20 legal faq’s when buying in the Riviera Maya

20 LEGAL FAQ’S WHEN BUYING IN THE RIVIERA MAYA
LEGAL AND ADMINISTRATIVE
SERVICES IN THE RIVIERA MAYA
www.pelaezasociados.com

INTRO
 When buying a real estate in the Riviera Maya, it is necessary for non-Mexican
buyers to work with the most qualified professionals to help ensure that they
minimize risks involved in buying in a foreign country, that will obey different
laws and ordinances, which they may not be familiar with. Like anywhere in
the world, Mexico has its own administrative processes for buying real estate.
This process is neither difficult nor simple, but a process where you need to be
sure that you are being thoroughly informed and advised.
 This FAQ’S may help you to know the basics:

CAN NON-MEXICANS BUY REAL ESTATE IN THE RIVIERA
MAYA?
 Yes, a person of any nationality is able to legally acquire, hold and/or
sell real estate rights in Mexico. In addition, buyers do not have to be
residents in Mexico to own property, hence there is no need to qualify
for resident status under immigration laws.

AS NON-MEXICAN, CAN I PURCHASE PROPERTY WITHIN THE
RESTRICTED ZONE UNDER A MEXICAN CORPORATION ENTITY?
 Yes, a non-Mexican must purchase within the restricted zone either with
a bank trust (real estate rights) or under a Mexican Corporation (direct
purchase). If you want to acquire a property for residence purposes,
you need to acquire the real estate rights with a bank trust. If you want
to acquire for purposes other than residential, you can acquire via
Mexican Corporation with certain requirements and procedures.

WHERE IS THE MEXICAN RESTRICTED ZONE?
 The Mexican Constitution defines the restricted zone as all land within
50 kilometers (30.5 miles) of Mexico's ocean coast line, or that land that
lies within 100 kilometers (61 miles) of any borders with other countries.

WHAT IS A BANK TRUST OR FIDEICOMISO?
 If you are familiar with bank trusts or family trusts in the United States
then you will find bank trusts in Mexico to be very similar.
 Bank trusts or Fideicomiso’s are not just for foreigners. Throughout
Mexico, many Nationals use this instrument as an estate planning tool
for the ease of passing property to individuals or corporations and
saving on Capital Gains taxes.

HOW DOES THE BANK TRUST FUNCTION?
 The property is transferred via a trust to a Mexican bank, which will work
as the Trustee (administrator of assets). The Trust Agreement requires
the issuance of a permit issued by the Mexican Ministry of Foreign
Affairs. The purchaser is appointed as the Trust Beneficiary, which will
use and enjoy the rights that derive from the entrusted asset. The Trust
Title must be signed by all parties (Trustor-Seller, Trustee-Bank, Trust
Beneficiary-Purchaser), and executed before a notary public, who will
send it to the Public Registry for its proper record and filing.

WHO IS INVOLVED IN A BANK TRUST?
 Three parties: The seller of the property is the Trustor (fideicomitente),
the bank is the Trustee (Fiduciario), and the buyer is the Beneficiary
(Fideicomisario).

IS THE BANK TRUST RENEWABLE?
 Yes. According to the Foreign Investment Law, trusts can be renewable
for an indefinite number of successive 50-year periods.

WHAT ARE MY RIGHTS AS A BUYER?
 The Trust is a legal substitute for fee simple ownership. As Beneficiary,
you have the right to rent or sell your property without restriction. You
may also transfer your rights to a third party or pass it on to named
heirs.

THE BANKTRUST ISN’T JUST A LEASE?
 No, a bank trust is not a lease and confers on the trust-holder the same
rights as ownership in the United States or Canada.
 The trust is the only vehicle that allows you to own the trust rights by
which -in practical terms- allows you to freely use, enjoy, rent, inherit,
and otherwise dispose of the property as you may want to. The lease
only provides you with a certain period of time to use and you are not
the owner of the rights to the property.

ISTHETRUST AN ASSET OFTHE BANK?
 No, the deed to real estate property is held by the bank for you. It is not
considered a Bank’s asset, thus, the property rights are yours.

CAN I WILL MY REAL ESTATE IN THE RIVIERA MAYA TO MY
FAMILY OR SOMEONE ELSE?
 Yes. The Fideicomiso or bank trust gives you all the rights of free simple
ownership, including leaving the property to your family or friends.

IF LATER I DECIDE TO SELL MY PROPERTY, CAN ANYONE BUY IT?
 Yes. If the buyer is also a foreigner, you simply assign beneficial rights,
through a Trust Assignment. If the new buyer is a Mexican, you can
instruct the bank to assign the title in favor of the buyer.

