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Mexican Trusts ( fidecomiso ) few questions and answers Provided by Scotiabank Inverlat

MEXICAN LEGISLATION 

The Mexican Constitution prohibits foreigners to make direct acquisition of land and waterways within a limit of 100 kilometers from any frontier and 50 kilometers from any coast; such regions are known as “Restricted Zones”.

 THE LAW TO PROMOTE MEXICAN INVESTMENT AND REGULAR FOREIGN INVESTMENTS.

 The purpose of this law is to promote Mexican and Foreign investment; this encourages fair and balance development in consolidating the country’s economic independence. It specifies in which way capital should participate and how, by establishing a trust, foreigners can purchase Real Estate earmarked for industrial and tourism activities.

 INVESTMENT IN REAL STATE.

For the benefit and security of foreigners wanting to invest in Real Estate located on the Mexican Border or coastal regions, the Government has decided to do away with various loopholes that had been used to bypass constitutional restrictions. The most common of these maneuvers, which were jeopardizing foreign investments, were the Mexican interposition in name only and factious contracts or other legal instruments. The government will take action against such methods but will grant full protection to foreigner who, through trust institution, can invest in Real Estate in restricted zones under the provisions of the aforementioned law.

 INTERVENTION OF TRUST INSTITUTIONS.

 Through the Ministry of Foreign affairs, the Federal Government, after hearing the recommendation of the interministerial consultative commission in charge of studying the economic and social implications of specific projects to which the law refers can authorize trust institutions to act as trustees in acquiring Real State whose beneficiaries are foreigners.

 INDUSTRIAL AND TOURISM DEVELOPMENT.

 The purpose of this arrangement is to accelerate industrial and tourism development in coastal and border zones in accordance with the Mexican Constitution.

The law provides that trust institutions can acquire land in such zones acting as trustees for foreign beneficiaries if it is used for industrial or tourism activities.

 HOW THE TRUST WORKS

 When a foreigner wishes to acquire the right of using and exploiting a property, he can instruct SCOTIABANK INVERLAT, S.A., to purchase it and retain it in trust for a term of fifty years, provided the Ministry of Foreign Affairs grants the necessary permit. 

OWNERSHIP OF THE PROPERTY AND RIGHTS OF BENEFICIARY

 Upon acquiring a property in Trust, the Bank becomes its new legal owner, subject to the clauses of the contract granting the beneficiary the rights to use, exploit, rent or sell the property or transfer said rights to a third party, the formalities involved are straightforward and simple.

 RENEWAL OF TRUST.

 At the end of the trusts term which, as mentioned before can be for a term of fifty years, the beneficiary has the following options:

 a).- If there is no change in the Mexican Government present policy, it is a possible that the trust agreement might be renewed  for an additional period of more than fifty years. In case the authorities fail to grant such an extension, the trust will have to be terminated up by selling the property.

b) No matter what alternative results, the beneficiary’s interests will be adequately protected. It should be pointed out that the beneficiary is, at any time during the term of the trust agreement or at its termination, can arrange for the sale of the property to any person legally qualified to purchase the Real State.

 STRUCTURE OF THE TRUST.

Parties involved in a Trust Contract. 

1.- THE TRUSTOR A Mexican Citizen or a Mexican corporation with no foreign participation; the original owner of the Real State, its the party who places the property in trust. 

2.- THE TRUSTEE. As indicated previously, the trustee is the Banking Institution which holds the trust over the land for the benefit of the beneficiary.

3.- THE BENEFICIARY. The first beneficiary is normally the promoter, who acquires beneficial rights in order to develop the property and sell its beneficial interest to other parties in turn. The final Beneficiary is a foreigner, since Mexican ordinarily will buy direct ownership. 

SOCTIABANK INVERLAT, S.A. TRUST DIVISION REQUIRES THE FOLLOWING DOCUMENTS FOR A TRUST AGREEMENT:

 1.- Title of the property (deed)

2.- Map of location of the property

3.- Receipts of the payment of real state Tax.

4.- Permit of Foreign Affairs. It is obtained by SCOTIABANK INVERLAT, S.A.  

Kindest Regards.

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Below you will find out what the Application for a Trust looks like.  Its NOT a for to fill out and send to us.  Its here for information purposes to give you an idea of what is required.

SCOTIABANK INVERLAT, S.A. INSTITUCION DE BANCA MULTIPLE

GRUPO FINANCIERO SCOTIABANK INVERLAT

DIVISION FIDUCIARIA 

I here by solicited of you to carry out the necessary paper work to carry out the constitution of our trust, same that has the following characteristic:

·       FIDEICOMITENTE (S) SELLER

·       FIDEICOMISARIO (S) BUYER

·       FIDEICOMISARIO SUSTITUTO (BENEFICIARY)

·       BIEN A FIDEICOMITIR (PROPERTY)

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Cost associated with creating a trust.  Assuming a value of 635,000 pesos.

 

Date:
Cliente:
Property Description:
Price of Property $ 635,000.00 pesos
* First year cost					$     5,520.00
Second year costs payed in the first year					$     5,520.00
**Permission from the SECRETARIA DE RELACIONES EXTERIORES					$   10,500.00
** Registration NACIONAL DE INVERSIONES EXTRANJERAS					$     3,100.00
SUBTOTAL					$ 24,640.00
I.V.A. tax					$     1,104.00
TOTAL			Mexican	Pesos	$ 25,744.00

Some Personal Advise:

Well if you need a Lawyer here is his info:

Alberto Alvelais +52 1 984 8030827 Email  Us

Spanish English and French spoken
Immigration document, real-estate transactions, corporations and much more.