
Ask the Notary Public to check that the land is not Ejido land, as discussed earlier An official appraisal of the Land (Avaluo) needs to be carried out; your Public Notary can arrange this.

You Notary Public (or lawyer) will ask for official documents that can include (but are not limited to): Photo ID (passport), Birth Certificates, Marriage Certificates (if appropriate), and your visa (could be a Tourist Permit) to show your stay in Mexico is legal.

The seller will need to present to the Notary Public documents including (but not limited to): original property deed, up-to-date tax receipts for the property, public utilities bills (shown as paid), plus up-to-date details of land-service fees (shown as paid)

Capital Gains Tax is paid by the seller, unless you have agreed to pay CGT as part of the buying agreement. The Notary Public will state how much this is.

Payment is made (see note below) at the time when the deed is signed over to you, and this is done at the Notary Public's office.

The Notary Public's and Solicitors (if applicable) fees are paid at this time as well, as well as other taxes associated with land purchase (see Taxes, below)

Payment: Whether you are paying with cash or via some kind of financing you (or your lawyer representing you) will need to have the agreed funds available for hand-over at the Notary Public's office on the date the deeds are signed across to you.

Money Transfer Declaration: Cash or monetary instruments (of any kind) with a value of or exceeding USD$10,000 MUST be declared when you enter Mexico (and the enter/exit the USA - even if you are in transit to Mexico from elsewhere via the US). There are no limits on how much you can transfer in or out of either country - but sums over the US$10K limit must be declared on a special form.

The Role of the Notary Public in Mexico

The Role of the Notary Public in Mexico

The Notary Public is the most important person you will deal with when you make a property investment in Mexico. Do not confuse the role of the Notary Public in the US or UK with its counterpart in Mexico: they are quite different. In the UK for example, almost anyone can become a Notary Public. Not so, in Mexico, where the role is appointed directly by the State Governor (the highest seat in State Public Office). The Notary Public has the power to witness and certify important business documents which require absolute authenticity. The appointment also holds responsibility for the management and secure storage of original records. Notary Publics must be Mexicans of at least 35 year in age, they must have a degree in Law, have 3 year's work experience at a Notary Public office and they must pass a stringent exam. Those who pass, in time, are appointed as Notary Public by the State Governor.

Under Mexican Law, the deed to the property must be prepared by a Notary Public. As a buyer, it is your right to choose the Notary Public, and it should be your first port of call - or second after your lawyer.

The Notary Public will ensure that all documentation and permits are in order so that the transaction can proceed.

Everything official to do with your transaction should be done via the Notary Public: Do not take anyone's word about documentation (like property deeds) being valid - take copies to the Notary Public for official verification. A good lawyer will be able to advise you on such matters.Common Checks that should be made:

The Notary Public and/or your lawyer will do a series of checks on the property and ensure that the property has a 'clean' history, and that there are no liens on the land (e.g. an old unpaid mortgage). Under Mexican Law, liens are passed on with title of the land - BEWARE!
Your Notary Public should also check that all land taxes have been paid during the last five years (if applicable) and that utilities (electric, gas, water and phone) have also been paid during the last two years. By Law, you are not liable to debts after these times.

Other items to be checked include: Checking all buildings are on tax registers and have the required building permits, utilities were legally installed and payments are up-to-date, the property is not jointly owned, or if it is, that both (or all) owners agree to the sale, and that the seller/s has/have the right to sell.

The Notary Public is legally responsible to ensure that all documents are in order and that all legal procedures have been adhered to. He will do a thorough check and will not destroy his reputation by hiding any problems, or potential problems from you.

Ejido (Agricultural) Lands

Ejido (Agricultural) Lands

Ejido lands have a long history in how they came into being. Essentially, they are similar to "commons land"; after the revolution, communities and peasants were handed strips of land, in the main, to grow crops on, and they are called "Ejidos". You CAN buy Ejido land, but the sale requires the agreement of the whole community that 'own' it, the process is arduous and risky.

Some big property developers may negotiate to buy a big plot of Ejido land, with a view to "fractionalising" it (usually introducing mains water, sewerage and electric to the land as well), to develop property and/or to sell off the individual plots to small property investors. Under these schemes, the land is often re-classified and made available for private ownership. The process is usually undertaken by professionals who understand Mexican property law intimately and can from a year to several years. The current advice is: double check to make sure that the land you are buying is not Ejido land and if it is, avoid it.

Note: It is advisable to purchase Title Insurance if the property you are purchasing is ex-ejido land (although regardless of the type of property, Title Insurance is a shrewd investment).
The real estate property of the ejido is divided into three categories:

-Individual parcels

-property for common use, and

-property for community development

Individual parcels are those for which parcel certificates have been issued to individual ejido members by the decision of the ejido member''s meeting, and inscribed in the national agrarian registry. No individual parcel may be larger than pequeña propiedad (100-800 hectares) and no more than 5% of the ejido property. The national agrarian registry will issue a deed of an individual parcel of the ejido which in turn will be recorded at the corresponding public registry of property.

The property for common use in the ejido is really the patrimony of the ejido and it is the ejido member''s meeting which decides what is to be done with this land. It can be subdivided into individual parcels or used to do business with other private individuals or corporations. The property for community development is intended to meet the needs of the ejido community for urban development. Article 75 of the new agrarian law states that the ejido may transfer ownership of common use properties to partnerships or companies in which the ejido or its members participate in joint venture corporations in which their capital contributions consists of real estate property. It is important to point out that the title to the property in a joint venture is assigned to the corporation and the ejido no longer owns the real estate property in question.

The agrarian authorities no longer intervene to regulate transactions between third parties and the ejidos. The process of formation of an ejido is similar to the one for a joint venture corporation. As in the latter case, members in the aggregate contribute their rights to the real estate for common use. The contributions are approved by the ejido members meeting. The contributed rights then constitute the economic support or capital of the ejido community.

Purchasing property of the ejido is a decision of the ejido member''s meeting. Only the property for common use may be purchased. Many foreign investors have entered into joint venture agreements with large ejidos using the ejido population as workers and producing vegetables and fruits, which are subsequently sold throughout the world. In projects not involving agriculture, which could include tourist developments, there are no restrictions on how much the ejido must hold in capital of the corporation. There is no restriction whatsoever in dealing with indiividual parcels if a parcel certificate has been duly issued and registered. Leasing of property for common use is permitted. Article 45 of the new agrarian law states that common use of property and individual parcels may be the object of any contract that entails the use of property. Such contracts are limited to a term of 30 years, and may be renewed.

