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Today we want to inform you about the Restricted Zone Trust, the means for all foreigners interested in investing in real estate in Mexico in the Restricted Zone. If you are planning to buy a property in Mexico, either to live in or for your retirement, to come on vacation or to invest, this information is for you.
What is the Restricted Zone?
In accordance with article 27, section I of the Political Constitution of the United Mexican States, foreigners are prevented from acquiring direct ownership of land and water in an area that is 100 kilometers from the borders and 50 km from the coastline, the use and enjoyment of real estate located within this restricted area is only allowed, through the constitution of a trust, in accordance with the Second Title of the Foreign Investment Law.
What is the Restricted Zone Trust?
This permit granted by the Ministry of Foreign Affairs to establish trusts are intended to allow the use and exploitation of real estate located in the restricted area in favor of foreign persons (individuals or legal entities) or, to Mexican companies with a clause of admission of foreigners as long as the property is used for residential purposes, for a maximum period of 50 years that can be renewed after those 50 years. The trust contract must be recorded in a public deed.
Through this contract, a person as Trustor transmits or contributes a property to a
Trust in exchange for consideration, in which the Trustee is entrusted with holding ownership thereof, managing it and transmitting or delivering it in accordance with the instructions of the Trustee.
Foreign Trustee and upon his death in favor of his beneficiaries, whom he will designate upon the constitution of the Trust.
In accordance with the above, we can define the trust as a legal figure that allows foreigners to use and enjoy a property through a permit granted by the Ministry of Foreign Affairs and is done through a bank (trustee) that serves to guarantee its operation.
What you should know
- The duration of the trust is 50 years, which than can be extendable
- The contract is executed before the faith of a notary public
- Permission from the Secretary of Foreign Relations is required and the Trustee carries out the procedures
- The Trust is registered in the National Registry of Foreign Investment
In order to carry out the constitution of a trust, we need to obtain the following documentation:
1. Name and nationality of the settlor.
2. Name of the credit institution (bank) that will act as trustee.
3. Name and nationality of the trustee and, if any, of the second trustees and of the substitute trustees.
4. Duration of the trust.
5. Use that will be given to the property (purposes).
6. Description, location, measurements, boundaries and total area of the property that is the object of the trust.
7. Distance of the property from the Border or the Federal Maritime Terrestrial Zone.
8. Cover the payment of rights for the amount established in article 25 of the current Federal Law on Rights, by electronic payment at certified credit institutions.
9. The application for permits to establish trusts in the restricted area must be submitted ONLY by electronic means, through SIPAC27.
What documents do you need as a foreigner to act as trustee?
- Passport copy
- Copy of immigration status
- Copy of driver's license (for the United States and Canada also serves as proof of address)
- Copy of proof of address
- Fill out the forms that the bank gives you
- Payment of rights
In the event that the trust property is to be sold, there are two options:
- If it is a Mexican, the extinction of the trust is requested.
- If it is to another foreigner, the rights of the trust can be assigned where the name change of the trustees and the substitute trustees is made.
It is very important that you always consult an expert who guides you in the best way throughout the process and who always guarantees legal certainty in the formation of the trust and the properties in which you want to invest.
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