BajaNomad - MEXICO LEGSILATORS VOTING ON SALE OF COASTAL PROPERTY TO FOREIGNERS

MEXICO LEGSILATORS VOTING ON SALE OF COASTAL PROPERTY TO FOREIGNERS

Udo - 5-17-2009 at 08:47 AM

MEXICO LIVING
Selling Mexico's Coast to Foreigners
by Christa Thomas

On March 5, 2009, Senator Mario López Valdez introduced legislation
that would remove restrictions on foreigners from directly acquiring
property on Mexico's coasts.

The bill seeks to modify Article 27 of Mexico's Constitution, to grant
foreigners the ability to acquire land near Mexican beaches without
intermediaries.

Article 27 was put in place for reasons of national security, in
response to numerous historic foreign invasions. Currently, foreigners
who wish to acquire lands situated within 50 kilometers (31 miles) of
Mexico's coast must do so indirectly through trusts administered by a
Mexican bank, or, in limited circumstances, through a Mexican
corporation.

The Constitutional prohibition does not impede foreigners from owning
land in the coastal zone. It only imposes procedures that make the
purchase more costly and complicated, and the investment more uncertain.
This can reduce the incentive for foreigners to invest in Mexico.

Senator Valdez, a member of the Partido Revolucionario Institucional
(PRI), argues that current international economic and political
conditions favor removing ownership restrictions. In particular,
international investors are looking for cost-effective alternatives to
the high cost of housing in their local markets.

In Mexico, tourism is an important economic activity that contributes 8
percent to the nation's GDP, and employs 6 percent of the population. In
2007 there were over 4.3 million vacation properties (including
timeshare units) within the coastal regions, with nearly 70 percent of
those belonging to foreigners.

Senator Valdez contends that offering simplified coastal land ownership
to non-Mexicans will further boost Mexico's economic growth.

This legislation to amend the Constitution is now with a Committee of
the Senate for analysis and official opinion.

Source: www.pan.senado.gob.mx <http://www.pan.senado.gob.mx/>

Posted by George Puckett, author of Baja Diaries-Chronicles of a
Paradises Lost <http://www.bajadiaries.com> and Founder of Mexico-My
Space <http://www.mexico-myspace.com>

COULD MAKE IT THIS TIME AROUND.

Bajaboy - 5-17-2009 at 08:58 AM

I'm not going to get too excited but this would be a good thing for Mexico.

Paulclark - 5-17-2009 at 09:24 AM

This would be great for development and make buyers feel more secure -- and save the non-Mexican buyer $1,900 USD

vandenberg - 5-17-2009 at 09:33 AM

There must be some kind of banking industry lobbying that would be heavily upposed to doing away with the "Golden Goose", the fideicomiso. Where else can you sit on a sh*tload of nothing, while collecting millions of dollars ?

oldlady - 5-17-2009 at 09:35 AM

IRS

Osprey - 5-17-2009 at 09:56 AM

Van, what do you know about the banks we don't know? Maybe I've been left out of the loop. I've read lots of accounts about 90% of banks down here no longer handle Fideicomisos -- they must have thought they were not enough income for the handlings cost. No claims I know about. Not much income to the bank, not much work to handle. No golden geese around here. Was I misinformed or? Maybe some others can chime in and set me straight. Thanks.

vandenberg - 5-17-2009 at 10:11 AM

Quote:

Originally posted by Osprey
Van, what do you know about the banks we don't know? Maybe I've been left out of the loop. I've read lots of accounts about 90% of banks down here no longer handle Fideicomisos -- they must have thought they were not enough income for the handlings cost. No claims I know about. Not much income to the bank, not much work to handle. No golden geese around here. Was I misinformed or? Maybe some others can chime in and set me straight. Thanks.

My thought:
There is but a one time effort required initiating/doing the paperwork, which the trustee pays for. After that the trust likely goes on microfilm, dissappears into some bankvault, never to be seen again, and for years after, the bank collects their $500.00 yearly fee, while doing absolutely nothing but pay their help minimal wage. Sounds like a "Golden Goose" to me.

comitan - 5-17-2009 at 10:14 AM

Its a Golden Goose from my pint of view. :yes:

Osprey - 5-17-2009 at 10:31 AM

Anybody else? It's a gold mine. The all gave it up. Why?

bajadock - 5-17-2009 at 10:48 AM

Any reliable statistics on number of fideicomisos contracted annually? If that stat were available, I'm guessing the number would be pegged toward 0 for 2009.