Financing Your Mexican Property Investment

Financing Your Mexican Property Investment

Historically and in many cases today, most property/real-estate deals in Mexico are cash only. Mexican Banks are now beginning to offer mortgage products for the purchase of real-estate in Mexico, although 30-40% deposits are required and interest rates are not as attractive as those in the US, Canada and Europe.

There are some banks in the US who are now offering mortgages on Mexican Property, but they are usually offered on the back of equity built up in a property in the USA and the rates are higher on the additional loan amount, to reflect the additional risk. Many Americans HAVE mortgaged a house in Mexico using this financial vehicle so it is possible.

Financing inside Mexico is still difficult and relatively expensive, so if you plan to buy real-estate in Mexico you will be well advised to have your own foreign funding available; either through an equity-release scheme or other fund. Some people who are planning to retire to Mexico will sell their house in their home country and use the proceeds to finance property in Mexico; those who want to keep a 'base back home' may release equity from their existing home, rent it out, and use the dual proceeds to fund their retirement home in Mexico.

It's important to think carefully beforehand about how you are going to finance your property in Mexico. An Estate Agent in Mexico may be able to advise you, and some even have connections with financial institutions in the USA who can proffer solutions depending on your personal circumstances.

Cost and Taxes

Costs and Taxes

When you buy property in your home country, you are usually faced with the associated costs like agent fees and taxes. Mexico is no different, although the net value of these costs as a percentage of the property values may be lower overall, but this is not guaranteed as professional fees have risen recently too.

Costs and Taxes: Buying

Acquisition Tax: This Tax is paid on the sale value of the property and is equivalent to about 2% depending on the State in which you buy. This tax is paid whether the property is sold, transferred, donated, placed into trust, split off or merged.

VAT (Sales Tax): No Value Added Tax (Sales Tax) is payable on residential property. Commercial Property transactions are liable to VAT at the current rate in addition to the Acquisitions Tax.

Appraisal Tax: The Tax Authority may choose to perform a commercial appraisal of the property after you purchase it. If the appraisal value is more greater than 10% of the price you paid for it, you will be asked to pay 20% tax on the difference between the two amounts. This sum is due within 15 days of the date of the appraisal report.

Registry Fee: In order to have the Public Records updated, a 1.3% fee (based on the value of the transaction) is paid by the buyer.

Public Notary Fees: You will be required to pay fees for services provided by the Notary Public. These are about 1.5% of the transaction value, plus the cost of the official appraisal (as described in Valuation section, for tax purposes)

Bank Trust: If you purchase property within the 50/100km restricted zones, you will need a bank to set up and manage a trust for you. Shop around, as prices vary from Bank to Bank. Set-up fees can cost up to US$750, with annual service charges between US$300-US$500. The annual service fee will cover legal obligations (e.g. the filing of necessary documents annually) by the bank on your behalf.

Lawyer / Attorney Fees: If you hire a lawyer / attorney, you will also need to pay him/her with fees for services they undertake on your behalf. These should be negotiated in advance.

Land / Building Surveys: If you need to undertake any land or building surveys, these will have to be paid for separately. Cost will depend on type, extent and complexity of surveys undertaken.

Foreign Office Permit: Your permit from the Mexican foreign office will cost around US$150.

Service Fees: If you are buying a house in a gated community, or an apartment, be sure to check on the annual service fees, and have these put in writing. Service fees can range from US$100 a year to US$1000 a year, depending on location, number of houses or apartments in the enclosure and amenities offered.

Title Insurance: When you buy property in Mexico, you would do well to consider purchasing Title Insurance. Rates are based on the sale value of the property and are charged at around US$5-US$5.50 per US$1,000 of the value. More Information about Title Insurance.Costs and Taxes: SellingWhen you sell a property in Mexico, you will be subject to the fees of any professional services you contract, plus the following taxes and fees:

Income Tax on Property Gains: If the home has not been your main residence for at least the last two years, will be required to pay income tax on the property. You may either pay 20% on the gross amount of the transaction, or elect to pay 40% tax on the net profit obtained from the property. This law prevents short-term speculation on the property market. Commercial property is taxed at above rates, regardless.

Agent Fees: If you employ an agent, expect charges of around 3-6% of the value of the sale as a fee, but you may want to negotiate on this beforehand. You will also need to pay VAT (Sales Tax) on agent fees.

What can a foreigner buy in Mexico?

