How To Navigate "Restricted Zones" & Trust Rights
In this interview:
- Can you own property in Mexico's "restricted zones"?
- Is there a "99 year" limit to ownership?
- How do you ensure that YOU own your property?
- What can MoXi do to make your purchase 100% secure?
Video Transcript - (Speaker: Alex Koper, CEO)
Wanted to give a quick little tutorial on trust rights. You might be asking me why we're talking about trust rights today. In the country of Mexico, the Constitution as it was originally written, did not allow property purchases for foreigners in certain parts of the country, they're called Restricted Zones.
These areas previously disallowed foreigners from actually owning such property in those areas. Those areas are within a certain number of kilometers of a border or within a certain number of kilometers of a coastline. And many MoXi clients choose to own property by a coastline in particular. Many of the zones in which MoXi lends or makes mortgages are secured by property in a Restricted Zone.
A Restricted Zone does not mean you cannot own property in that zone as a foreigner, as a US citizen. It in fact just means that you need special permission and you need to do so via a trust agreement called a Fideicomiso, and a Fideicomiso is a document or a body entity that allows you as a foreigner to have rights to that property.
A Fideicomiso needs to be managed by a fiduciary and at MoXi we have several approved fiduciaries that meet MoXi's very specific criteria for safety, security, stability, and longevity. That agreement will be managed by the fiduciary bank and essentially, and effectively you have full rights to profit from the sale of the property, improve the property, buy the property, live in the property, do whatever you want with it. You can Will it or deed it to somebody else.
Family members can inherit the property. So for all intents and purposes, that property is yours, but you are just owning it via a special trust agreement. And that is the legal and proper way for a foreigner to own property in a Restricted Zone within Mexico.
MoXi originates mortgages across the country of Mexico. Some are in Restricted Zones, some are not in Restricted Zones, but for safety, security, stability, and consistency, MoXi uses a Fideicomiso they get on that same trust agreement for all mortgage originations.
What that means is you'll have MoXi's name in the first place beneficiary holder of the Fideicomiso. That's effectively the way that MoXi records its lien and then you or your entities. Either you personally, or an LLC, or a trust, or a corporation domiciled in the United States will be in second place.
When your loan is paid off and fully satisfied, MoXi will release its lien as the first place beneficiary, and you will have full access to your Fideicomiso. MoXi is your partner in Mexico homeownership, not just during the process of your actual purchase or when you start your refinance transaction, but for the life of your loan. We are working with you regularly, of course, to collect the principal and interest repayment of your mortgage loan.
We are also working with third parties across the board, which include the fiduciary bank that manages your Fideicomiso to ensure that it gets regularly renewed to ensure that there's no disruption in your trust rights.
One of the biggest myths that are out there, is that in Mexico you have a 99 year land lease or something along those lines. And that is just not true. There's no risk with respect to the expiration of this trust agreement as well.
There’s a good chance that you have some followup questions regarding Mexican homeownership as a US Citizen. We love that! Contact the MoXi team and we’ll be glad to chat with you right away.