Thursday, February 5, 2009

Buying Real Estate in Playa Del Carmen

Playa Del Carmen is on the verge of growing into the next must-see destination. For more info go here: Playa Del Carment Beaches blog. Every year the property values and tourism rates are going up in Playa Del Carmen. There is a lot of confusion out there about owning property in Mexico. Especially when it comes to owning owning property in the "restricted zones" like close to the beach, and near the borders, Playa Del Carmen included.

As experienced real estate owners in Mexico, let us clear up a few misunderstandings about owning real estate in mexico. We've dont this before, so following these instructions will make it as easy and quick as possible. We pretty much know how the process works and understand the reasons for this method of property ownership, so here is a partial explanation for the trust method of property ownership in the “Coastal Zone” of Mexico.

The laws have shifted greatly. No longer is purchasing land in Mexico unavailable to foreigners. It’s still not unusual to have someone emphatically exclaim that “you can’t own property in Mexico”, or that “you have to have a Mexican partner on title to own property in Mexico”. This isn't the case anymore.

Don't believe any of it. Here is the truth:

At one time the Mexican Government prohibited foreign nationals from owning land in the restricted border zones (within 50 km. of the ocean, border etc.) because they were concerned about being taken over by foreigners. The Fideicomiso system was placed into the Mexico laws, and are now permanant. To own property in Mexico back then, no matter how much you loved the country, you had to make a dangerous purchase that was semi-legal and could be taken away at any time.

The solution to this is a Fideicomiso, or land trust. The governemnt has instituted this provision to allow foreigners to own real estate in the restricted areas of Mexic, such as the Playa Del Carmen beachfront. Not unlike a trust created in Canada or the USA where assets are lodged in the trust and held for the exclusive use of the beneficiary, your Mexican trust holds the property deed for the sole benefit of you, the beneficiary. You have the right to do anything with the property (within the law of the local jurisdiction of course). You can occupy, rent, sell, develop, lease, etc. at your discretion. One advantage of the trust is that when creating the trust document for a specific property, you lay out your beneficiaries upon you death, eliminating the need for a Mexican Will.

The down side to all this is you end up having to pay a slightly increased price to create the fideicomiso, although not much more than nationals do, and you also have an annual fee that you must pay to the bank who holds the trust. I look at this fee (tax on us) that Mexican’s do not have to pay, as a part of the price we pay to enjoy all that Playa Del Carmen has to offer. This ‘payment of yearly trust fee’ certainly makes for good discussion at margarita time.

Your real estate purchase does not include the requirement of being a Mexican resident. The bylaws pertaining to purchasing land are different than what we are used to, however the results are the same. The fideicomiso system is complete, if inconvenient, and it makes buying and selling property in Mexico safe and secure. When the time comes, make sure you use a good Notary that adheres to the proper procedures. Ask questions!

Ideally this article cleared up more questions than it raised. There is lots of information on trusts in different publications and on the internet, most of which is factual. This process should be easy and quick, other than a little bit of time taken to get documents notarized. This is the most important thing to realize, owning land in Playa Del Carmen is not difficult. Owning Real Estate In Mexico is within your reach!