What can a foreigner buy in Mexico?
The regulations on the sale of real property to foreigners are found in Mexico Foreign Investment Law. The law gives a Mexican company with foreign capital many more rights than a foreign national.
A foreign national can acquire land almost anywhere in Mexico with the permission of the Foreign Affairs Ministry. The only exception in the Foreign Investment Law is that foreigners may not acquire real property in the "prohibited zone".
The "prohibited zone" is the strip of land 100 km from the border and 50 km from the beach. If a foreigner wishes to acquire land in the prohibited zone, he or she may enter into a trust agreement with a Mexican bank (discussed below).
A Mexican company with foreign investment, even 100% foreign investment, may acquire property in the "prohibited zone" as long as it is not used for strictly residential purposes. If the property is considered to be solely residential, the company must use a trust. The Regulations of the Mexican Foreign Investment Law state that residential real estate is real estate specifically to be used as a dwelling by the owner. The law provides a list of examples of real estate that seem residential but is not considered as such by the law. According to the law, non-residential real estate includes, but is not limited to:
1. Time Shares.
2. Real estate intended for both industrial, commercial or tourist use and residential use.
3. Real estate acquired by credit institutions in payment of debts.
4. Real estate bought by companies to be developed and sold. This would include apartments and residential communities.
5. Generally, any real estate to be used for commercial, industrial or agricultural purposes, as well as, ranching, fishing, forestry, or to provide services.
The Regulations make clear that this list is not complete and that any questions of whether an activity is residential should be sent to the Foreign Affairs Ministry.
Property Acquisition with Bank Trust
A Foreigner may not hold actual title to any land in the "prohibited zone". To possess land in the "prohibited zone" a trust is necessary. In a trust, a Mexican bank holds title to the land while a foreign beneficiary has the right to use, enjoy, or even sell the land, and receive the proceeds. There are two steps to forming a trust: obtaining the trust permits and entering into the trust agreement.
Both the bank and the buyer must obtain permits from the foreign Affairs Ministry to form a trust. To obtain a trust permit, the parties must supply personal data, proof of title, and a description of the intended uses for the property. The buyer must additionally agree to be considered as a Mexican with regard to his or her rights. This agreement is know as the "Calvo clause" The bank must agree to notify the Foreign Affairs Ministry of any assignment or cancellation of the trust. There is also a trust permit fee, which the buyer usually pays to the bank. The amount of the fee depends on the duration of the trust.
After the parties obtain trust permits, they should draw up the real estate trust agreement and have it recorded by a notary. The notary needs the following documents to record the agreement:
1. The title documents for the property.
2. A certificate of no tax liability. This certificate is used to prove that there are no outstanding property taxes nor other assessments on the property at the time of the agreement.
3. A certificate of no encumbrances. The certificate of no encumbrance shows that there are no conflicting claims to the property. It also contains the chain of title and a description of the property.
4. A topographical study of the property.
5. An appraisal of the property. The commercial value of the property is used to compute property and other taxes. The appraisal must either be done by a bank appraiser or a corredor público, an attorney licensed by the state to perform appraisals.
The standard rate that banks charge for a trust is $300 and $1,000 per year. Trusts can be created for up to 50 years and may be renewed.
The Notary
Before a buyer can actually acquire real estate, he or she must go before a notary. For this reason, it is important to understand the role of the notary in the Mexican legal system. Unlike American notary publics, all Mexican notaries are licensed attorneys. Notaries are also specially licensed by the state to insure that the law is followed in certain transactions. They are held accountable for any transactions in which they are involved and can be held liable for any irregularities in the documents. Because there are few notaries, and they are necessary for so many transactions, the notary is a prestigious position.
While the notary is a lawyer, it is not his or her job to advise the parties to a deal of any legal options they may have. As long as a document presented possesses all the legal formalities, it will be notarized and recorded. Notaries charge based upon an agreed table which varies according to the price of the property, but is frequently between 1.5% and 2.5%. Acquisition Process
Most real state transactions have at least two steps:
The first step in purchasing property is the Promise to Purchase and Sell. The promise is a legally binding expression of
the will of the parties to make a contract in the future. Admittedly, "promise" is probably the wrong choice of words, as a valid contract is formed. This agreement is especially convenient in the case of the American who wishes to buy a piece of property through a trust and must wait for the paperwork. At the initiation of activities, the notary will file a notice which will put a temporary freeze on registrations of liens, ensuring the protection of priority to the buyer.
At the time of the Promise, the seller usually demands a deposit from the buyer to take the property off the market. The deposit is usually between 20% and 50% of the purchase price of the property, but tending toward 20%. Mexican law has no equivalent of an escrow, which makes it more difficult to recover the deposit if the selling party backs out of the agreement. All the buying party is left with in such a situation is a lawsuit.
The second step is closing the transaction. The title to the property is transferred by the Purchase Sales Agreement. This contract must be in writing and to be binding on third parties it must be recorded in the Public Registry of Property. To record this agreement, the parties must go before a notary.
"Closing companies" have opened in some of the beach resorts, acting as bonded escrow agents. Another alternative to using the Notary services is to work with a bank and create an escrow agreement among the parties, although the bank will charge for its trust services. Before a notary will record the Purchase Sales Agreement, the following documents are required:
1. The title document.
2. A certificate of no encumbrance or tax lien on the property.
3. A Topographical study and appraisal of the property.
4. The property tax receipts for the last 5 years.
5. A notice of purchase.
6. The water bill receipts for the last 5 years.
Many Americans want to have title insurance on the property as a way to reduce liability. It is not common for Mexicans to possess title insurance, but there do exist companies that supply this, specifically for the benefit of Americans. However, this service is more expensive than the price that is charged in the United States.
The notary also withholds a number of fees and taxes. In addition to the notary fee, the notary withholds the income tax generated from the sale of the property, which is either a percentage of the gain or a percentage of the sales price of the property. Certain costs are most commonly borne by one party or another, but the parties are free to negotiate who will pay each cost.
Customarily the buyer pays all transaction expenses, except the income tax owed by the seller. In Mexico, inspections are not common, but are recommendable in order to avoid future disappointments. Many times, real estate transactions are negotiated which state the sales price as less than the price that was actually paid. This is usually done to avoid or lessen taxes for the seller. Besides being illegal, this is not a good idea. Any taxes avoided at the agreement stage will eventually have to be paid (at a higher rate) as capital gains taxes when the property is resold, unless the new owner continues to give the property an unnaturally low value.
The Ejido
Ejidos are communal tracts of land, mostly agricultural in nature, which compose a large portion of Mexican real estate. Ejidos are considered to be the property of a whole community, rather than any single person. Members of the ejido (ejidatarios) hold partial title to the land, they can live and work on the land but they may not transfer it to another party. Before 1992, it was impossible for someone who was not an ejidatorio to again title to this land. The constitutional reforms of 1992 changed this rule and opened up ejido land, allowing it to be converted into private property.
Despite the reforms, buyers should be very careful when purchasing former ejido land as the pitfalls are numerous.
At present, there are two ways in which a third party can acquire title to ejido land. The first is through adverse possesion. Because this procedure is uncommon and may not apply to foreigners, the more common method of gaining title to ejido land is through the PROCEDE (Program of Certification of Ejido Rights) procedure.

What can a foreigner buy in Mexico?

What can a foreigner buy in Mexico?

The regulations on the sale of real property to foreigners are found in Mexico Foreign Investment Law. The law gives a Mexican company with foreign capital many more rights than a foreign national.

A foreign national can acquire land almost anywhere in Mexico with the permission of the Foreign Affairs Ministry. The only exception in the Foreign Investment Law is that foreigners may not acquire real property in the "prohibited zone".

The "prohibited zone" is the strip of land 100 km from the border and 50 km from the beach. If a foreigner wishes to acquire land in the prohibited zone, he or she may enter into a trust agreement with a Mexican bank (discussed below).

