BASICS
Los Cabos is located at the southernmost tip of the Baja California peninsula. 1,000 miles south of Los Angeles. 30 miles south of the Tropic of Cancer.
TIME ZONE
Los Cabos is on Mountain time.
CLIMATE
Los Cabos enjoys a mild Mediterranean climate and has generally low humidity conditions similar to Palm Springs or Arizona. The cool breezes emanating from the Sea of Cortes and the Pacific Ocean make Los Cabos a tropical paradise.
Annual average temperature: 78 degrees
Days of sunshine annually: 340 plus
Annual rainfall: 6" to 10" at sea level 50" -60" in mountains
MONEY
The local currency is Mexican Pesos, however American dollars are widely accepted in Los Cabos. Most restaurants, stores and hotels list prices in U.S. dollars. Check with your travel agent for the most current exchange rate.
AREA ATTRIBUTES
November-July: Sunny, warm mild days, warm evenings, low humidity, little or no rainfall.
August-October: Sunny, hot days, warmer nights, humidity; rainy season.
Topography: Low lying desert by the sea, mountain peaks inland rising to 6,000 feet.
AIR SERVICE
By air, Los Cabos is 1 hour 45 minutes from Phoenix and San Diego, 2 hours from Los Angeles, 2 and 1/2 hours from Houston, and 3 hours from San Francisco. All major mid-west and East Coast U.S. cities can connect through Houston via Continental Airlines, or through Dallas via American Airlines. There are more than 20 flights arriving to Los Cabos daily.
ENTERING LOS CABOS
Citizens of most countries including the US and Canada only require a passport when entering Mexico. However citizens of some countries may need Visas, check with your local Mexican Embassy to find out more.
BACKGROUND
The Spanish explorer Hernan Cortes first visited San Jose del Cabo in 1535. It was missionaries, however, rather than the conquistadors who first brought European civilization to the Baja peninsula and to a small village they named San Jose del Cabo. It took another 200 years before a Jesuit mission was finally built, in 1730, to win over the native Pericu Indians to Catholicism.
For the next 150 years, the villages of San Jose and Cabo San Lucas, a mere fishing outpost 25 miles closer to the Pacific Ocean, were provisioning stops for pirates awaiting passage of the Manila galleons. It is said that fortunes in gold and silver are still buried in the many coves and inlets between the two towns. In the 19th century, San Jose slowly evolved into a modest center of commerce for ships moving up and down the California coast.
In the early 1900's, the area was a hard-to-reach fishing paradise for those who knew its treasures. By the 1950's, it had become a private retreat for Hollywood stars, international dignitaries, presidents and their guests. The region was then "rediscovered" in the late 1970's when the Mexican government focused on tourism as an income generator for the country.
BUYING IN MEXICO
RULES OF THE GAME - LEARN ABOUT REAL ESTATE IN MEXICO
A good understanding of the trust issue (Fideicomiso) allows a protection mechanism for foreign buyers. This understanding provides the basis for realizing that investing in Mexico is a wise, safe and rewarding endeavor that allows you to enjoy your chosen lifestyle.
Ensuring that all aspects of your chosen property are in proper order avoids any legal or financial complication when you decide to sell your property to upgrade or realizing a return on your investment. At Pisces Real Estate we will assist you in not only realizing the dream of the lifestyle owning property in Los Cabos affords, but guide you through the process to ensure all is in order with your purchase.
Remember to only utilize a reputable Real Estate firm in Los Cabos. This one simple step will ensure that you are guided through the steps to a secure transaction for your investment.
REAL ESTATE IN MEXICO
All too often citizens of the United States, Canada and other countries assume that property purchases in Mexico are carried out automatically in a manner similar to their native countries. The first rule of any property purchase in Mexico is, always work with a Real Estate Brokerage firm. Purchasing property in Mexico is different than in other parts of the world and a professional Real Estate Agent is your safest way to success.
We are here to protect your investment and ensure that you are satisfied with your transaction. Our evaluation of a potential property of interest will guide you to determine if that is the right investment for you. Your best interest is our primary concern.
We take the time to show you how Mexico's real estate transactions function and how the supporting legal system has responded to the industry's needs. It is essential that you have an idea of how this system works and what to expect when considering an investment in Mexico. We are at your service at any time for consultation.
MEXICAN REAL ESTATE LAW - HOW IT RELATES TO FOREIGN INVESTMENT
Article 27 of the Mexican Constitution regulates the ownership of its territory by establishing that "in a zone of 100 km. (62 miles) along any border or 50 km. (31 miles) along the coast, foreign entities cannot acquire direct ownership of the land and waters." Until recently, foreign investors were allowed ownership of real estate only located outside of the "Restricted Zone".
Recognizing the demand by foreign interests for ownership of real property, and the importance of making these desirable properties available to foreigners for the potential positive impact on the economy, the Mexican government implemented a series of Foreign Investment Laws beginning in 1973, modified in 1989 and modified again in December of 1993 to incorporate the provisions of the NAFTA treaty.
