Investment in the Riviera Maya as a foreigner.

A recurring question among foreign investors in Mexico is whether it is possible to own a property on the beach. This is because there is a rumor that foreigners are prohibited by law from owning property on the beach. Worse still, if you want to buy land, a house, or a condo, you must do so through a shady or illegal transaction.

For this reason, today we will dedicate this article to dispelling all doubts about the acquisition of properties on the beach and borders that are considered restricted areas.

Background

Many years ago, when the Mexican Constitution was drafted, there were uncertain times regarding the position of our neighbors as well as the great world powers who had colonies in territories near Mexico. For this reason, and with the intention of protecting the country from possible invasions, an article (27) was drafted in the Political Constitution of the United Mexican States that prevents foreigners from owning property in what is known as the restricted zone. This restricted zone includes 50 kilometers from the coast and 100 kilometers from the borders where the possession of real estate by foreigners is not allowed.

However, in 1993 the Foreign Investment Law was published and with it, foreigners were allowed to own real estate in the restricted zone. Here we present the two ways to do it.

ARTICLE 27 OF THE MEXICAN CONSTITUTION (Excerpt)

… In a strip of one hundred kilometers along the borders and fifty on the beaches, for no reason may foreigners acquire direct control over land and water.

The restricted zone, according to article 27 of the Mexican Constitution, is all the land located 100 kilometers from any national border and 50 kilometers from any ocean. Article 27 of the Constitution establishes that no foreigner will be allowed to acquire direct title to the land within the restricted zone. However, Mexico’s Foreign Investment Law allows foreigners to acquire indirect title to land in the restricted zone by one of two methods; through a Mexican corporation or through a bank trust.

THE TWO MOST COMMON TYPES OF CORPORATIONS ARE THE S.A. DE CV AND S. DE R.L. DE C.V.

THROUGH CORPORATIONS

As of 1995, foreigners can own, operate and manage Mexican companies. Some restrictions remain on the activities in which a Mexican company can participate when foreigners are involved, such as mining, airports, and telecommunications; However, the general rule is 100% participation. There are no investment restrictions on foreign-owned Mexican corporations intended to purchase and develop a property. Mexican corporations require a minimum of two associates or shareholders. Both shareholders can be foreigners, and it is not necessary to have a Mexican partner.

There are various types of Mexican corporations, however, the two most common are the S.A. de C.V. and the S. de R.L. de C.V. The S.A. de C.V. is a stock corporation and S. de R.L. de C.V. resembles a limited liability company. It is important to have the advice of a lawyer and an accountant on both sides of the border to understand the different implications that each type of company has in terms of legal and fiscal aspects.

USING A TRUST

ONE OF THE MOST COMMON FORMS OF INVESTMENT

A trust (trust) is a three-part contract whereby the seller (the settlor) irrevocably transfers to a real estate bank (fiduciary / trustee) so that a third party (trustee/beneficiary) can use and enjoy the such property.

The transfer of real estate from the seller to the bank is a final and irrevocable transfer of title. Under Mexican law, only an authorized Mexican banking institution can be a trustee. The bank acquires title to the real property and is obligated to allow the beneficiary to use and enjoy the property as he sees fit (as long as the way in which he does so is legal).

Other details when Investing in the Riviera Maya as a Foreigner

If the beneficiaries wish to rent the property to third parties, they can do so by obtaining the necessary authorizations. Beneficiaries also have the right to sell

the property whenever they wish and to receive the benefits produced by said sale.

The bank cannot encumber or sell the property without the express written consent of the beneficiary.

Mexican law requires that all real estate transactions be carried out by a Notary Public. The Notary is obliged to register in his books the deed

transfer of title, have signed it by the parties involved, and write it down in the Public Registry of Property that corresponds to the location of the property. Once the deed of transfer of title is signed in the presence of the Notary Public and registered with the Public Registry of Property, the real estate transaction has complied with the requirements of Mexican law.

GUARANTEE RIGHTS

There is no escrow institution in Mexico. Instead, from the moment the parties agree on a price and make an initial payment until the deed of transfer of title is signed before the Notary, a preliminary agreement is usually signed to guarantee the rights of the parties involved. This agreement should only be signed after having confirmed with the Public Registry of Property that the property involved in the transaction is free of charges (Debts with individuals or government). Once the preliminary agreement is signed, all necessary paperwork and authorizations are obtained and sent to an appropriate notary to be signed and recorded.

DEED AND TITLE

The deed of transfer of title that is registered in the books of the Notary, as well as in the Public Registry of Property, will contain the entire trust agreement and is the document that will prove that you have rights to certain real estate property.

Once the deed has been registered with the Public Registry of Property, the first deed of title goes to the bank, and the second deed of title is delivered to the buyer/beneficiary.

TRUST FOR 50 YEARS

If you need to verify with authorities outside of Mexico that you have invested in a foreign country, an “apostilled” or “legalized” copy of your trust deed will suffice.

The Foreign Investment Law allows trusts for up to 50 years, and such permits can be renewed. Therefore, Investing in the Riviera Maya as a Foreigner is something safe and capable of providing all the legal and legal certainty necessary to protect your assets.

In addition to the above, there are a series of conditions that must be met to carry out this type of real estate transaction, so we always recommend being advised by a lawyer specialized in the subject so that your investment is as safe as possible from the beginning.

Yes, it is possible to own property in Mexico as a foreigner.

The procedure is somewhat complex because it requires extensive knowledge of both legal and tax concepts.

At Select Riviera Maya Real Estate we can advise you from the beginning until you receive the keys to your property.