BajaNomad

Good News for El Dorado Ranch

CaboRon - 1-21-2009 at 03:15 PM

Wed Jan 21, 2009 10:08 am (PST)
5,000 Baja foreigners - Benefit from a historic lease to purchase
windfall
San Felipe, Baja California
Five thousand Rancho El Dorado lessees received an early Christmas
gift from Pat Butler in San Felipe, Baja California's largest
developer. The foreign retiree/vacationers would have lost their
leases, and the homes thereon, in the year 2020 if not for Mr.
Butler's ethics and generosity. A large percentage of these
beautifully built straw bale homes are valued in six figures.

Mr. Butler bought the development rights and leases for El Dorado
Ranch (San Felipe) from the National Pen Company. They had an
agreement with the largest farming cooperative (sp. Ejido) in Baja
California; it is also the nation's second largest ejido. This
acquisition has made U.S. – Mexico investment history. Closing a deal
with 214 ejido families to purchase an enormous property is a first
for a U.S. developer. The land now belongs, and is duly registered,
to Butler's Mexican corporation, Ranchos Epoca de Oro.

El Dorado Ranch can now sell these lots and the remaining property to
foreigners in the form of a living trust or mexicans. The Mexican
constitution does not permit foreigners to own coastal land "fee
simple". However, the bank trust provides all the benefits of
ownership in exchange for a fiduciary fee of $350-500 per year. El
Dorado properties are also insured by Stewart Title.

We received numerous calls and e mails from client lessees at Rancho
El Dorado. Worried and confused by the change in their baja property
investment status. The following were the concerns expressed.

I was promised a lease renewal at the end of the lease period at no
cost,. Now they want to charge me.
They want me to pay them (El Dorado) the property taxes. Why can't I
pay taxes directly to the government?
El Dorado is going to control the master bank trust, the paying of
taxes, security-maintenance and services of the subdivision. What is
to prevent them from charging me excessively for these services in
the future?...
Why are we changing to a new 50 year lease? Why can't I continue with
the 20 year lease at no annual charge?. Confusion regarding the
trust – It is not a lease: 50 years and renewable in perpetuity.
Property transfers to your heirs at the time of death.
El Dorado is rushing me to judgment. If I do not pay the $3,750 in
November, my costs to establish a trust will rise to six thousand
dollars.

Pat Butler has always been accessible to MEXICO MATTERS..and our
inquiries were immediately responded to with copies of contracts for
purchase of a bank trust.

To say we were more than happy to assure investors would be a gross
understatement. Not only is the property legally ready for transfer
of title, the costs to do so are half the average costs for
establishing a bank trust. For $3,700 investors are converting a
lease, terminating in seventeen years, to a secure property trust. El
Dorado Ranch had the legal right to let the leases expire. In
seventeen years, El Dorado would be the lucky new owners of thousands
of luxury homes paid for by the lessees.

The cost increase for not signing the property transfer documents in
November is understandable to our consulting group. Mobilizing and
coordinating expensive legal talent for the transfer of title is a
costly process. Transportation costs, hourly legal fees for
fiduciaries and notarios plus administrative staff time doubles with
each re-scheduling of property transfer signing dates. I

In answer to the concern about El Dorado controlling a master trust,
the reason is simple and in the best interests of the investors. If
all 5000 were to contract for individual trusts their costs would
exceed six thousand dollars per property: engineering fees, legal
fees, bank fees and foreign investment registries. As Mr. Butler
expressed to us "There are not enough notarios (attorneys who are
keepers of the public record) in Mexicali to process 5000 trusts in a
reasonable time frame. It would take years to complete the
transfers".

El Dorado will not deny an individual property owner from securing
their own individual trust, they have that option. Aside from the
additional time, trouble and costs there are no benefits to an
individual trust. Under the master trust, a trust beneficiary may
sell the property to another foreigner and a new trust is established
for the buyer. The new trust will no longer be part of the existing
master trust. If the buyer is a Mexican national the property will be
registered directly to the Mexicano and the property trust of the
seller dissolved. .

The concern that El; Dorado Ranch will raise homeowner fees and dues
excessively is a risk homeowners have in any "gated community. The
evidence indicates that Rancho El Dorado has not charged excessively
to date; -why would that change? As for property taxes, El Dorado
will demonstrate to property owners that these taxes have in fact
been paid to the government. Property taxes are very low in Mexico
and should not be a major burden to investors.

Frankly, we as foreign investment consultants, are quite amazed that
Mr. Butler is being so generous in "rolling over" these leases
without realizing some financial gain for El Dorado. The $3,700 costs
are just that. Costs to pay the bank, the notario and government
fees. The conversion to lease usually involves a significant payment
to the owner lessor. In a similar situation, in Cabo San Lucas, lease
to purchase is costing investors fifty to one hundred thousand
dollars for the privilege.

We want to thank and congratulate Mr. Butler and El Dorado Ranch.
They deserve the success they have achieved. As one, very happy, El
Dorado resident explained it "Mr. Butler has made a heavy investment
in infrastructure and services. It is a much more comfortable place
to live as a result. Also important, resales around my home are proof
that my property has doubled in value."

Most media reports about foreigners and Mexican real estate are
horror stories. Foreign real estate investment in Mexico is still
suffering from the fraud of Punta Banda where 200 families were
evicted from their luxury beach homes in Ensenada. El Dorado is such
a positive story that it will likely receive little or no media
attention North of the border

BajaGringo - 1-21-2009 at 03:48 PM

Great post Ron. Thanks for sharing it...

What an amazing guy!

Dave - 1-22-2009 at 03:51 AM

Quote:
Originally posted by CaboRon
Frankly, we as foreign investment consultants, are quite amazed that
Mr. Butler is being so generous in "rolling over" these leases
without realizing some financial gain for El Dorado. The $3,700 costs
are just that. Costs to pay the bank, the notario and government
fees. The conversion to lease usually involves a significant payment
to the owner lessor. In a similar situation, in Cabo San Lucas, lease
to purchase is costing investors fifty to one hundred thousand
dollars for the privilege.


All El Dorado pigeons lessees are sooo lucky. :rolleyes:

meme - 1-22-2009 at 03:07 PM

I must be missing some point here? This is VERY OLD NEWS! THIS ALL TOOK PLACE OVER TWO YEARS AGO! Why is it just here now?