CAN I ASSUME SOMEONE ELSE'S TRUST RIGHTS AND/OR
OBLIGATIONS WHEN I BUY A PROPERTY?
 Yes. The Buyer may elect to be the assignee of the rights of the seller's
existing trust. Typically, this is done if there is a substantial number of
years left on the sellers trust. This process is called an Assignment of
Rights (Cesión de Derechos).

CAN THE MEXICAN GOVERNMENT SEIZE MY LAND?
 Foreigners often worry about their land being expropriated by the
Mexican government. Under the North American Free Trade
Agreement (NAFTA), Mexico may not directly, or indirectly, expropriate
property except for a public purpose. This is the same as "Eminent
Domain" in the U.S., where it is necessary to expropriate land, swift and
fair market compensation together must be paid.

CAN I HIRE AN ATTORNEY FROM MY COUNTRY OR I NEED TO
HIRE ONE FROM MEXICO?
 We always recommend all investors the guidance of Mexican legal
counsel when contemplating any real estate investment. Mexican laws
and practices regarding real estate differ from those in the United
States or Canada.

WHAT IS THE ROLE OF A NOTARIO?
 The Notario Publico (Notary Public) has an important role in the purchase of
real estate, much greater than in most other countries. The Notario Publico is
a government appointed lawyer who processes and certifies all real estate
and corporate transactions.
 The Notario is ultimately responsible to the government for the collection of all
taxes involved. It is extremely important to remember that a Notario cannot
represent you in your real estate transaction (unbiased party); he may offer
advice, but he does not, and cannot, represent you.

WHAT IS AN EJIDO LAND?
 Ejido is common land owned by a community. Buying with this legal
figure is very delicate; strongly seek guidance from an attorney.

DO I ALWAYS NEED LEGAL COUNSEL?
 It is highly recommended and many people opt to get legal counsel
because many of the legal contracts and paperwork involved in
buying a home in Mexico are complex and can be confusing to the
public, many people prefer to work with an attorney. An attorney can
review contracts, review clear title, conduct your due diligence and
make you aware of special considerations and potential problems,
and can also coordinate and accompany you to the closing (or even
execute a Power of Attorney on your behalf).

DO I NEED A POWER OF ATTORNEY?
 If you are a foreigner and would like to conduct a transaction, such as
an Assignment of Trust Rights or a direct sale and would like to avoid
the hassle of coming to the country; special attorneys that are
knowledgeable of International Law can help you draft a Power of
Attorney that complies with International Treaties (e.g. 5 de October
1961- Haye Treaty). That way either by getting a POA apostilled (US,
FRA, ITA) or legalized (Canada), you can conduct swift and expedite
business.

BY LAST
 The Riviera Maya is awash with real estate agents, brokers, builders,
developers, promoters, advertising posters, flyers, reviews, magazines,
etc. All trying to sell or tell you that their real estate is the best. As in any
important purchase, it is essential that you feel comfortable with the
people you are working with and that you feel confident that they are
working in your best interest; hence, do not feel rushed into making a
decision in which you are not comfortable.

RENDERING SENSIBLE ADVISE
 In Pelaez & Asociados we have the experience and the competence
to advice you through the entire process of acquiring real estate in the
Riviera Maya.
 Contact us now if you require assistance, our legal team can provide:
 A personal briefing to explain the process and answer questions
 Organization of due diligence performed on the property
 Verification of zoning and construction permits
 Organization of services for closing
 Access to our legal resources
 Qualified, experienced and trustworthy staff
 Follow up- hand on hand- at the notary’s offices at closing
 An English translation of the deed of title (Fideicomiso) if required

BONUS LEGAL TIPS
How can I confirm who is the owner and additional information about a property I
want to acquired?
 You have to go to the Public Registry of Property and Commerce, corresponding
to the location of the property and request a process called free encumbrance
certificate on the property.
If I want to know if the property has debts of property tax, what should I do?
 Requiring an updated balance at the City Hall, for which you will be
required with the Cadastral Code number (government asset identification
number).

CONTACT
www.pelaezasociados.com +52 (984) 106 4263
+52 (556) 415 1932
Edificio Plaza Paraíso Caribe Of. C-37
Av. 10 sur, esq. calle 5 sur, Playa del
Carmen, Q Roo.
jcpg@pelaezasociados.com
otero@pelaezasociados.com
Facebook.com/attorneyspelaez
@attorneyspelaez

20 legal faq’s when buying in the Riviera Maya

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20 legal faq’s when buying in the Riviera Maya