Have you toyed with the idea of purchasing a home in Mexico? If so, you're not alone. Over 70,000 united States citizens now live between the border and Ensenada. Not all are here full time. Many have second homes they occupy on weekends and during the summer months. Others have moved to Mexico permanently to retire. Young people, trying to escape the high prices of homes in California that doom them to remain renters, are now purchasing in Mexico with the intent to commute to jobs in San Diego with the ease of the Sentri Pass. The Rosarito area has become a Mecca to those wishing to start anew.

Current changes in the Mexican law have made easier and guarantee safe investing in real estate for non-Mexican foreigners. Various U.S. corporations currently offer financial services like bank trust, loans and title insurance for real estate purchases in Mexico. The Baja California state government reported that in 2005 foreign investments in the region reached $17 billion dollars and it is estimated to reach $20 billion by 2006.

Thanks to low real estate prices, low property taxes, low cost health services, and a high standard of services and it's proximity to the U.S., many retirees, pensioners and senior citizens have chosen to invest in the Baja California coast and maintain a high living standard, even higher that in some U.S. regions. Condo and housing developments in the region are being built with the same high standards used in California, including all basic services and some other like cell phone, internet access, satellite t. v., private security, among many.

According to Mexican law, a foreign individual can’t hold fee simple or direct title in residential areas of most the Baja peninsula since there’s a restricted zone 100 kilometers deep from any Mexican border and 50 kilometers from any coastline. The peninsula is so long and thin, it generally applies to all of Baja. As a result , the bank trust or “Fideicomiso” (pronounced “Fee-deh-com-ee-so”) has been established under the guidelines of the Mexican government to allow foreigners to acquire ownership rights to real estate property within these restricted zones.

What exactly is a Fideicomiso? It is a bank trust. The Mexican bank becomes the Trustee or legal titleholder when the Settler or seller irrevocably transfers a house, condominium, or property to the benefit of the foreigner, or trust Beneficiary, the buyer. The beneficiary can utilize and enjoy the property as he wishes, having the rights of ownership but not the “direct dominion” which is held by the bank. A beneficiary can direct the bank to lease, mortgage or sell the property. He can pass the property to his heirs who become the Beneficiary Substitutes as they move into the position upon the death of the primary beneficiary.

It should be made clear that the bank trust is never considered an asset of the bank. The bank or trustee must fulfill its duty to the beneficiary by assuming full technical, legal and administrative supervision of the trust in order to protect the interest of the beneficiary or buyer. It can’t make decisions concerning the property without written directions of the beneficiary. A bank trust provides to the beneficiary absolute control over a property. A worst case question to be answered is, “What happens if the bank fails?” The answer is simple. The bank trust is transferred to a different authorized bank.

An individual bank trust offers the purchaser security with its regulation by the government. The paperwork is thick and official. The bank has to pass through extreme security in order to obtain official authorization from the government. It can’t make mistakes. The property has to be legally owned by the seller through an Escritura Publica or bank trust and can’t have any liens against it. Both the buyer and seller have to have photo identification and proper paperwork. The transaction needs to be witnessed and registered locally as well as in Mexico City. As a result, obtaining and individual bank trust is the most secure way in which an individual foreigner may personally won the rights to residential property in Baja Calif, Mexico.

For assistance, feel free to contact our real estate agents or download our Bank Trust pdf file.