In the Constitution, there is a provision that creates an area known as the Restricted Zone. The Zone is 100 km (62 miles) from the borders and 50 km (or 31 miles) from the coasts. In this Restricted Zone, only Mexicans could own land. After so many years of being a possession of someone else, this provision was done for their own protection, and at the time, it made sense.

However, in the 60s the Mexican Government realized that there was a lot more money outside of Mexico than inside. In 1970, in an effort to create foreign investment, a Bill was passed into law which created a legal and viable opportunity. The Bill stated that a trust, called a 'Fideicomiso' could be set up, with the foreigner as the sole and exclusive beneficiary. Since a Mexican bank must administer the trust, it satisfies the requirements to purchase land in the restricted zone. The beneficiary (foreigner) could control the land. Because of the 1970 Bill, major foreign investment flowed into Mexico. Not only Cancun, but also Cozumel, Acapulco, Puerto Vallarta, Ixtapa, and Cabo-San Lucas exploded.

In 1994 the newest Bill was passed pertaining to the Restricted Zone. This law states that a Mexican Corporation, wholly owned by foreigners, can be a legal Mexican entity. Now, you can own a corporation and hold all its assets. In addition to the confusion that results from the different types of corporations available to form (Limited Liability Corps, S-Corps, Partnerships, to name just a few), there are specific situations in which it is beneficial to own a property through a trust and when the benefits of a corporation are better. Here at American Development Company, through our years of experience of assisting foreigners in Mexico, we can help tailor the best vehicle to your particular situation. Be wary of anyone that says there is only one way to do things (whether that be through a Trust or a Corporation). Either they do not have your best interests in mind, are misinformed, or are just plain lazy.

This is not law, but nearly always done. The second source is on the West Coast of Mexico near the California boarder, which has a long history of granting land leases on beachfront parcels used by weekend vacationers. The lack of understanding by these lease holders, coupled with bad information from Mexican sources has culminated in the 99 year lease misnomer that is still perpetuated. The government has made it very easy for foreigners to own land in Mexico. So much so, that in 1998, the revenues from the industry of foreign investment & tourism surpassed the revenues from the oil & gas industry. It should be noted that in Mexico the government owns the monopoly, PEMEX, which controls all oil & natural gas in Mexico. The revenue it collects is from the DIRECT sale to the public. However, the taxes from the industry of foreign investment and tourism exceed those of oil & natural gas. Foreign investment & tourism - is now their cash cow and the Mexican government welcomes your participation.

The Mexican Constitution, passed into law in 1917, created what is called the “Restricted Zone”. This Restricted Zone is 100 kilometers (62 miles) from the borders and 50 kilometers (31 miles) from the coasts. And in this Restricted Zone only Mexicans can own the land.

In the 1960’s the Mexican government recognized that there was a lot more money outside Mexico than inside Mexico. To attract foreign investment, a Bill passed in 1970 created a legal way for foreigners to invest in Mexico. This new law allowed the creation of a trust (“Fidecomiso” in Spanish) with a Mexican bank in which the foreigner is the sole and exclusive beneficiary. The Mexican bank holds the title and administers the trust, thereby satisfying the Constitutional requirement for Mexican ownership in the Restricted Zone. The foreigner is the beneficiary of the trust and controls the land (rents, sells, improves, whatever…). Because of this 1970 Fidecomiso Bill, major foreign investment flowed into Mexico and we witnessed the developments of Cancun, Cozumel, Acapulco, Puerto Vallarta and Ixtapa.

There are limitations to the Trust system. For each property purchased, a separate trust is required. The set up cost for each trust is normally 1% to 1.5% of the purchase price of the property. Additionally, the bank charges an annual administration fee of $800 - $1,500 dollars, for simply holding the deed on your behalf. And it is necessary to request written approval from the bank for virtually anything you may wish to do with the property, including making improvements. Usually only a formality, but still rather cumbersome.

Taking advantage of the new horizons offered by the NAFTA treaty, the Mexican government in 1994 passed a new Bill pertaining to ownership of property in the Restricted Zone. In this new law, the Mexican government allows a Mexican Corporation, wholly owned by non-Mexicans, to be the legal entity fulfilling the Constitutional requirements for Mexican ownership in the Restricted Zone. You own the Corporation. Your Corporation holds the deed to your property. So you hold the deed to your property. You don’t have to ask the bank’s permission to for anything pertaining to your property. Additionally, with the Corporation system there are no high annual administration fees paid to the bank. Your Corporation can own more than one property. And should you sell one or more properties, you may sell your Corporation or just the property. To further simplify matters, after your Corporation completes the purchase, you may elect to make your Corporation dormant. This makes the annual paperwork much easier. Overall, there are many advantages to using the Corporation system, but the best is that you actually hold title to your property.