A Mexican company with foreign investment, even 100% foreign investment, may acquire property in the "prohibited zone" as long as it is not used for strictly residential purposes. If the property is considered to be solely residential, the company must use a trust. The Regulations of the Mexican Foreign Investment Law state that residential real estate is real estate specifically to be used as a dwelling by the owner. The law provides a list of examples of real estate that seem residential but is not considered as such by the law. According to the law, non-residential real estate includes, but is not limited to:

1. Time Shares.

2. Real estate intended for both industrial, commercial or tourist use and residential use.

3. Real estate acquired by credit institutions in payment of debts.

4. Real estate bought by companies to be developed and sold. This would include apartments and residential communities.

5. Generally, any real estate to be used for commercial, industrial or agricultural purposes, as well as, ranching, fishing, forestry, or to provide services.

The Regulations make clear that this list is not complete and that any questions of whether an activity is residential should be sent to the Foreign Affairs Ministry.

Property Acquisition with Bank Trust

A Foreigner may not hold actual title to any land in the "prohibited zone". To possess land in the "prohibited zone" a trust is necessary. In a trust, a Mexican bank holds title to the land while a foreign beneficiary has the right to use, enjoy, or even sell the land, and receive the proceeds. There are two steps to forming a trust: obtaining the trust permits and entering into the trust agreement.

Both the bank and the buyer must obtain permits from the foreign Affairs Ministry to form a trust. To obtain a trust permit, the parties must supply personal data, proof of title, and a description of the intended uses for the property. The buyer must additionally agree to be considered as a Mexican with regard to his or her rights. This agreement is know as the "Calvo clause" The bank must agree to notify the Foreign Affairs Ministry of any assignment or cancellation of the trust. There is also a trust permit fee, which the buyer usually pays to the bank. The amount of the fee depends on the duration of the trust.

After the parties obtain trust permits, they should draw up the real estate trust agreement and have it recorded by a notary. The notary needs the following documents to record the agreement:

1. The title documents for the property.

2. A certificate of no tax liability. This certificate is used to prove that there are no outstanding property taxes nor other assessments on the property at the time of the agreement.

3. A certificate of no encumbrances. The certificate of no encumbrance shows that there are no conflicting claims to the property. It also contains the chain of title and a description of the property.

4. A topographical study of the property.

5. An appraisal of the property. The commercial value of the property is used to compute property and other taxes. The appraisal must either be done by a bank appraiser or a corredor público, an attorney licensed by the state to perform appraisals.

The standard rate that banks charge for a trust is $300 and $1,000 per year. Trusts can be created for up to 50 years and may be renewed.

The Notary

Before a buyer can actually acquire real estate, he or she must go before a notary. For this reason, it is important to understand the role of the notary in the Mexican legal system.

Unlike American notary publics, all Mexican notaries are licensed attorneys. Notaries are also specially licensed by the state to insure that the law is followed in certain transactions. They are held accountable for any transactions in which they are involved and can be held liable for any irregularities in the documents. Because there are few notaries, and they are necessary for so many transactions, the notary is a prestigious position.

While the notary is a lawyer, it is not his or her job to advise the parties to a deal of any legal options they may have. As long as a document presented possesses all the legal formalities, it will be notarized and recorded. Notaries charge based upon an agreed table which varies according to the price of the property, but is frequently between 1.5% and 2.5%.

Acquisition Process

Most real state transactions have at least two steps:

The first step in purchasing property is the Promise to Purchase and Sell. The promise is a legally binding expression of
the will of the parties to make a contract in the future. Admittedly, "promise" is probably the wrong choice of words, as a valid contract is formed. This agreement is especially convenient in the case of the American who wishes to buy a piece of property through a trust and must wait for the paperwork. At the initiation of activities, the notary will file a notice which will put a temporary freeze on registrations of liens, ensuring the protection of priority to the buyer.

At the time of the Promise, the seller usually demands a deposit from the buyer to take the property off the market. The deposit is usually between 20% and 50% of the purchase price of the property, but tending toward 20%. Mexican law has no equivalent of an escrow, which makes it more difficult to recover the deposit if the selling party backs out of the agreement. All the buying party is left with in such a situation is a lawsuit.

The second step is closing the transaction. The title to the property is transferred by the Purchase Sales Agreement. This contract must be in writing and to be binding on third parties it must be recorded in the Public Registry of Property. To record this agreement, the parties must go before a notary.

"Closing companies" have opened in some of the beach resorts, acting as bonded escrow agents. Another alternative to using the Notary services is to work with a bank and create an escrow agreement among the parties, although the bank will charge for its trust services.
Before a notary will record the Purchase Sales Agreement, the following documents are required:

1. The title document.

2. A certificate of no encumbrance or tax lien on the property.

3. A Topographical study and appraisal of the property.

4. The property tax receipts for the last 5 years.

5. A notice of purchase.6. The water bill receipts for the last 5 years.

Many Americans want to have title insurance on the property as a way to reduce liability. It is not common for Mexicans to possess title insurance, but there do exist companies that supply this, specifically for the benefit of Americans. However, this service is more expensive than the price that is charged in the United States.

The notary also withholds a number of fees and taxes. In addition to the notary fee, the notary withholds the income tax generated from the sale of the property, which is either a percentage of the gain or a percentage of the sales price of the property. Certain costs are most commonly borne by one party or another, but the parties are free to negotiate who will pay each cost.

Customarily the buyer pays all transaction expenses, except the income tax owed by the seller.
In Mexico, inspections are not common, but are recommendable in order to avoid future disappointments. Many times, real estate transactions are negotiated which state the sales price as less than the price that was actually paid. This is usually done to avoid or lessen taxes for the seller. Besides being illegal, this is not a good idea. Any taxes avoided at the agreement stage will eventually have to be paid (at a higher rate) as capital gains taxes when the property is resold, unless the new owner continues to give the property an unnaturally low value.

The Ejido

Ejidos are communal tracts of land, mostly agricultural in nature, which compose a large portion of Mexican real estate. Ejidos are considered to be the property of a whole community, rather than any single person. Members of the ejido (ejidatarios) hold partial title to the land, they can live and work on the land but they may not transfer it to another party. Before 1992, it was impossible for someone who was not an ejidatorio to again title to this land. The constitutional reforms of 1992 changed this rule and opened up ejido land, allowing it to be converted into private property.

