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Restart bank trust debate, urge realtors

Elimination of fideicomiso would detonate market, industry says

The real estate industry plans to lobby for a renewed discussion in Congress over the elimination of the bank trust foreigners must use to purchase property.

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The president of the Real Estate Confederation of Latin America said removing the requirement for foreigners to buy real estate with a trust, called a fideicomiso, would detonate sales and have an impact on the entire sector.

Antonio Hánna estimated it would drive up demand by 30% in the five years following the change.

Only Mexicans by birth or naturalization, or Mexican companies, can directly own real estate within 50 kilometers of the ocean or 100 kilometers of international borders. Foreigners who wish to hold land within those areas, known as the restricted zone, must do so with a bank trust.

The buyer, who must pay an annual fee to the bank, has the right to use the property but the bank holds the title.

Sales of vacation homes and apartments totaled 1,725 last year. Remove the bank trust requirement and the number would soar to 2,423 after five years, said the confederation.

The change would require an amendment to the constitution, which is what the Mexican Association of Real Estate Agents (AMPI) lobbied for a few years ago. The proposal got as far as Congress, but became bogged down in the Senate, said AMPI president Gustavo Solares.

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He, too, predicted that removing the fideicomiso requirement would detonate activity in the market.

Claudia Velázquez of the real estate consultancy Softec said that in addition to the constitutional change there was also a need to streamline the process for Mexican buyers as well. She said they represent up to 80% of the purchasers in some tourist destinations.

Tourist property sales have been improving throughout the country, Velázquez said, but it was important to remember that Mexican citizens were a strong component of the market.

Among the destinations attractive to foreign buyers, according to Federal Mortgage Society statistics, are Puerto Vallarta, where housing prices averaged 12,743 pesos (US $536) per square meter last year; Los Cabos, where prices averaged 10,830 pesos; Cancún with prices at 10,166 pesos; Acapulco, 8,939 pesos; and Puerto Escondido, 7,060 pesos.

Source: El Financiero (sp)

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  • Pete L.

    One reason AMPI couldn’t get the job done the first time around is that the fideicomiso is merely a speed bump in the buying process, not a barrier. It’s a little inconvenient and does slow down the closing a bit, but there are some very real advantages like being able to pass the trust and property on to your kids without having to go through probate. And my understanding is that legitimizing outright land sales to foreigners requires a change to the Mexican constitution. This means it not only requires the approval of both houses of Congress but the approval of most if not all 31 states (and probably the City of Mexico as well—the newly created de facto 32nd state). I wouldn’t hold my breath.

  • Three score and ten

    “Antonio Hánna estimated it would drive up demand by 30% in the five years following the change.”

    Why? Is this based on facts or intuition? It doesn’t obstruct the sale. It’s not that expensive. And it guarantees future ownership. I am unable to think of a reason why someone would not execute a home purchase because of the fideicomiso aside from buyer ignorance which would be AMPIs failure.

    • kallen

      I pay $300 a year. On a fixed income, that is money that could be in my pocket, Plus it “sounds” shady and people don’t trust anything Mexico as it is.

    • Brian Donovan

      It is an additional step with additional monies ….. more paperwork and more of a chance of being ripped off …..
      Just as I and many others have been ! Get a grip with your BS and lies …….

  • Mary Beth Maria O’Connor

    I have worked in Mexico for the last 26 years and I don’t think it has deterred any buyers. If the fideicomiso is explained properly, it is a great option for setting up your estate plan for your Mexican property, many nationals hold property in trust for just that reason. In the long run, especially on high-end properties, the money saved by avoiding probate versus an annual fee of under $500 dollars – the trust is the obvious choice.

    • kallen

      Its (the fideicomiso) a major hassle though. I know quite a few people who decided not to by because of it. I agree with the article: nix the fiedo and sales will detonate (strange use of the word).

    • Brian Donovan

      Hi Mary ….. I hired you as my Lawyer to protect me and to follow all Laws ……. well, as you and I both remember you failed ! Do you remember taking any ethics classes ! After two years I am still waiting for my TRUST and will probably never see it …… and you knew what these people/developer were all about and you chose to turn a blind eye and let me get dekcuf …… shame on you !

      I hope that something equally horrendous happens to you as you have caused to happen too me …..
      Ethics ? Morals ? Integrity ? Honesty ?

