What is the Trust?

We explain it to you
in a simple way
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01.

We share the following Simple Guide to Trusts for Real Estate in Mexico, if you are a foreigner about to buy a property in Mexico

The trust is a legal contract in which a person, known as the trustor, transfers ownership of certain assets or rights to another person or institution, called the trustee. The trustee manages these assets or rights for a specific purpose, for the benefit of a third party, known as the trustee.

02.

What is the Trust for?

The trust is designed to help people protect and care for their wealth and maximize the legacy left to future generations. The main objective of a trust is to guarantee, under a legal framework, that the stipulated assets are transferred to the chosen beneficiary. 

 

Trusts are excellent tools for many personal purposes as well, such as ensuring your children's education, covering debt payments, and providing financial security to those you love most.

03.

Who should process the trust?

Any natural person and all legal entities with their own assets and personality can be trustees, since they only need to have the capacity to receive the benefit of the trust. 

 

The trustors can only be those with the capacity to transmit the assets or rights that are the object of the trust.

04.

Where is the trust made?

The trust is made through a contract that must be formalized before a notary or public broker for it to be legally valid. 

 

Furthermore, when it comes to real estate, the trust must be registered in the public property registry.

05.

Who should process the trust?

The costs associated with creating a trust can vary. Some of the costs that can be expected include an origination fee, which is paid to the bank at the time the trust is established, an administration fee for managing and maintaining the trust over time, and a fee for additional services, such as audits and legal reviews

Why, if I am a Foreigner, should I process a Trust when purchasing a Property?

It is important to understand why a trust is required. Here are some key reasons:

 

  • Legal Restrictions: The Mexican Constitution prohibits foreigners from directly acquiring properties within the coastal strip and in an area of 100 kilometers from the land borders. The trust is a legal solution that allows foreigners to own real estate in these restricted areas.

 

  • Bank Trust: To purchase beach property, you must establish a bank trust. In this process, the bank acts as a trustee and you as a trustee. The bank holds the property in your name and administers the trust according to your instructions.

 

  • Legal security: The trust ensures that your property rights are protected. The bank is responsible for verifying the legality of the property, registering it in the public registry and ensuring that there are no liens or legal problems.

 

  • Facilitates Buying and Selling: By using a trust, you can buy and sell property more easily. You do not need to change the deed every time you sell or buy, since only the beneficiaries of the trust are modified.

 

  • Inheritance and Succession: If you are a foreigner and want to leave the property to your heirs, the trust facilitates the transfer of property without legal complications.

Escrow is a legal and safe tool that allows you to enjoy beach property in Mexico without violating legal restrictions. If you need more guidance, at Howes Realty we are here to help.
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