Despite the reforms, buyers should be very careful when purchasing former ejido land as the pitfalls are numerous.

At present, there are two ways in which a third party can acquire title to ejido land. The first is through adverse possesion. Because this procedure is uncommon and may not apply to foreigners, the more common method of gaining title to ejido land is through the PROCEDE (Program of Certification of Ejido Rights) procedure.

The History of Land Ownership in Mexico

The History of Land Ownership in Mexico
The History of Mexican Land

To really understand how ownership in Mexico works, it is important to understand the history of property ownership and its evolution in Mexico. If you picture a country that has been dominated by foreign owners since the early 1500's, you will begin to see why Mexico is so protective of its most valuable resource...land.

In 1517, when Hernandez de Cordoba sailed from Spain to the Yucatan Peninsula, foreigners laid claim to Mexican lands. Spain decided that since they had landed here, it was now theirs. It was not until 1822 that Mexico declared its independence from Spain, much like the U.S. declared independence from England, but even with this new independence, the lands of Mexico were still owned by wealthy foreigners, the Mexican upper class and the Church. Porfirio Diaz, a former President of Mexico for over 30 years, nearly sold all of Mexico to foreigners during his term.

The end result was the Mexican Revolution, which cost over one million lives and was the basis for the Federal Constitution of 1917. The new constitution imposed new laws and restrictions on foreign ownership and ownership of lands by the Catholic Church. Article 27 of the constitution allows Mexican Nationals and Mexican Companies to own property, however it restricts foreigners from owning land with the restricted zone. It is also said that the U.S. was involved in this new zoning in an effort to prevent the installation of foreign military bases on our borders or near our coastlines. This "restricted zone" is defined as property within 60 miles from any Mexican border or within 30 miles of any Mexican coastline.

Not until the 1930's did the Mexican people truly see the property being returned to them. President Lazaro Cardenas disassembled the large property holding and distributed them in the form of cooperative farms or "Ejidos". The people were given ownership of these properties and were allowed to farm and cultivate them and receive the profit from their efforts. After nearly 4000 years, over 50 million acres of land was back in the hands of the Mexican people, however, it was still owned by the Federal Government.

Even though the people were allowed to farm the properties and profit from their work, it was not until 1992 that they were allowed to sell the properties. The 1992 Agrarian Law recognizes property rights within the Ejido and allows for the owner of record to sell or lease the property to a non-Ejido member. The property can be removed from the National Agrarian Registry (removed from Federal Control) and placed in the public land registry allowing it to be sold or leased. Today, thousands of acres are being removed on a daily basis from the Ejidos, added to the public lands and being sold or leased. There are well over 50 million acres of land that will go through this process to be either leased or sold over the coming years.

Mexican Property Trusts (Fideicomiso)

In 1994, amendments to the Constitution permitted foreigners to purchase and own real estate in Mexico located within the "restricted zone" which is all land within 60 miles of a national border and within 30 miles of the Mexican Coast. This Law permitted ownership through a land trust or "Fideicomiso".

A "Fideicomiso" is a Mexican Trust. The way it works is the Mexican Government issues a permit to a Mexican Bank of your choice, allowing the bank to act as purchaser for the property. The bank acts as the "Trustee" for the 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 law authorizes Mexican banking institutions to act as trustees. A trustee takes instructions only from the beneficiary of the trust (the foreign purchaser). The beneficiary has the right to use, occupy and possess the property, including the right to build on it or otherwise improve it. The beneficiary may also sell the rights and instruct the trustee to transfer title to a qualified owner.

Many people refer to the trust arrangement in Mexico as a lease agreement... this is not true. 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. You have all the rights that an owner of property in the U.S. or Canada has, including the right to enjoy the property, 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.
Documentation

La Punta Realty will facilitate long-term investment by individuals and developer's by listing and offering only properties with all necessary entitlements and approvals. The property purchase procedure will be similar to transactions in the United States. Documentation will be standardized in both English and Spanish, and title insurance will be available on all properties we sell.

Investing in Mexico

Mexico offers the foreign investor an attractive investment opportunity in an economy that is undergoing dramatic improvement and growth. Following the country's inability in 1982 to service its escalating foreign debt, Mexico introduced structural changes in its economy designed to move the country toward an open economy with more direct foreign investment. Among the most significant changes were

(1) Mexico's accession to the General Agreement on Tariffs and Trade,

(2) a government willing to work with the International Monetary Fund and other sources to restructure the country's foreign debt,

(3) the liberalization of policies concerning foreign ownership of Mexican companies, and

(4) the encouragement of tourism development.

In an effort to promote foreign investment, Mexico enacted new regulations designed to relax the restriction on foreign investment, which formerly limited foreign ownership of Mexican companies to 49 percent. Under the new regulations, foreign investor's can now own up to 100 percent of a large number of enterprises, including hotel companies, development companies, etc. without prior authorization from the Foreign Investment Commission. Thus, foreign investors in these enterprises have been put on equal footing with local investors and are no longer required to engage a Mexican investment partner.

The Mexican Federal Corporate Income Tax ranges from 25 to 38 percent. Provisions in the income tax code have also been established to offset the detrimental effects of inflation on monetary assets and liabilities, inventories and depreciable assets.

Mexico will continue to offer foreign investors close proximity to the world's largest market, a solid communications infrastructure, ample supplies of energy, low labor costs, and skilled and trainable labor resources. The liberalization of the foreign investment rules is a clear indication of the very favorable attitude the government has taken towards foreign investment. The combination of a rapidly improving economy and stable profitable base foretell and excellent ongoing investment environment.

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 North Bay Puerto Vallarta region is a priority area for this targeted growth.

This article is taken from Snell Real Estate in Cabo San Lucas

Manifesting Your Construction

Manifesting Your Construction
Recording the Cost of Your New Construction

WHAT IS MANIFESTING?

Manifesting is simply recording the amount you spent on your construction, or remodel, in order to add this to your cost basis. Adding to your cost basis is the key to reducing your Capital Gains Tax. Proper documentation and Manifesting Your Construction is a vital part of building your new home.

WHY DO I NEED TO MANIFEST MY CONSRTUCTION?

When you sell your home, the Manifested cost plus the cost of your lot stated in your Trust (Title), will be used to determine the basis for Capital Gains tax.

