To Own A Piece of Paradise!
Back in the first few days of April there was a rumor that got my attention. More on that in a minute.
For many months I have been working on and off on a book about buying real estate in Mexico.
Here one might think that the process or processes involved are relatively static – but that is far from the truth. In the thirteen years or so that I have been looking at buying property in Mexico, there have been many changes to the rules and process.
Articles and books written as recently as 2010 already contains inconsistencies due to the ever changing rules and regulations; just three or four years past. And current events promise to add to the confusion and misinformation.
We purchased our first property in Mexico 8 years ago. We now own three properties here. One of which is in the zone in where foreigners are not allowed to own land in their name. This is part of the Mexican Constitution; the origin of which is 1917.
The aforementioned rumor came out so close to April 1st that I was quickly convinced it was nothing more than an April Fool’s joke. The story was supposedly spawned by a real estate agent somewhere in northern Mexico. A fellow Blogger had commented regarding speculation of possible Constitutional changes essentially eliminating the restrictive laws that prohibit foreigners from owning land 50 kilometers from coastal boundaries and 100 kilometers from Mexican border lines. The Blogger wrote the following (emphasis mine):
I have NO personal knowledge of this but according to a real estate person posting on the local forum, it has been done, [the new law] just has to be posted in the, ” Diario Oficial de la Federacion”.
Quote from their posting:
“The Mexican Congress has approved a major change to the law that will become known as a milestone event in the history of legislation regarding property ownership in Mexico. As of now, the bank trust requirement for foreign ownership of property within 50 kilometers of the coast and 100 kilometers of the border has been removed. Foreigners can now own residential property with non-lucrative purposes in the area known as the “restricted zone” directly, without putting the property in a bank trust.
The dragon has been slain.
The parliamentary group, directed by Manlio Fabio Beltrones Rivera and Gloria Elizabeth Núñez Sánchez of the PRI, and Raúl Paz Alonzo of the Pan led this effort.
We give an enormous Thank you to the group that made this possible.
In my opinion, this historic change will open the doors to foreign investment, bringing juridic[al] security to the investor.
This change will be effective the second day after publication in Diario Oficial de la Federacion. We will try to have an English translation of the news article soon.”
Wow – as suggested “This historic change will open the doors to foreign investment….” I got excited.
But, after much effort I was unable to find any confirming information on this. The next day the same Blogger that had supplied this information came back with this:
“Sooo funny this morning on that forum the real estate agent is backpedaling rapidly, saying he “misread” his info. yesterday when he said it had been passed. People were not so dumb and went hunting for info. and found out it had NOT been passed. Got to love these local forums.”
False alarm – excitement dramatically abated.
I had already alerted several friends on the good news – only to have to go back and correct my shared misinformation.
Now yesterday all this speculation and misinformation transformed into at least partial truth. An article in The Wall Street Journal:
Mexico’s lower house votes to change 1917 Constitution
The bill now goes to the Senate and could pass this month
Land rights would be recognized only for residential property
By Laurence Iliff (Wall Street Journal)
MEXICO CITY–Mexico’s lower house of Congress voted on Tuesday to change the Constitution to allow foreigners outright ownership of residential property in the so-called prohibited zone–within 50 kilometers (32 miles) of the coastline and 100 kilometers of its international borders–with the goal of drawing more second-home buyers and retirees from the U.S., Canada and elsewhere.
The proposed change to the 1917 Constitution doesn’t affect the prohibition on commercial property in the coastal and border zones. The ban was originally intended to keep U.S. expansionist intentions in check nearly a century ago.
The vote in the Chamber of Deputies was 356 in favor and 119 against, which was more than the two-thirds needed for a constitutional amendment. The ruling Institutional Revolutionary Party, or PRI, was joined by the conservative National Action Party, or PAN, in sponsoring the bill.
The bill now goes to the Senate. It could pass by the time U.S. President Barack Obama visits Mexico on May 2, or could be held until the next session of Congress in September, several lawmakers said, adding that the bill has a good chance of passing in the Senate.
Proponents of the bill said that it would spur tourist-oriented investment, drawing U.S. baby-boomers as they head toward retirement, along with Canadian “snow birds” who spend part of the year in warmer climates. Lawmakers opposed to the measure said it would hand over Mexico’s sensitive natural resources to foreigners.
Lower house representative Gloria Nunez of the PRI said in an interview that it’s time Mexico gave legal certainty to foreigners who want to buy real estate, but who are wary of the current system that forces them to use bank trusts or put their properties in the names of Mexicans.
“We have a big problem here in Mexico in that we have not given legal transparency to foreigners,” which has created a climate ripe for fraud, Ms. Nunez said. The lawmaker represents the state of Nayarit on the Pacific coast that is one of Mexico’s hot spots for Americans and Canadians looking to buy near the beach.
Opponents of the measure said that it was the first step toward opening up other economically sensitive resources to foreign ownership, specifically Mexico’s plentiful crude-oil reserves.
Representative Socorro Cesenas Chapa of the leftist Party of the Democratic Revolution, or PRD, said in an interview that the amendment would open the door to further changes in the constitution, such as the privatization of the oil industry and public lands on the coast. “Under no circumstances can we allow this initiative to go forward,” she said. “It’s a form of privatizing our coastlines.”
Write to Laurence Iliff at email@example.com
And similar information appeared in The Washington Post (READ HERE).
OK so we are still a ways away from the early erroneous declaration, “The Mexican Congress has approved a major change to the law that will become known as a milestone event in the history of legislation regarding property ownership in Mexico.” Not there yet. Now we will wait on the Senate’s vote.
But, yesterday’s news is a revelation we hope gets to fruition. Already there is speculation that the change will increase tax revenues and perhaps cost current Fideicomiso property owners some substantial dough. All remaining to be seen. Taking away prejudicial laws has to be a step in the right direction.
I will reserve my excitement and elaborations on how this might affect many foreigners until the senate does ratify this change, or not.