La Manzanilla Mexico Ejido

Commercial notes

COMMERCIAL

In resort areas, time share hawkers are rampant. Beware of the high risks involved, because Mexican law provides very little legal protection to the time-share owner. If you absolutely must invest in a time-share, do so with full warning and preferably with a stateside company.

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The assertion by some purchasers that title to residential real estate can be vested in a Mexican corporation for foreign ownership purposes simply is not correct.

However, all other real estate, non-residential in nature, can be conveyed to foreigners in fee simple provided the title is in a Mexican corporation whereby foreigners can have exclusive ownership.

. that can solely and exclusively be owned by one or more foreign stockholders with no Mexican ownership participation.

Whether title is vested in a fideicomiso or a Mexican corporation, in either case, all of these properties can be insured by a US contract of indemnity more commonly known as a title policy.

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Property Ownership Through A Corporation

A Mexican corporation may be 100% foreign-owned and may purchase property in a restricted zone without a fideicomiso.

Property owned by a corporation is commercial property and will have much higher water, electric, telephone, and tax rates.

A Mexican corporation may not own a single-family residence.

In a corporate transaction there is usually a preliminary sales agreement or an "agreement to agree". The preliminary sales agreement includes the price, terms, and closing date.

A formal sales agreement is executed at the time of closing.

Escrow, the process of having a third party hold the deed in trust during the transaction, is not used in Mexico. The buyer should be cautious about making any initial deposits.

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Article 5, Title Two of the Law, real estate used for "residential purposes" shall mean any real estate destined "exclusively for residential use of the owner or third parties".

The following activities, without limitation, shall be deemed real estate held for non-residential purposes:

1) Those destined for time-share use.

2) Those destined for any industrial, commercial or tourism activity that may simultaneously contain a residential component.

3) Real estate acquired by credit institutions, financial intermediaries, and auxiliary credit organizations to recover debts owed to them and in the ordinary course of business.

4) Real estate used by entities in the course of their business consistent with sale, development, construction, sub-division and other activities included in the development of real estate projects, until these are sold to third parties.

5) Generally, real estate destined for use in commercial, industrial, agricultural, cattle, fishing, forestry, or service-related activities.

When in doubt whether real estate is deemed destined for residential purposes, the Ministry of Foreign Relations shall resolve the matter in ten business days from the date the party consults the Ministry on the subject. If at the end of ten business days, the Ministry fails to respond, the use in question shall be deemed for non-residential purposes.

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