If you have not Manifested Your Construction, Mexican Tax Law will not recognize your construction costs and you will not be able to use them as a deductible expense. All your receipts, cancelled checks and bank statements will not help, unless you have completed your Manifestation.

Before Your Begin Construction...

Decide how to structure your financial arrangements with your contractor. The two main choices are Cost Plus and a Fixed Bid.

COST PLUS

With Cost Plus, you pay the contractor for the cost of materials, plus a fee of 12% to 20%. Using this method, you will need to keep excellent records in order to prove all your expenses. With Cost Plus, you are responsible for paying the Social Security tax for every person working on your home... your contractor is not.

Each time you pay the contractor, he must provide you with a legal Mexican Invoice called a Factura. Each Factura must be in your name and will include a 10% sales tax call IVA Tax. Without the Facturas, nothing you spend is deductible as an expense in Mexico.

FIXED BID

With a fixed-bid contract, the contractor quotes you a flat fee to build your home. A fixed bid will include all labor, materials, Social Security, etc. It is all-inclusive. When using the Fixed Bid process, you put the burden of record keeping on the contractor and you do not have to pay the 10% Mexican IVA Tax each time you make a payment. You will still need to receive a Mexican Invoice, Factura, from the contractor for each payment; however, the Factura should reflect the amount of the payment due with no 10% sales tax (IVA Tax).

IVA Tax is basically a sales tax and Mexican Tax Law states there is no IVA Tax for the construction of a personal residence, provided the contractor is providing an all-inclusive bid. Again, the fixed bid process is much less labor-intensive for you and puts the majority of the record keeping on the contractor.

TIP:When using Fixed Bid, make certain the contractor is in agreement to provide you with a Factura for each payment with no 10% sales tax added. Have this in writing in your construction contract.

PULLING A BUILDING PERMIT

The building permit is the first step to Manifesting Your Property correctly. You will need the permit both to start construction AND to finish the construction. The permit is pulled from the government office called Obras Publicas, meaning Public Works. Normally, the contractor will pull this permit and there are two things you need to watch for.

1. Make sure the Building Permit is pulled in the same name as the Beneficiary named in your Trust.

2. Make sure the Building Permit represents the approximate amount of the construction the contractor has proposed to do the work.

The fee for the Building Permit is based on the estimated value of your construction. In and effort to reduce this fee, some contractors will report a lower construction amount when pulling the permit. This is a huge mistake! You will want your construction costs recorded accurately, so your cost basis will be accurate for capital gains. Never report a lower construction value to save some money on the permit fee, because it will cost you much more in the long run!

LETTER OF TERMINATION OF WORKS

When construction is finished, and you are ready to Manifest Your Construction, you will need to take your Building Permit to the Obras Publicas office with a letter stating the amount you spent and that you have finished your construction. You or your contractor can write the letter. With this letter, you will request an official statement of completion called an "Adviso de Terminacion de Obra", which means a "Letter of Termination of Works".

This letter will state the amount you spent on your construction, which should be in accordance with the amount stated on the Building Permit. THIS LETTER IS THE DOCUMENT THAT ACTUALLY ESTABLISHES YOUR CONSTRUCTION COST BASIS FOR THE TAX OFFICE.
SOCIAL SECURITY

Social Security is very serious issue in Mexico and your home can actually be liened or sold to force payment if these taxes are not paid. This can even happen years after you finish your construction.

When you receive your "Letter of Termination of Works", Obras Publicas will send a copy to the Social Security office. They will compare this amount with what you or your contractor has paid to Social Security during construction. (If you are using Cost Plus, you are responsible for paying the taxes and if you are using Fixed Bid, the contractor is responsible.)

If the amount of Social Security Taxes paid corresponds to the amount of your construction, you will receive a letter from Social Security called a "Carta de Razonabilidad de Pago", meaning a "Letter of Reasonability of Payment". This letter is very important, as it is your protection to prevent any future claims for non-payment of Social Security taxes.

MANIFESTING YOUR CONSTRUCTION

Once you have your "Letter of Termination of Works" and your letter from Social Security, you simply take them to the Tax Office, called the Catastro Office. They will record the value and add it to the cost reflected on your Trust document. Once completed, you have successfully Manifested Your Construction and established an accurate tax basis for your property.

If you do not have a Trust, you should not begin construction. Without the Trust document, you cannot pull a building permit in your name and you run the risk of not being allowed to deduct your land cost or construction cost when you sell.

Remember: Annual property taxes are relatively low in Mexico...capital gains taxes are not. Registering an artificially low number will cost you much, much more in the long run!

La Punta Realty will work with you to make certain all your documents are in order and your actual costs are recorded properly. There are no short-cuts and no legal ways around taxes here, any more than there are in the United States or Canada. Your home is a large investment, and following proper legal steps will ensure a safe and enjoyable experience in Mexico. If someone says, "This is Mexico and that's the way we do it here" , they have just thrown up a red flag and you should seek another contractor.

Always get your Trust. Always record the real value of your purchase. Always purchase U.S. Title Insurance. Always manifest your construction.

La Punta Realty is the recognized real estate leader in North Bay Puerto Vallarta. We use U.S. Title Policies and U.S. third party escrows in Mexico for all our transactions. We understand the local laws regarding ownership of real estate in Mexico by foreign investors, and we will put this knowledge to work for you to make certain your investment protected.

If you are considering a real estate purchase in North Bay Puerto Vallarta, make sure everything is done right by allowing La Punta Realty to work for you. We are an independent brokerage, assuring you that our only interest is representing you in a real estate transaction that is safe, solid and secure.

Our strength is in our commitment to safeguarding the interests of our clients. We will offer no properties that cannot secure a U.S. Title policy with Stewart Title Guaranty. No other real estate firm in North Bay Puerto Vallarta is more dedicated to protecting your interests and ensuring a safe, clean transaction for both buyer and seller.

This article is taken from Snell Real Estate in Cabo San LucasMa

Capital Gains in Mexico

Capital Gains in Mexico

In a classic western movie called "The Searchers", starring John Wayne, an Indian spoke in his native tongue, and a Cowboy asked what he said. John Wayne replied, "It's not so hard to understand if you speak Niyuki Comanche." Well, the same goes for understanding the Capital Gains Laws in Mexico.

