In order to consider investing in a property one will need to get the complete information, confirm that everything presented on the offer is “crystal clear” and legally registered.
IBG professionals combine several skills to explore and probe that all the information presented to you is adequate to confirm all the details as the legitimacy of parties involves:
property background, liens disclosing all valid documents, confirming zoning and building permits, and ensuring clear ownership and any other information needed to make a smart decision.
Foreigners who wish to purchase real estate in national territory must do so through the “Calvo Clause”, an agreement whereby they agree to consider themselves as Mexican nationals concerning such property.
The content of the first section of Article 27 of the Mexican Constitution, which regulates land and water ownership in Mexico, states that "Only Mexicans by birth or naturalization and Mexican corporations have the right to acquire land domains, waters, and accretions or to obtain concessions for the exploitation of mines or waters"
Furthermore, the same paragraph establishes that "The State may grant the same right to foreigners, provided that they agree before the Secretariat of Foreign Affairs to consider themselves as nationals concerning such property and not to invoke the protection of their governments about such property; under penalty, in case of failure to comply with the agreement, of forfeiting to the benefit of the Nation, the property they have acquired under it".
The first guideline it establishes is the waiver of the protection of its governments to resolve any controversy related to real estate, with the risk of losing the assets or investments if they fail to comply with the agreement.
It is important to mention that there are two major exceptions to this agreement:
Plots or ejido lands.
Real estate located in the restricted zone (100 km strip along the borders and 50 km wide along the coasts).
The restricted zone is 100 (100) kilometers wide along the borders and 50 (fifty) kilometers wide along the coasts where foreigners cannot acquire ownership over land and water, as stipulated in the constitutional article mentioned above.
Notwithstanding the foregoing, the acquisition of real estate within the restricted area can be carried out through:
If they include within their articles of association a clause in which their partners/shareholders consider themselves to be Mexican, with regard to the rights and obligations arising from contracts, or shares and property or interests owned by companies, waiving to invoke the protection of their governments under penalty to lose them to the benefit of the nation in the event of non-compliance; and If the property acquired is intended for non-residential purposes, and a notice of such acquisition is filed with the Ministry of Foreign Affairs (SECRETARÍA DE RELACIONES EXTERIORES) within 60 (sixty) business days following the date on which the purchase is made, in terms of Article 10, Section I of the Foreign Investment Law (LEY DE INVERSIÓN EXTRANJERA), and Article 5 to of its Regulations.
The special requirements for restricted zone trust agreements are found in Article 11 of the Regulations of the LEY DE INVERSIÓN EXTRANJERA, which establishes certain requirements that must be included in the trust agreement.
Some of these requirements are as follows:
Calvo Clause: It is the manifestation made by foreign individuals in which they agree to consider themselves as Mexicans with regard to their rights as trustees, and not to invoke the protection of their governments, under the penalty, otherwise, of losing such rights in benefit of the Mexican Government.
Retention of fiduciary ownership: It means that during the entire term of the trust, the trust institution retains title to the ownership rights of the properties in trust, without granting ownership rights to the trustees.
Information on the fulfillment of the purposes of the trust: The trustees are obliged to inform the trust institution about the fulfillment of the purposes of the trust, and the trustee is obliged to inform the SECRETARIA DE INVERSIÓN EXTRANJERA in this regard when required to do so, whenever there are reasons to believe that the conditions under which the permission to form the trust was granted have not been complied with.
New permit in case of a contribution of new properties or change of purposes: The trustee institution must obtain prior permission from the SECRETARÍA DE RELACIONES EXTERIORES in the case of an extension of the subject matter of the trust assets or if there is a change in the purposes of the trust.
Notice of Trust Termination: That the trustee institution undertakes to notify the SECRETARÍA DE RELACIONES EXTERIORES of the termination of the trust within 40 (forty) business days following the date of its termination, and
Termination of the trust at the request of the SECRETARÍA DE RELACIONES EXTERIORES: That the parties in the agreement undertake to terminate the trust at the request of the SECRETARÍA DE RELACIONES EXTERIORES, within 180 (one hundred and eighty) days from the date of notification of the requirement, in the event of noncompliance or violation of any of the conditions outlined in the permit by which the trust was formed.
Restricted area trusts have a maximum duration of 50 (fifty) years: Said term may be extended at the request of the interested parties -i.e., the trustees- to the SECRETARÍA DE RELACIONES EXTERIORES, through the institution acting as a trustee, within 90 (ninety) business days before the expiration of the term.
If the term of the trust is reached without an extension having been requested, the trust must be extinguished, and the trust property must be transferred to a person capable of acquiring it in a restricted zone.
Finally, under the terms of Article 32 of the LEY DE INVERSIÓN EXTRANJERA, trusts of real estate located in a restricted zone, whose trustees are foreign individuals or legal entities or those whose assets are real estate for residential purposes located in the restricted zone and whose trustee is a Mexican company with a foreigner´s admission clause, must be registered before the National Registry of Foreign Investments.