    • Brian Donovan

      The “TRUST” is required by law ….. it is not an option ……. geez …………

  • dooglas

    I have been a Broker in Los Cabos for 30 years, and am VP of  MLS BCS, SA de CV. providing real estate services for about 400 agents and brokers in Baja California Sur. We deal with hundreds of Americans, Canadians and other foreigners every year. My neighbor is one of the Senators who was in office at the time that the bill was introduced to remove the Trust condition of foreign ownership for the foreigner’s personal Mexican residence. The bill did not attempt to remove the Trust requirement for additional types of properties or multiple properties owned by the same owner.
    Mr. Hanna, past president of AMPI, is commenting on the removing the “requirement” for a foreigner to own through a Trust; he does not propose eliminating the Trust altogether. The Trust will always remain as a viable vehicle for ownership by foreign or Mexican individuals (not family trusts or companies). It will also remain for those whose residence title is already in one and who cannot afford to pay the 5-6% closing costs required to take a title out of the trust. Extinction of a Trust can cost $1500-2500 US just for the bank Fiduciary’s signature, plus an additional set of closing fees and 2% acquisition tax.
    The aspect of a Trust Beneficiary passing title easily to heirs without a probate court involved may appear to be a good reason to have a Fideicomiso, but if one dies while in ownership, and the Trust does pass on to one’s Substitute Benficiary(ies), there is still a judicial process to go through. And the Substitute Beneficiary(ies) will pay an inheritance tax based on their relationship to the Primary Beneficiary who died; the closer relation the cheaper.
    What the law proposed l that would not be precluded by removing the “requirement” to have one. If Foreigners could choose not to have their title in a fideicomiso it would eliminate a multitude of problems and costs for them.

    • Brian Donovan

      “Trusts” are nothing but a great big problem ….. Get rid of them …………….. !!!!!!!!!!!!!!!!!

  • BUCEPHALUS

    Remove the fideicomiso and of course sales would skyrocket. Several people I know would like to buy in Mexico but are confused and not very excited about the whole fideicomiso process. Having a secure permanent title to your property will do wonders for people’s confidence in buying. Too many hear stories of shady dealings and many feel this is just another way to separate them from their cash.

    • Jimi_X

      I agree 100%.

  • Jimi_X

    As I stated before,…If the fideicomiso was such an “advantage”,…Why wouldn’t every Mexican National want to have one?

  • Mexicanbeachbum Robin

    This is all about buyers buying at the beach, in the “restricted zone”, requiring the bank trust. If a buyer wants to own DIRECT, no bank trust process, no bank trust fees, no foreign affairs permit, no yearly cost, then buy inland, away from the restricted zone. Many Mexicans utilize the bank trust process here.

    • BUCEPHALUS

      I believe many do have issues with the bank trust. Not that there s anything to worrie about as far as getting ripped off, it’s just the whole process and yearly maintenance costs do not set well with many. If Mexico wants to increase sales and bring in investment dollars or Euros, the coastal and border restrictions should be lifted and direct title should be issued at the time of sale. This would put people’s minds at ease and take away any uncertainty. After all, nobody is going to build foreign bases or attack across any border any time soon. This constitutional requirement was intended to keep foreign buildup near the borders and coast.

      • Brian Donovan

        you will not get your TRUST ever ! dozens and dozens of my neighbors and myself have been waiting for years and years 2,3,4,5,6,7,8,9 years …… don’t do it !

        • BUCEPHALUS

          Yes, many of my friends have had problems as well. Mostly, it is with HSBC the bank. They got themselves into quite the pickle with the government and the cartels. They are now not allowed to do the fideicomisos and that has caused a groundswell of problems. Myself, I went through the process of becoming a citizen and now the whole point is moot. I do hope the government straightens all these grey areas out. What better way to get around the current political cycle than to make buying and moving to Mexico easier and less complicated. Best of luck to you. Still beats living north.

          • Brian Donovan

            The developer and his henchmen are my problem ……….

          • BUCEPHALUS

            How is the developer keeping the process from happening? Shady registration and of lots with the government? Or is paperwork not in order? Where is this happening? If you haven’t already, I’d start the legal process against the developer if they are holding up your right to claim your paid for land under a fideicomiso. Again, I hope for the best outcome for you and that your problems get resolved quickly.

    • Brian Donovan

      yes you can buy no trouble at all …. too funny ….. I have been waiting for over two years to get my “TRUST”

      they lie about everything down here …. it is their culture …. it is acceptable ….. it is expected ……
      don’t even consider buying anything or even renting long term …… come for a week or two and leave …..
      these people ….. if you can call them that …… are not civilized yet ….. if ever ….. I hired two lawyers ….. both did nothing …… the cops are constantly soliciting bribes …… I could go on forever …… biggest mistake of my life …….. don’t do it !!!!!!!!!!!

  • Mexicanbeachbum Robin

    Something to think about. Every buyer wants a “good deal”. Who doesn’t? Some buyers waited for this to “pass” last time but it didn’t. The buyers waited and waited and lost out. If this starts again, the word will get out like it did last time “did you hear? no more bank trusts…the Mx government is doing away with them” , then many buyers didn’t make the move on a property, and they may wait again, waiting for that act of Congress and Senate, meanwhile losing out again on the good deals. Prices are coming back, actually very quickly and inventory is shrinking, I see the MLS every day. If it’s not a problem for them to wait, then OK. Sometimes you gotta do what you gotta do, but hopefully they make decisions on facts and not hearsay (there’s alot of that) .

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