Understanding the Tax Laws in Mexico is an extremely important part of the Purchase Process. What you do today dictates your tax liabilities tomorrow.

The information provided here is to help you "understand" the tax system in Mexico and the important issues related to them. We highly recommend you meet with a tax professional prior to completing your purchase to confirm if any of the laws have changed since this document was published in 2003.

CAPITAL GAINS TAX

Capital Gains Tax Law in Mexico states that tax is owed on the profit you receive when you sell your home or property. By Law, you have two options when it comes to Capital Gains and you can use whichever is the lesser of the two options.

Option 1: 34% of the net profit. (There are a variety of deductions included in this option.)

Option 2: 25% of the gross sales amount with no deductions.(These percentages reflect the
2003 Tax Code)

Although a 35% Capital Gains Tax may seem high, Mexico does have several laws and procedures that will assist you in maximizing your cost basis, thereby reducing your net profit, thus lowering your Capital Gains. The key is to understand these laws before you buy, not when you decide to sell.

WHY SHOULD YOU TAKE ON THE SELLER'S CAPITAL GAINS LIABILITY?

The first step in calculating your Capital Gains is to subtract the value you have recorded in your Trust (Fideicomiso), from the sales price of your property. In the past, some real estate companies recorded values lower than the actual purchase price in an effort to "save" tax for their client. Their thinking was to save money on the 2% acquisition tax. This is a big mistake.

Never record a lower value than what you actually paid for the property. Doing so simply establishes a lower cost basis for the property, which increases your Capital Gains Tax liability.
An oversimplified example is: You wisely purchase a lot for $1,000,000.00, but unwisely record a value of $500,000.00. In the eyes of Mexican Tax Law, your cost basis is now $500,000.00. If you sell the lot for $1,200,000.00, you see a profit of $200,000.00, however, according your recorded cost basis, Mexico sees a profit of $700,000.00. Your Capital Gains Tax for Mexico will be 35% of $700,000.00 ($245,000.00.) You just lost $45,000.00 instead of making a profit.

Rule Number 1: Always record the full value of your purchase.

Ownership in Mexico, specifically the Trust process, has been established to protect you and provide you with the legal means to safeguard your investment. Recording your real purchase price and proper documentation is the only way to maximize your potential profits. The bottom line is to always secure a Trust over your property as quickly as possible for the real value of your purchase.

Never allow anyone to convince you to record a lower value than what you have actually paid for your property, or YOU will assume the seller's Capital Gains Tax liability. Recording a lower value today can cost you plenty should you decide to sell in the coming years. It's like the old "shell game"... if a seller can get a buyer to record a lower value, the tax liability is simply passed along, and eventually someone will have to pay. Don't let anyone tell you "That's how we do it here." Mexico is like everywhere else. The Capital Gains Tax is the responsibility of the Seller.
It's simple:

1) It isn't yours until you have the title in your name.

2) If you don't record the accurate value of your purchase, you're most likely taking on someone else's capital gains liability.

Fact: Recording the real value benefits you and establishes your cost basis in the eyes of Mexico.

Fact: The amount you pay for a property has no impact on your yearly property taxes.

Fact: Capital Gains Taxes you pay in Mexico can be applied to your U.S. Taxes.

HOW DO I KNOW IF MY VALUE IS RECORDED CORRECTLY?

La Punta Realty closing department will oversee the creation and completion of your Trust. We will review the documents with you and, to make certain everything is in order, we will be present when you sign your Trust.

You can verify the value yourself by examining the first page of the Trust Document and noting the amount written out in text, which is always in Pesos. Simply divide the current exchange rate into the Peso amount and make sure the result reflects the actual dollar amount you have paid. If you want to check an old Trust, simply determine the peso rate for the day and year the Trust was executed. We can give you the exchange rate, or the bank and the Internet are also helpful.

(Helpful hint: When you sign your new Trust, have the Notary jot down the exchange rate on the document itself. This will come in handy years later.)

WHAT IS AN INFLATIONARY CREDIT?

As soon as you pay your 2% Acquisition Tax to receive your Trust, you are eligible to receive an inflationary credit from the Mexican Government for every year you own the property. This credit is added to your cost basis when you decide to sell your property.

The credit is based on Consumer Index Adjustments (inflation) and can be quite significant. We have seen credits in excess of 20% per year applied to a cost basis. On a million dollar property, this can be as much as $200,000.00 U.S. per year added to your cost basis, significantly reducing your capital gains tax should you decide to sell in the coming years.

Fact: You are not eligible to receive the inflationary credit unless you have paid your 2% Acquisition Tax.

Fact: You can receive the inflationary credit based on the date of your buy/sell agreement, provided you paid the 2% Acquisition Tax for the property.

WHAT ABOUT THE TWO-YEAR CAPITAL GAIN EXCLUSION?

Mexico, as well as the United States, provides its residents a Capital Gains Tax Incentive for their primary home. The Tax Incentive in Mexico states that if you sell your "primary residence" after two years, you pay no Capital Gains. This law is in place for "Residents" (Mexicans Nationals or Foreigners) of Mexico only, and there are several items required to establish residency status. In order to claim your home as your primary residence in Mexico, you must be able to prove that it really is your Primary Residence.

At the closing, you will be required to provide the Notary with a residence visa or working permit (FM3 or FM2), as well as a bank account, water, phone and electric bills, paid tax receipts and your Trust, all in your name, all with the address of the home and all in place for over 2 years.

Fact: You cannot have two primary residences at the same time, therefore, if you claim the home in Mexico as your primary residence, you give up your primary residency status in the U.S.

Fact: The Capital Gains Tax Exclusion is intended for residents of Mexico, not for persons owning second homes or vacation homes.

There are no short-cuts and no legal ways around taxes here, any more than there are in the United States or Canada. Your home is a large investment, and following proper legal steps will ensure a safe and enjoyable experience in Mexico. If someone says, "This is Mexico and that's the way we do it here". They have just thrown up a red flag and you should seek another agent.
If you plan on building a home or doing a major remodel to an existing home, please read our Informational Brochure called Manifesting Your Construction to make certain all your expenses are added to your cost basis.