CREATION OF THE LAND TRUST - FIDEICOMISO
For those who wish to acquire property for residential usage, and who have a valid entry visa, current Mexican law requires that title to the property be transferred to a Mexican bank. It is necessary to establish an individual land trust (fideicomiso) in which the foreigner becomes the beneficiary of that trust. The bank handles all of the paperwork including filing the permits with the Ministries of the Interior and Foreign Affairs. In general, the bank has the responsibility to the government and the new owner to ensure precise fulfillment of the Trust agreement, assuming full technical, legal and administrative responsibility in fulfilling all requirements in protecting the interests of the beneficiary, you!
The bank owns the real property rights, and the beneficiary (equitable owner) owns the personal rights to use, rent, modify or transfer his rights to a third party. Ownership of these personal rights is evidenced through a deed prepared by a Mexican Notary, signed by the representative of the trustee bank and duly registered with the appropriate local authorities.
The Foreign Investment Law of 1993 stipulates a term of 50 years for the Trust with opportunity to renew the trust for multiple 50 year increments. The filing for this renewal must take place on the forty ninth year and between the sixth and seventh month prior to expiration. By requesting renewals every 50 years a property may be held by a family or business entity in perpetuity.
Since by law, Mexican banks enjoy government protection against bankruptcy, the Trust is indirectly guaranteed by the government . As a practical matter, even in unrestricted zones many foreigners prefer to hold their property in Trust.
PROTECTION - PROTECTION OF THE PURCHASER INTEREST
All real estate transactions are processed through the office of a "Notario", a qualified government appointed lawyer who acts on behalf of the government to ensure the proper transfer of all real estate transactions. Among the officials many important duties is to register with the appropriate government agencies the deed transferring rights to the new beneficiary. This is the single most important step in protecting a foreigners investment in Mexico since it remains the ultimate proof of ownership if the property is ever disputed.
The purchase/sale document, which includes either deed of rights, or transfer of rights of beneficiary in a property, is generally valid between the parties to a transaction. It most likely contains a description of the property, price to be paid to the seller, and any special terms or conditions negotiated in the sales process. IT WILL NOT however provide valid notice to third parties unless it is recorded in the Public Registry office of the municipality in which the property is located.
Until the buyer is formally named as a beneficiary in a public document before a Mexican Notary, title to the rights in the property remain with the last legal registered owner. While the seller holds title to the property it is his asset; he may mortgage it or sell it again, it may be liened for satisfaction of a judgment; or in testate. In such a situation, there may not be any remedy for the purchaser who neglected to correctly register the deed.
To ensure proper registry of the property, an official appraisal of the property, notarized bank instructions, a property tax certificate and certificate of no liens must be obtained. Sellers Capital Gains Tax and Buyer's Acquisition Tax (2% of the sales price) must be paid in conjunction with registering the deed by both the tax office (Treasury) and the Public Registry. If this process is not completed the buyer is not fully protected.
PROPERTY TRUST - YES... YOU CAN OWN PROPERTY IN MEXICO.
In 1994, amendments to the Constitution permitted foreigners to purchase and own real estate in Mexico located within the "restricted zone" which is all land within 60 miles of a national border and within 30 miles of the Mexican Coast. This Law permitted ownership through a land trust or "Fideicomiso".
A "Fideicomiso" is a Mexican Trust. The way it works is the Mexican Government issues a permit to a Mexican Bank of your choice, allowing the bank to act as purchaser for the property. The bank acts as the "Trustee" for the Trust and you are the "Beneficiary" of the Trust. The "Beneficiary" rights are very similar to Living Wills or Estate Trusts in the U.S.
The law authorizes Mexican banking institutions to act as trustees. A trustee takes instructions only from the beneficiary of the trust (the foreign purchaser). The beneficiary has the right to use, occupy and possess the property, including the right to build on it or otherwise improve it. The beneficiary may also sell the rights and instruct the trustee to transfer title to a qualified owner.
Many people refer to the trust arrangement in Mexico as a lease agreement...this is not true. The home or property that you buy will be put into a trust with you named as the beneficiary of the trust, you are not a lessee. You have all the rights that an owner of property in the U.S. or Canada has, including the right to enjoy, sell, rent or improve the property. The initial term of the trust is 50 years and can be renewed for fifty year terms indefinitely.
LIST YOUR PROPERTY WITH PISCES
The most important question on the mind of a seller is usually "Why should I list with you?"
Our answer here at Pisces Real Estate is plain and simple:
1. GOOD NAME
Pisces Real Estate is a trusted name in the Industry and is known around the world. We are recommended by many clients as their preferred choice of Realtors.
2. EXPERIENCE
Pisces Real Estate has had over 20 years experience in providing our Sellers with a non-complicated closing. Choosing the right realtor is the key to a successful transaction.
