What is a fideicomiso?

Los Cabos real estate has flourished as one of the most desired overseas property investment and relocation hotspots for North American second home buyers. Did you know you do not have to be a Mexican citizen for owning real estate in San Jose del Cabo Mexico? The key is to have a bank trust fund or agreement called fideicomiso.

And then, you may wonder, what is a fideicomiso in real estate?

For many Los Cabos luxury real estate potential buyers, the need for a fideicomiso when shopping around the Los Cabos real estate listings may be confusing. The early step is for them to understand the Mexican real estate trust agreements, otherwise known as a fideicomiso. The procedure involved in acquiring within the real estate Los Cabos area is relatively straightforward, yet some initial knowledge we are about to share can go a long way in comprehending the regulations related to the purchasing process.

How does the fideicomiso for buying real estate in San Jose del Cabo Mexico work?

The majority of the most sought after properties of Los Cabos real estate for sale are located along the coastal regions, which used to be unavailable for foreign investors until the restricted zones law was updated in 1998 to attract buyers beyond national borders, hence opening the possibility of owning a beachfront property 30 miles away from any ocean (or 62 miles away from any borderline, which is not the case).

This adjustment requires the foreign investor to have a fideicomiso when purchasing property within the Los Cabos real estate area, enabling the equivalent of a title deed ownership, authorized by the Mexican government. The fideicomiso is set up by a ratified Mexican bank acting as a trustee, legally obligated to follow any instructions provided by the purchaser, who becomes the beneficiary. This trust has a validity of 50 years, which can be renewed upon request over and over again. The bank will usually charge an annual service fee of about $500 USD and, acting as the trustee, is officially committed to respecting the buyer’s full rights.

In summary, the fideicomiso allows you to invest in any Mexican property and own it as a beneficiary of the fund. While you have all the rights of Los Cabos real estate ownership, the authorized Mexican bank holds the legal title to it as your trustee, whose ultimate responsibility is representing the buyers’ interests.

What do you need to know when contracting a fideicomiso for buying real estate in Los Cabos?

For foreign investors, it is of utmost importance to know how exactly ownership rights of non-nationals are regulated. Nowadays, the country’s laws are clear enough, and the Mexican law provides you with this resource that allows you to own a property from the Los Cabos real estate market. However, there are some legal nuances buyers need to be cognizant of:

• Foreign investors are entitled to use the property until the validity period of the trust is expired. After that, it can be renewed.
• Without a fideicomiso, a US citizen is not able to attain full legal ownership of the property in a restricted zone.
• A fideicomiso allows you to leave the real estate as an inheritance to your alternate beneficiaries.
• Non-citizen investors must have a local attorney for step by step advisory, and conditions and terms of sale evaluation.
• All foreign investors must hire a Mexican notary for closing property deals legally through the fideicomiso. They are authorized by the Mexican government to certify the trust deed and other documents required for real estate transfers.
• Purchasers have the right to give your estate asset as a pledge and mortgage it by setting up the guaranty trust, only if the chosen Mexican bank offers the service.
• Should the trustee deceases, the fideicomiso will be assigned to substitute beneficiaries established by the purchaser.
• Prior to the execution of the fideicomiso, a preliminary agreement needs to be signed, including price, closing costs, closing date, escrow agent, earnest money deposit, house amenities, and upgrades, among others.
• A permit issued by the Federal Ministry of Foreign Affairs is required to allow any Mexican bank to execute the transaction.

Once the fideicomiso process is finished, the buyer is absolutely entitled to use and enjoy the real estate property and will be responsible for paying the Mexican bank annual fee, property tax, condominium maintenance fees (if applicable), water and energy bills, as well as any other service contracted.

​After the preliminary agreement has been signed, the closing agent (broker, attorney or real estate professional) will assist in the purchase process. The property title search, appraisals, finance approval, visual inspections, etc. are usually performed before the closing date.

Will the developer be involved in the process while scrutinizing Los Cabos real estate MLS?

Here at Encanto de la Laguna, we have the determination of making you feel contented while going to the process of choosing, visiting and buying your San Jose del Cabo luxurious real estate property.

We have a team of experienced, professional advisors willing to assist you in every step of the way, accompanying you throughout the whole route, in order to make everything as easy, reachable and accomplishable for you.

Do not hesitate to ask questions, look at the options we offer, examine details, visit the surroundings… everything you need to do and know for your entire satisfaction. The Los Cabos state-of-the-art lifestyle is skillfully eager and ready to welcome you.