La Punta Realty is the recognized real estate leader in North Bay Puerto Vallarta. We pioneered the use of U.S. Title Policies and U.S. third party escrows in Mexico for all our transactions. We understand the local laws regarding ownership of real estate in Mexico by foreign investors, and we will put this knowledge to work for you to make certain your investment is protected.
If you are considering a real estate purchase in North Bay Puerto Vallarta, make sure everything is done right by allowing La Punta Realty to work for you. We are an independent brokerage, assuring you that our only interest is representing you in a real estate transaction that is safe, solid and secure.

Our strength is in our commitment to safeguarding the interests of our clients. We will offer no properties that cannot secure a U.S. Title policy with Stewart Title Guaranty. No other real estate firm in North Bay Puerto Vallarta is more dedicated to protecting your interests and ensuring a safe, clean transaction for both buyer and seller. We never forget it's your money and your investment... it's our job to protect it.

This article is taken from Snell Real Estate in Cabo San Lucas

Buying Real Estate in Mexico-Separating Fact from Fiction

Buying Real Estate in Mexico - Separating Fact from Fiction

The "Wild West Days" of buying property in Mexico are over. Banking on the words "That's the way we do business here!", and trusting "Thy Seller", have given way to U.S. Title Insurance and bonded escrow accounts.

During the last ten years, property in Mexico has become a lucrative and viable investment strategy, bringing with it a new breed of sophisticated investors. U.S. title insurance, bonded escrow accounts and comprehensive title searches are "in"... promises and handshakes are "out".

Owning property in Mexico is easier and safer than ever, because now there are established and well defined rules regarding non-Mexicans owning land in Mexico. These rules are in place to protect your ownership rights and to promote the sale of real estate to foreign investors. The key is a safe, established and perpetually renewable Mexican Property Trust called a "Fideicomiso".

What is a "Fideicomiso" or Mexican Property Trust?

With the advent of North American Treaty Agreement, the Mexican Government recognized that it was critical to make foreign investment in Mexico safer and easier than ever. Because the Mexican Constitution prohibits foreigners from purchasing or owning real estate within 60 miles of an international border or within 30 miles of the Mexican Coast, a new, safe method of holding title was created. This new instrument, modeled after the one in Monaco, allows ownership through a Mexican Property Trust, called a "Fideicomiso". This is a trust agreement, much like an estate trust, giving you all the rights of ownership.

The Department of Foreign Affairs in Mexico City issues a permit to a Mexican Bank of your choice, allowing the bank to act as purchaser for the property. The bank acts as the "Trustee" for the Trust and you are the "Beneficiary" of the Trust. This is not an asset of the bank; they simply act as the Trustee to hold the Trust. Much like Living Wills or Estate Trusts in the U.S., the Mexican Bank, or Trustee, takes instructions only from the Beneficiary of the Trust (You). The Beneficiary has the right to use, occupy and possess the property, including the right to build on it or otherwise improve it. The Beneficiary may also sell the property by instructing the Trustee to transfer the rights to another qualified owner, or bequeath the property to an inheritor. The initial term of the trust is 50 years, and it can be renewed for an additional periods of 50 years indefinitely, providing for long-term control of the asset.

You have all the rights of a property owner in the U.S. or Canada, including the right to enjoy the property, sell the property, rent the property, 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.

How Long Does It Take To Get A Trust?

At La Punta Realty, we work with Federal and State Notaries for all our closings, and to secure your new Trust. (In Mexico, a Notario Publico is much different than in the United States, more like a Clerk of Courts.) On average, we can obtain your Trust within 60 days and in some cases, we have actually transferred title in as little as two to three weeks. We oversee the entire process and make certain you understand each and every step involved. We can even provide you with an English sample Trust for you to review.

You would be amazed how many people have only a simple buy/sell agreement between themselves and the seller as evidence of ownership. This is not a safe method of ownership and is not recommended by La Punta Realty or Stewart Title Guaranty.
Rule Number 1: Always get your Trust.

When Do I Pay For My Property?

When you have clear title, exactly like you would anywhere else. By using our U.S., bonded, third party Escrow service with Stewart Title Guaranty, Houston Texas, your money is held in an individually numbered, bonded and insured escrow account until your Trust is complete and the property rights have been transferred to you.

We do not recommend that you release funds to a seller unless you have received your Trust first. Purchasing property without receiving a Trust is simply buying without receiving the title in your name, which is risky and not recommended.

Fact: Until you have received your Trust, and rights to the property have been transferred to you, the legal owner of record in Mexico is still the previous owner.

Fact: You cannot bypass Mexican Taxes or fees by not getting your Trust, even if you sell the property to someone else before you have your Trust in place.

Do I Need Title Insurance?

Whether you buy real estate in the U.S. or Mexico, La Punta Realty recommends U.S. Title Insurance for every property you purchase. You have insurance for your car, your home and your health, why not purchase it for one of your largest investments, your property. La Punta Realty will not represent or sell any property in Mexico that cannot be covered by a U.S. Title insurance policy with Stewart Title Guaranty, Houston Texas.

Fact: U.S. Title Insurance is available for properties in Mexico purchased by U.S. Citizens.

Fact: Just because you have a Trust does not ensure you have free and clear title. In a Stewart

Title property search, the properties title is searched all the way back to the Mexican Revolution. Most title searches to secure a Trust only go back one or two owners of record.

How Can I Own My Property?

In the Trust document, you must name the Beneficiary or foreign owner for the property. This can be you personally, multiple partners, a foreign corporation, an estate trust, a living will, or other entity. The Trustee of the Trust (the Mexican Bank) will take direction from whomever you name as the Beneficiary.

Fact: You can name a U.S. Corporation as the Beneficiary of the Trust. This is perfectly legal.

Fact: If you sell more than 25% of the shares in the U.S. Corporation, you have created a real estate transaction in Mexico, and all Mexican Taxes apply.

(This is Article 151 of the Mexican Revenue Code and is also declared in the International Tax Treaty between the U.S. and Mexico. If this is done, and you do not pay the Mexican Taxes, you will have created a tax burden over the property for the new owner.)

Fact: You can own a property in a Mexican Corporation and take title fee simple only if the property is for development or investment purposes.

Fact: You cannot own property through Mexican Corporation to by-pass the Trust process.

Fact: It is against the law for a foreigner to own property in a Mexican Corporation for residential purposes.

This article is taken from Snell Real Estate in Cabo San Lucas