Mexico's Laws, old and new, have addressed the situation of foreigners owning land. Section I of Article 27 of the Mexican Constitution grants the right to acquire land, solely to Mexican individuals and companies, and grants the State the discretionary authority to grant the same right to foreigners, subject to obtaining from the Ministry of Foreign Affairs, the corresponding permit and authorization. Furthermore, under said permit, foreigners are to consider themselves Mexican nationals with respect to the property acquired and are not to invoke the protection of their government with respect to the same.

The perimeter area of Mexico is what constitutes the "restricted zones". This is, 100 kilometers in width from the borders, and 50 kilometers from the coastal shores.

With the intent of promoting foreign investment in Mexico's Restricted zones" and with the purpose of securing the right of those foreign investors, a presidential resolution qualified the 'Fideicomiso' as the vehicle for foreigners to acquire real estate property rights.

The 'Fideicomiso' is a trust agreement established through a Mexican banking institution, which will act as trustee. The document itself is the sum of many other documents drawn by a Notario Publico (Public Notary), upon approval issued by the Ministry of Foreign Affairs of Mexico, authorizing the establishment of said Fideicomiso. Therefore, it is the Mexican bank who obtains title to the property and thus becomes the owner of record.

PARTIES TO A FIDEICOMISO The Fideicomso involves, at least, the following parties:

TERM OF THE FIDEICOMISO

As a result of the North American Free Trade Agreement (NAFTA), Mexico enacted a new Foreign Investment Law, effective December 28, 1993, which abolishes restrictions on foreign investment in most areas. Part of this eradication on restrictions is the term of the Fideicomiso to 50 years, previously being 30 years, and which can be renewable.

Once a foreigner has established a Fideicomiso, he or she may elect to sell the real estate property to another foreigner. Instead of creating a new Fideicomiso, Seller an Buyer may agree on assigning the rights already established, from the current Beneficiary to the prospective buyer.

Having a Fideicomiso is no protection itself and should not be confused as such. In the event an affectation occurs, the Fiduciary institution will appoint an attorney for the specific purpose of defending the property held in Fideicomiso Whatever the outcome, the cost is to be undertaken by the Beneficiary of the Fideicomiso.

FIDEICOMISO CLOSING

Within Mexico's "restricted dosing is a two step process. Firstly probably an agreement of a promise of Fideicomiso Agreement, which is a blueprint for the completion of the transaction. Secondly, and most importantly, is the establishment of a Fideicomiso deed duly executed before a Notario Publico (Public Notary), and most significantly, recorded at the Public Registry of Property

In addition to the purchase price, a real estate sales transaction involves numerous expenses for both parties. These fees, along with settling the debits and credits can be a complex task if it is not accurately outlined. For a detailed estimate, please call us.

A Fideicomiso Closing undertakes, among others, some of the following Steps:

The definition of an 'escrow' is the method of closing a real estate transaction in which an impartial third party is authorized to keep or safeguard certain item, money in most cases, while supervising the fulfillment of an instruction. Upon satisfaction of said instruction, the Escrow entity will deliver that certain item to the designated Beneficiary. Ask us about the various escrow services available in Mexico and the USA

No, it is not. These are two different items and are to be treated as such. The Escrow activity will hold money and deliver such, upon the fulfillment of an instruction. The Fideicomiso is the deed vesting beneficial rights to a certain real estate property

The cost of escrow is directly related to the sales price, and both, Buyer and Seller share it. ESCROW SERVICES offers the most competitive prices in the industry.

WHAT IS A TITLE EXAM AND WHY IS IT NECESSARY?

A Title Exam is a written summary or history of the recorded documents on a particular property. It is extremely important for a buyer to know the true condition of the Title before making that important investment decision.

A policy of title insurance is defined as: a contract by-which a Title Insurance Company agrees, subject to the terms of its policy, to indemnify (compensate or reimburse) the insured, being this the owner, the lender, mortgagee, interest holder, or beneficiary, against loss sustained as a result of defects in the title other than those exceptions listed in the policy. The Title Insurance Company agrees to defend, at its own expense, any lawsuit affecting the title, if such is based on a defect in the title, which the policy insures against.

When dealing with the owner of a- real estate property or a broker, the purchaser should require satisfactory proof that the seller is the true owner and has good title to the- property. The owner is generally- required to produce documentary proof called "evidence of title''. Best"evidence of title" will be the one attested under a title exam .

Among others, the Title Insurance Company covers the mistakes or omissions which could be made in the previous search of rights, and also those deriving from mistakes made in the Public Registry of Property (Registro Publico de la Propiedad).

Title Insurance can be taken out either by the seller or the buyer of the real estate property. The policy protects only the person who owns the policy.

The cost is directly related to the value of the property. The higher the value, the more coverage is needed. The Exam fee and the title premium is small compared with the total purchase price. THE PREMIUM IS PAID ONLY ONCE AND REMAINS IN FORCE FOR AS LONG AS THE PROPERTY IS OWNED BY THE INSURED.

After a Search Exam has been completed showing clear Tide, your policy can then be issued by a highly reputable US based Title Insurance Company.

Do not be confused with these items. A Fideicomiso is the vehicle by which foreigners can acquire real estate property rights within Mexico's "restricted zones". Having a Fideicomiso is no protection in itself and should not be confused as such. In the event an affectation occurs, the Fiduciary institution will appoint an attorney for the specific purpose of defending the property held in Fideicomiso, whatever the outcome, the cost is to be undertaken by the Beneficiary of the Fideicomiso.

A policy of title insurance, in the event of an affectation, will defend the title, in court if necessary, at the company's expense, bearing the cost of settling the claim, if it proves valid, in order to perfect your title and keep you in possession of the property, or paying for a covered cost.

The North American Free Trade Agreement (NAFTA) combines the resources of three nations which total over 360 million consumers and approximately $10 trillion in annual sales output. NAFTA today rivals the 12-nation European Economic Community, stimulates economic growth for each of the NAFTA nations, and has made each one more globally competitive.

The basic principles for Mexican, U.S., and Canadian investors are established under NAFTA'S Chapter 11. The most important rights are:

1. Non-discrimination (To be given national treatment; that is: to be treated like Mexicans in Mexico).

2. To be able to convert local currency into foreign currency and freely transfer such funds out of the country.

3. Property may not be expropriated without prompt compensation for fair market value.

4. No performance requirements (such as the requirement to purchase locally made components).

5. Investors may have disputes with a host government, regarding rights under Chapter 11, resolved by international arbitration..

In Mexico, an inherent helper to NAFTA, is the Foreign Investment Law (FIL), which became law on December 28, 1993, and has brought a genuine enthusiasm throughout North America concerning Mexican investment opportunities, particularly in real estate and development. The FIL has been a major step towards bringing Mexico's real estate laws in line with those other industrialized countries. It allows fee ownership of non-residential properties in the country's restricted areas, seacoasts, and borders, provided that such -property is (1) owned through a Mexican corporation; and (2) is for non residential purposes; It also extends the bank trust or fideicomiso term for residential properties from 30 to 50 years, with an automatic renewal of the term-for another 50 years.