But, the lack of traffic is enjoyable.

longlegsinlapaz - 5-17-2009 at 10:52 AM

Quote:

Originally posted by vandenberg
There must be some kind of banking industry lobbying that would be heavily upposed to doing away with the "Golden Goose", the fideicomiso. Where else can you sit on a sh*tload of nothing, while collecting millions of dollars ?

I agree totally! There would be an immediate drop in nationwide bank revenue of $350-$450 USD a year for each & every fideicomiso currently in place. It'd also reduce Hacienda's tax revenue by the 10% they curently receive. IF IT WERE TO HAPPEN, I'm betting they'd come up with a fideicomiso cancellation fee & that'd be the last revenue they'd be raking in. I can't see much likelihood of that happening. If you think the banks are going to willingly give up what I also consider to be "free money" for the sake of the overall Mexican economy, by increasing tourist dollars in other (non-banking) arenas, I can't envision it happening during our lifetimes! Basically, we're being charged $350-$450 a year just for them to post the annual payment!

Osprey, banks still hold the fideicomiso in trust, but several (not all) banks have made a lot of our lives tougher by moving the annual payment process away from our local banks to impossible to communicate with banks in mainland Mexico! :no:

Wiley, I'm sorry that you only have a lousy little "pint" of view! :lol:

Just goes to show ya that "o's" can have value! :rolleyes:

BigWooo - 5-17-2009 at 10:59 AM

I guess I'd feel much more secure owning our properties fee simple...but can you envision the nightmare process that will be invented to transfer ownership from a fideicomiso to a fee simple title...that I'm not looking forward to.

Mexitron - 5-17-2009 at 11:33 AM

Maybe the banks figure they'll start making money lending for real estate down there, as the prices will likely go up with the lack of restrictions...?

Woooosh - 5-17-2009 at 11:43 AM

What decade are they shooting for? Mexico alwasy brings these types of issues up just before the political fireworks season. I never figured out how the restricted property ownership meshed with NAFTA anyhow.

Bajahowodd - 5-17-2009 at 11:49 AM

It is odd. In the US, there is sort of an opposite practice. Virtually all banks loan funds for mortgages, but then, they sell the paper, thus relinquishing the long-term income for a smaller, if quick, profit.

susanna - 5-17-2009 at 12:26 PM

We purchased a Lot across Puerto Nuevo in 2005 and only have a contract thru Grupo Lagza since the sellers were mexicans and paid it off when we purchased
it from them, but we never got as far as getting a Fedicomiso.What will happen
then if we decide on selling? I have been paying the impuestos since then.

It's an illegal subdivision so...

Dave - 5-17-2009 at 01:00 PM

Quote:

Originally posted by susanna
We purchased a Lot across Puerto Nuevo in 2005 and only have a contract thru Grupo Lagza since the sellers were mexicans and paid it off when we purchased
it from them, but we never got as far as getting a Fedicomiso.What will happen
then if we decide on selling? I have been paying the impuestos since then.

A fideocomiso is not an option. Best you could do is to sell it to a national.

CaboRon - 5-17-2009 at 01:07 PM

Quote:

Originally posted by Dave

Quote:

A fideocomiso is not an option. Best you could do is to sell it to a national.

I agree, you do not own the property .....

rts551 - 5-17-2009 at 01:09 PM

Quote:

Originally posted by Woooosh
What decade are they shooting for? Mexico alwasy brings these types of issues up just before the political fireworks season. I never figured out how the restricted property ownership meshed with NAFTA anyhow.

What the hay does NAFTA have to do with this issue?

susanna - 5-17-2009 at 02:09 PM

Any National out there interested in buying an Oceanview lot?
Please contact me.Or if anyone out there knows someone also.

toneart - 5-17-2009 at 02:41 PM

Quote:

Originally posted by Paulclark
This would be great for development and make buyers feel more secure -- and save the non-Mexican buyer $1,900 USD

The Fideocomiso fee is around $6,000 U.S. to set up. Plus the annual maintenance fee.