Just like in the U.S., if you don’t pay your real estate taxes the government may claim your property after due process. But they will not just take your property. In this modern day of instant worldwide communication, there would be a quick halt to foreign investment if there was a chance that the government could seize your property. And that is not what Mexico wants. Mexico is enjoying the billions of dollars that flow into the country each year from foreign investment.

You have to totally abandon your property for TEN years, including not paying the taxes on it. At the same time, the squatters have to openly occupy and pay the taxes on your property for that same ten year period. You will know that someone is there because they are paying your taxes for you. And the government must notify you that someone is trying to claim your property. You notify the government through your attorney, the squatters are removed and you have your property safe and sound.

When ejidos were originally granted, they were placed in non-prime locations at the time, usually in places where the towns weren’t. Nowdays, you can find ejidos situated on beautiful and highly desirable beach locations. Non-Mexicans see these beautiful beach front properties being used by a few Mexican peasants and offers are made to purchase the property. Money changes hands and often homes are built by the non-Mexicans. Tough luck for these non-Mexicans who didn’t consult with a qualified and dependable Mexican real estate attorney about a title search and what is ejido land and who is eligible to own it.

All non-Mexicans who occupy ejido land are illegal trespassers on that land, because only Mexicans are allowed to use the ejido land. Before buying property in Mexico, make certain you are buying property which you can legally own.

A signature, notarized by your local neighborhood Notary Public, is not recognized by the Mexican government as an official seal or signature. However, with the Hauge Convention the Apostile system was created to offer member countries of the UN a way to conduct international business a bit easier. You can, just as in the US, authorize your attorney to sign the final documents in order to close in absencia. All other documents you are signing via the Apostile system. This is a common practice.

For legal documentation such as the registration of the deed and title the exchange rate of the day is being used as a reference, which is required by law. However purchase prices for condominiums in Playa del Carmen, Cancun, Tulum and the Mayan Riviera are promoted and executed in US currency to void the loss of value through exchange rates fluctuations.

Average cost per condo, approx. 3,000 USD - 7,000 USD, annual trust maintenance fee approx. 500 USD. Set up expenses for a trust is usually much higher than for a corporation, and each property requires an individual trust (land being limited to a max. Of 2,000 m2), but a company can hold an unlimited number of properties of any shape and size in its name. Notary fees for title research and assurance and closing cost average no more than 3% of transaction value. Individual cost for lawyers are not included.

To obtain your immigration status as a retired person takes only a few days. It costs around $500 U.S. if you hire a lawyer for the paper work, and less expensive if you do it yourself. However, we recommend using a lawyer or legal firm with experience and not doing it yourself, especially if you don’t speak Spanish.

The old two lane highway continues south of Tulum toward Chetumal. This section is comparable to a secondary county road. Just south of the town of Limones is the turn to Mahahual and Xcalak. If you continue straight toward Bacalar and Chetumal the highway widens again to four lanes.

A bit of advice driving: When making any turn in Mexico ALWAYS look in front and behind to make sure traffic is clear before you make your turn. Do not stop in the middle of the road.

Turning left: Beware when turning left or U turning on roads with no median divider. If there is a special lane or a "RETORNO" (U turn lane) do as you normally would, with caution. At other times when turning in areas with no median divider ALWAYS check your rear view mirror first! On an undivided road it is customary to pull off the road to your right, put your left blinker or emergency flashers on and wait for traffic to clear. With no one else in either direction make your turn.

Passing: When traveling on the highway be alert and vigilant for aggressive drivers. Drivers in the on-coming lane may choose to pass and cross the centerline of the highway at unexpected times. Be ready to move right. Watch for vehicles driving or stopped on the road shoulder. Let tailgaters pass.

Median dividers: Median dividers running the length of highway 307, from Cancun to Tulum, are being completed in 2008. Breaks in the median are generally marked by reflectors in the road, and lanes typically swerve right then left around them. Please be careful not to hit these medians. There are also intermittent "topes" (speed bumps), especially around the towns. These have a rather steep incline so be sure to slow down before going over them.