What is fideicomiso?
What is fideicomiso?
A fiduciary commission is a tripartite contract between :
El fideicomitente: The person who hands over the assets to the trustee.
The trustee: the financial institution or person appointed to administer the assets.
The beneficiary: the person or entity that receives the benefits derived from the assets.Why is fideicomiso important for real estate investment in Mexico?
Property acquisition in restricted areas: In certain areas of Mexico, such as coastal and border zones, the acquisition of property by foreigners is restricted. The fideicomiso allows foreigners to acquire and administer property in these areas.
Protection of the investor’s rights: Fideicomiso offers legal certainty to protect the investor’s rights and guarantee the proper administration of your property.
Administrative ease: The trustee takes care of the legal and administrative tasks associated with the property, simplifying the process for the foreign investor.
Flexibility: The fideicomiso company offers flexibility in terms of duration, administration and profit distribution.
Types of fideicomiso
There are different types of fideicomisos, but the most common in real estate investment are :
Fideicomiso de administration: The trustee administers the property in number of the guarantor.
Fideicomiso de construcción: The trustee oversees the construction of a property.
Fideicomiso de garantie: The trustee guarantees the accumulation of an obligation.
Costs associated with fideicomiso include:
Trustee fees: The trustee charges a commission for his services.
Administrative expenses: You may generate administrative expenses related to property management.
Benefits :
Legal protection
Ease of administration
Flexibility
Access to restricted properties
Disadvantages:
Additional costs
Limitations on transfer of ownership
Selecting the trustee: It is important to choose a trustworthy and experienced trustee.
Drafting the fideicomiso contract: The contract must specify the terms and conditions of the agreement.
Handover of assets: The settlor hands over the assets to the trustee.
Registro del fideicomiso: The fideicomiso must be registered with the relevant authorities.
Restricted and alternative zones
Fidelity is mandatory in certain restricted areas of Mexico, such as coastal and border zones. Without an embargo, in some areas foreigners can acquire property directly through a Mexican company.
Risks and mitigation
To reverse a loyalty transaction, it’s important to consider the following risks:
Change risks: Fluctuations in the type of change can affect the value of the reversal.
Legal: It is essential to seek legal advice to understand local laws and regulations.
Real estate market: Real estate market conditions may vary.
To mitigate these risks, it is advisable to work with local professionals experienced in real estate inversions, and to diversify the map of inversions.
In summary, fideicomiso is a fundamental legal tool for real estate inversions in Mexico, particularly in restricted areas. If you understand the key aspects of the financial relationship, foreign investors can make informed decisions and protect your inversions.
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