Wow! Conversion from Fido to Fee Simple could get very complicated. Costs could also be high. It will be interesting to see if title searches will substantiate the alleged title guarantees that the banks and notorios have attested to in the Fideocomisos. Do you suppose the Mexican government would stand behind us? I see a can of worms grubbing to the surface. :?:

DENNIS - 5-17-2009 at 03:30 PM

Quote:

Originally posted by toneart
I see a can of worms grubbing to the surface. :?:

For sure, Tony. The conversion could turn into a yearly event.

Bajahowodd - 5-17-2009 at 03:54 PM

I believe that the idea behind the legislation is to encourage foreign investment. It would be counter-productive if it became a situation where thousands of folks who purchased under the "old" system were excluded from the new rules.

toneart - 5-17-2009 at 07:37 PM

Quote:

Originally posted by Bajahowodd
I believe that the idea behind the legislation is to encourage foreign investment. It would be counter-productive if it became a situation where thousands of folks who purchased under the "old" system were excluded from the new rules.

Hopefully you are correct. But then you are using logic.

oladulce - 5-17-2009 at 10:10 PM

I've had 2 experiences trying to terminate a fide with a bank. One, when we sold to a Mexicana who didn't need to assume our fide, and the other time when we bought a property and chose to switch to our own bank rather than use the bank of the seller's fide.

Both transactions took over 2 years to complete because of the lack of cooperation from the banks giving up the fides. Months and months of no responses and no follow through by the banks.
You could feel them hanging on like tug-o-war, not wanting to let go of the cash cow.

In both cases, we ultimately offered an "incentive" to the bank reps who were responsible for signing the final paperwork (at the recommendation of the frustrated notarios ) so we'd finally get some action.

In one instance we paid for the flight of the BancoCremi fiduciary manager to come from the Mainland to sign, along with his time and entertainment expenses. We'd probably still be waiting if we hadn't.

Fides are a royal pain but since there will be no motivation for the banks to cooperate and expeditiously transfer the titles if this passes, I doubt that we'll hold our titles in our hands in our lifetimes.

shari - 5-18-2009 at 07:17 AM

INCENTIVE!!! LOVE IT....now there is a great word that doesnt get everyones board shorts in a knot. Sad but true that paperwork requires creative incentives. As much as many here say they would NEVER contribute to a corrupt system...sometimes ya just have to step up to the plate in order to get things done.
PS: perdoname por este abducion

wilderone - 5-18-2009 at 09:03 AM

The root of the title and eviction problems don't come with the sale and exchange of money from seller to buyer, it comes with fraud in the title and right to sell it in the first place. Any changes would just make it easier and faster for the buyer to hand over their cash to the seller. And there are still Ejijo lands under the Agraria (sp?) dominion, requiring ejido members' vote, poor title trail due to poor recordkeeping and lack of formal procedures or official offices 75 years ago. That won't go away. Even if you "win" some title dispute that may arise, who would want to get embroiled in it in the first place? Attorney's fees suck big time. More unscrupulous developers with their ridiculous grandiose ideas who make "promises" and don't follow through because they're just plain stupid. That won't go away.

CaboRon - 5-18-2009 at 09:27 AM

Quote:

Originally posted by toneart

Quote:

Originally posted by Paulclark
This would be great for development and make buyers feel more secure -- and save the non-Mexican buyer $1,900 USD

GeoRock - 5-18-2009 at 11:51 AM

Does anyone know when this is going to be voted upon?

ligui - 5-18-2009 at 02:14 PM

does anone know when this is going to be voted on ? bump ...

MitchMan - 5-18-2009 at 05:23 PM

Generally speaking, when there is no financial incentive to do something, that something won't get done. If inaction works in someone's financial favor, that someone won't act until forced. If someone or some entity is getting money for doing nothing, that entity will not do anything to stop the flow of money and will do what they can to keep the flow of money going. Also, no political entity will stop a flow or source of money coming in (particularly if it is already coming in) by a voluntary act or edict without some replacement source of income.

