Cancun real estateThe ownership of Cancun Real Estate is “Restricted” by the Mexican constitution. In 1917, following the Mexican revolution, the Mexican Congress in an attempt to stop Americans and Europeans from buying up large tracts of the country passed laws that prohibited foreigners from owning land within 60 miles of the borders and 30 miles of the coasts (such as Cancun real estate). These are known as “Restricted Zones”, and are part of the Mexican constitution.

In all other areas of Mexico, foreigners can own land just like Mexicans, with their names directly on the deed. Land ownership is guaranteed in the constitution and the rights of land owners are secured there.

In 1971, in efforts to attract foreign investments, Mexico passed laws permitting foreigners to establish “Trust of Ownerships”, using Mexican banks as trustees. This circumvented the constitution and permitted the purchase of properties within the “Restricted Zones” i.e. Cancun real estate. In Mexico, only financial institutions can act as trustees.

In all cases the foreigner must obtain a permit from the Secretary of State of Mexico to purchase property. This is all done by a lawyer (Notario), who does the deed transfer. The permit is usually automatic and once obtained, the Notario can transfer the deed.

The deed allows you to name beneficiaries in case of death, (in direct ownerships, beneficiaries can only be a spouse or blood relatives). This may avoid the need for a will and probate. To purchase in a restricted zone (Cancun real estate) you will use a Fideicomiso” (trust).

cancun real estateThe name of the bank is on the deed, but the foreigner is granted all the rights of ownership, and the bank has no rights to the property. The bank holds the Cancun real estate in trust and the foreigner is named as the beneficiary of the trust. The trust agreements are for 50 years and they are automatically renewable.

The foreign owner can also decide to start a new trust with a different bank and start a new 50 year trust at any time, by paying the set-up fees and the deed transfer fees. When the foreign owner decides to sell the property, the buyers can assume the trust or take out a new one for another 50 year term. The deeds do not form part of the bank’s assets, and cannot be attached by a bank creditor.

There are several benefits to Fideicomisos; one being the right to name multiple beneficiaries in case of death (and they don’t all have to be blood relatives). For this reason some people have used Fideicomisos instead of direct deeds even in areas that allowed direct deeds. Also, since the deed is in the name of a bank, the bank has to investigate the status of the deed first; offering additional security.

The bank will charge an annual fee of $300 to $500 to maintain the trust. There is also a set-up fee to start the trust. Another option is to form a Mexican Corporation to buy Cancun real estate as the laws now allow a foreigner to own 100% of a Mexican corporation. A Mexican corporation can have it’s name directly on the Cancun real estate deed, however, they must show some commercial use for the property. Renting the property for some of the year has been deemed a commercial use.

The advantage of Cancun real estate is the savings of the trust set-up and annual fees, but there are charges for setting up a corporation and some annual costs are incurred there too. Leases are to be avoided as foreigners have little protection under the law.

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