FAQ’s About Cabo San Lucas Real Estate
Here are the FAQ’s you need to be informed about real estate in Cabo San Lucas, Mexico.
FAQ’s About Cabo San Lucas Real Estate
What is Fideicomiso?
“Fideicomiso”, or bank trust, is defined for real estate purposes as transaction entered into between a Mexican bank and foreign individual or firm investing in areas otherwise restricted to foreign investment, with the bank serving as trustee or legal owner with respect to a certain real property interest and the investor serving as the legal beneficiary of the trust. The bank holds title to the property in trust for the beneficiary who retains the exclusive right to the use and control of the property.
As trustee, the bank acts on behalf of the beneficiary in transactions involving the property held in trust. However, the beneficiary controls and makes investment decision regarding the property, including the decision to transfer, assign or otherwise dispose of this or her interest in the property.
The trust is essentially a contractual arrangement which, in most respects, is identical to the type of trust commonly used in the United States.
Trust are established for initial 50 year periods and can be renewed indefinitely.
How does the Fideicomiso work?
A Credit Institution holds the property, and grants the beneficiary the rights to occupy, modify, improve, lease or transfer property to a third party. The beneficiary also bares the financial responsibilities and liabilities of the property.
How can a Foreigner acquire property located in a Restricted zone?
A foreigner can acquire Property in the Restricted Zone through a Fideicomiso “Trust”
There are 3 parties involved in a Fideicomiso
- The Settlor (Fideicomitente): The seller of the Property
- The Trustee (Fiduciaria): Is a credit Institution that acts as a Purchaser of the Property
- The Beneficiary (Fideicomisario): A Foreigner that has the right to use and enjoy the property; being entitled to modify, improve, lease, or transfer the property to a third party. The Beneficiary is entitled to appoint Substitute Beneficiaries in case of demise.