3. KNOWLEDGE OF THE AREA
A major factor in the Real Estate business is to know your area not just your immediate surroundings. Pisces agents are extremely knowledgeable in all the areas surrounding our locale and beyond.
4. WE SELL WHAT WE LIST
Our track record for a successful sale shows that we deliver close to asking price on each sale in Pisces Real Estate. At closing, a 3% reduction or less from the Listing price is not an unusual outcome.
5. PISCES CLOSING DEPARTMENT
As part of our service to our Sellers, we provide a detailed Step by Step procedure for the Closing and the time factor involved which produces a smooth and uncomplicated Closing for our clients. Pisces Real Estate reviews each and every document needed before listing a property to make sure that our Sellers will have no unforeseen issues that cannot be solved in time for their Closing date.
6. WE LOVE TO ENHANCE
Pisces Real Estate has a Property Enhancement service for our Sellers. Every home needs an outsiders view or suggestion and we offer our expert advice on that "little added Touch of Enhancement" that each of our Sellers may need when we list a property.
7. MOST IMPORTANT TO CONSIDER
Pisces Real Estate has been an active member of Los Cabos MLS since its inception in the early 1990's. Also, belonging to the Mexican Association of Realtors in the Southern Baja better known as AMPI, NAR (National Assoc. of Realtors in the US), and the AMPI/MLS Association newly formed. We are very proud members!
8. YOUR VALUED LISTING
Pisces Real Estate will make sure that your listing is exposed in every available way to those interested in purchasing a property. You will be listed on MLS, AMPI / Flex, and part of our service to you your listing will uploaded to worldproperties.com. Our service to you has NO boundaries!
WHAT ARE THE STEPS TO RENT PROPERTY IN MEXICO?
1. Get in contact with a Pisces Real Estate associate.
2. Express your desire to rent a property in short or long term and specify your needs.
3. Once the agent finds the property that meets your requirements, this is the following Procedure:
- A reference sheet is filled out with the general information of the tenant.
- Once the information is verified by the renter, he decides whether the client is a candidate for rental of the property, if so, in most cases a one month's rent deposit is solicited plus the month's rent that is running. In some cases there will be renters who ask for a two months’ rent deposit.
- The renter and the tenant will sign a rental contract in which the conditions of said contract will be specified: length of the contract, special circumstances, conditions of deposit, etc.
- The renter will give you a informal receipt (Not a fiscal one), for the rent deposit and will also give you a rental receipt every month that goes by, these receipts do have a fiscal value.
- In the case that at the end of the rental period, the property is found to be in the same conditions it was received in, without presenting any damage; the one month's rent deposit will be reimbursed to the tenant.
- Generally in Mexico the rental payments do not include payment for services such as: electricity, water, telephone, satellite or cable TV. and gas bills. And if so it will be specified in the contract.
- In the case that the property is a condominium, it will also be specified in the contract whether or not the tenant must pay the home owners fees, or if it will be the renters responsibility.
FREQUENTLY ASKED QUESTIONS
I've always heard that foreigners can't own Coastal property in Mexico, is that true?
No, while it once was true, times have changed. Prior to 1973, foreigners were not allowed to hold legal title or exercise direct rights to real property in an area within 62 miles of Mexico's borders and 31 miles of its coasts. But laws passed in 1973 and 1993 have made it possible for foreigners, foreign firms and Mexican firms with foreign participation to acquire interest in coastal real estate through a bank trust (Fideicomiso).
Who is involved in this bank trust?
Three parties, the seller of the property is the Trustor, the bank is the Trustee (Fiduciario), and the buyer, or Beneficiary (Fideicomisario).
How does the trust function?
Title of the property is transferred to a trust with a Mexican bank acting as a Trustee. The Trust Agreement is formalized by the issuance of a permit from the Mexican Ministry of Foreign Affairs. The lot or home buyer is designated as Beneficiary in the Trust and the beneficiary rights are recorded in the public record by a Notary Public.
What are my rights as a buyer?
The trust is a legal substitute for fee simple ownership, but in this case, the Trustee is the legal holder of the property. As a beneficiary, you have the right to sell your property without restriction. You may also sell your rights to a third party, or pass it on to named heirs.
Is the trust renewable?
Yes. According to the Foreign Investment Law passed in 1993, trusts can be renewed for an indefinite number of successive 50 year periods. In effect they run in perpetuity.
If at a later date, I decide to sell my property, can anyone buy it?
Yes. If the new buyer is also a foreigner, you simply assign your beneficial rights. If the new buyer is a Mexican National, you can instruct the bank to endorse the title in favor of the buyer.
If the buyer is a foreigner, is his interest limited to the balance of my 50 years trust?
No. Upon application, a foreigner automatically can renew for an additional 50 year permit. This, however, is not mandatory.
Do many foreigners currently own coastal property in Mexico?
Yes. Today thousands of foreigners enjoy coastal resort property and have benefited from appreciation in these luxury and limited availability areas.
