Foreigners could own property in Mexico

Last Tuesday, the Chamber of Deputies approved the legislation to allow foreigners to own property in Mexico in coastal areas. Previously, they had to resort to "prestanombres" (tittle holders) or through other similar measures, still, the Senate has to approve the bill.

With the passing of this measure the Mexican Constitution, on the article 27, will change to: "In the case of land, it may be acquired exclusively for non-commercial purposes for which they must agree with the Ministry of Foreign Affairs in the terms described in this fraction."

Both lawmakers and real estate professionals believe that if the measure pass will help promote tourism. For them, adapting laws to the modern era will increase foreign investment, create new jobs and is encouraging that new buyers will be the ones whose name will be on the payment of the property and be liable to the corresponding duties and obligations.

Real Estate experts argue that previously potential buyers would chose not to make the purchase, because they cannot be the direct owners without using tittle holders or through a trust.

Herb Kinsey, Broker mlsbaja.com mentioned : " This is great news for Mexico and foreign investors and residents for several reasons. While the concept of fideicomisos or bank trusts is not too difficult a hurdle to explain and overcome with foreign buyers in Baja, it certainly adds an additional layer of complexity and cost to any purchase.The only ones who benefit from foreigners needing a bank trust are the attornies and closing services companies, as well as the banks who establish the trusts and then hold the property in fideicomiso for 50 years with annual fees in the range of $500 – $600.The banks may not be happy giving up their cash cows which can easily amount to well over $25,000 over the life of the trust, but this ammendment will save buyers thousand of dollars at time of purchase and a lot more during their entire period of ownership".

Manlio Fabio Beltrones was one of the main representatives that supported the legislation, which obtained 356 votes in favor and 119 against. Now the bill has been sent to the Senate for the next round of votes.