Call it logic, greed, practicality, common sense, need, quid pro quo fairness, or whatever you want to call it, that's the way of value and money anywhere, everywhere. There are hundreds, thousands, millions of examples of this. So, if fideicomisos are going by the wayside, I will believe it when I see it. And, if it happens, the change will be structured to generate a direct or indirect financial benefit to the government, to business or to the economy, or to some certain few individuals or entities.

I can concieve of it happening, but the actual specific rules of the change is what will really be of significance.

Three months ago in La Paz, a Bancomer officer told me that they make mortgage loans with a 30% down payment and an interest rate of 15%. If they do their due diligence on the property and the borrower, that is a winning deal for the bank.

Osprey - 5-18-2009 at 06:10 PM

Mitch, you have a flare for stating the obvious. You will go further on this board than many (you'll outlast me for sure). The bank trust origination fees plus the annual fee to renew (about $400 U.S.) are CHUMP CHANGE to the banks who will now, very reluctantly, renew your trusts. The total economic impact of all trust fees is less than 00.0007 percent of all bank revenues in Mexico. Shall we have a meeting of the winner and whiners? No. WHAT COST PARADISE? What would you pay to live here? $1,000 dollars? $10,000 dollars?, nothing?, $5 million dollars? I hope the law passes, you trust holders who think you pay too much to live in Mexico might find the new law's rules untenable, the fees too gross and unfair and you might all skip on back to where you can finally get a straight and honest deal on realty.

wilderone - 5-19-2009 at 09:54 AM

From what I've read, the Article 27 law will be changed to allow buyers of personal residences only to purchase outright (no bank trust). How does this work for developers of condominiums? The condo building is in a bank trust and all the condo buyers are not? Where's the safety in that? Even if it passes, it will be years before the Mexican counterparts to escrow, title search, title insurance, standard legal forms, procedures, the persons who will know how to effect a proper sale will become reality. And once all the concerned entities create their origination fees, document preparation fee, signing fee to notary, escrow fee, recording fee, closing fee, title insurance fee the notorios and bankers will simply shift into new roles and collect different kinds of fees. And there will still be bank trusts.
PS: Paradise is in the eye of the beholder.

Cypress - 5-19-2009 at 10:03 AM

About those real estate laws. Sure, they can be changed. Then they can be changed back. Then they........ :lol:

"The highway goes on forever and the party never ends." :yes:

GeoRock - 5-19-2009 at 10:15 AM

Does anyone know how one would follow the outcome of this issue? A good website for Mexican news in English? Anyone know when it is to be voted upon?

woody with a view - 5-19-2009 at 10:44 AM

Quote:

Originally posted by wilderone
From what I've read, the Article 27 law will be changed to allow buyers of personal residences only to purchase outright (no bank trust). How does this work for developers of condominiums? The condo building is in a bank trust and all the condo buyers are not? Where's the safety in that? Even if it passes, it will be years before the Mexican counterparts to escrow, title search, title insurance, standard legal forms, procedures, the persons who will know how to effect a proper sale will become reality. And once all the concerned entities create their origination fees, document preparation fee, signing fee to notary, escrow fee, recording fee, closing fee, title insurance fee the notorios and bankers will simply shift into new roles and collect different kinds of fees. And there will still be bank trusts.
PS: Paradise is in the eye of the beholder.

my eyes just glazed over......

p.s. Paradise is in the eye of the beerholder!

wilderone - 5-19-2009 at 12:00 PM

The initiative was proposed March 5, 2009. “The initiative is by no means guaranteed. Mexico’s current congressional session, with the largest block of seats [207 of 500] in the Chamber of Deputies held by the government's National Action Party (PAN), ends on April 30th, and the resulting lame duck deputies will be replaced as of September 1st, after July 5th elections.”

“Thus it is likely that the future of this Senate initiative will become clearer against the backdrop of September’s new congressional session.”

“It may not be coincidental that Senator López’s own state of Sinaloa is slated to be the benefactor of the upcoming Pacific Coast Integrally Planned Center, an expanse of tourist development 80 miles south of Mazatlán that will be twice the size of Cancun and officially funded by the National Trust Fund for Tourism Development (FONATUR). Development has been planned to begin this year and last until at least 2025. FONATUR committed $5 billion pesos to the venture, with another US$6.638 billion expected through private national and international investments.”