Laws for Americans attempting to buy or rent in Cancun Hotel Zone. (Ocean front/view)

So I'm contemplating moving down to Cancun and wanted a brief idea of how it goes: How safe it is (As well as my invesment.).

1)In terms of owning on the beach in the cancun hotel zone, which is my goal (Preferably a condo). I hear It's not possible OR safe due to the fact I'm not a national. Therefore, I have to have a "bank" or national own or share ownership and they can screw me over whenever and however they want. I am looking for a truthfull and safe suggestion or answer to this from my fellow expats who have been through the process. I also want to know the renting availability and ballpark pricing for 1 bedrooms and if I could be pointed out to a credible agent.

2) In terms of crime, I know the majority say it's like miami or any large city in the US. However, There are very bad areas in Miami and all Large US cities so how safe are Cancuns Hotel Zone, Playa Del Carmen and Cozumel. (I know they keep a close eye on these areas due to tourism $ but look at what Acapulco was and what it has turned into. I'm also a little uneasy about who controls cancun. (If you get my vibe.)

Thanks and I appreciate your responses.

 

Hotel Zone is safe.

A foreigner cannot directly own property located near the sea (I think the distance is within 50 KMs); but, there is a well recognized and well protected method of ownership through bank trusts. The title to the property is held, in trust, for you: this form of ownership has all the incidents of full ownership, aside from that detail. A number of banks offer this service. It is how we own our condo, in Cancun.

As for having your property titled to a Mexican National, it is never a safe option, even if that someone is your spouse (or, perhaps, especially if that someone is your spouse!).

 

Here is the list of links that I saved during my searches. We bought our Casa in the HZ back in 2007 directly from the owner. Some of the links are Realtors and others are about the ins and outs of foreigners, us, owning in Mexico.


Inter Realty Brokers - Prime Properties Cancun

Mexico Real Estate, Mexico Homes for Sale

http://www.cancunpropertiesonline.com/

http://www.paseroabogados.com/realestate3.html

Closing Costs in Mexico

the WHAT, WHY and HOW of closing costs

Mexico law Customs

Mexico Law Nafta

Mexico Legal Information | Mexico Law

Cancun Quintana Roo Public Notaries-cancun real estate

Mexico Real Estate Investment | Mexico Real Estate

 

You also may want to search through the threads here at CancunCare at

Living in Cancun & Riviera Maya

 

The whole thing is organized through the bank you choose to do business with, and the Notario, acting in concert. There are fees associated with setting it up, and there are annual fees, but it is not complicated from the consumer's standpoint, and the process has more than forty years legal precedence, at this point, so it is well establish and well protected, legally.

The owner can transfer his rights to the property via the trust, should he wish to sell, and can establish a beneficiary to whom to transfer his interest in the property in the event of his death. Other than the cost of it, I can see no downside to it, except that transfer of ownership is more time consuming- taking a week or two, instead of just days.

 

In our situation which may have been unique since we purchased directly from the original Mexican owner, we went through the Notario who had done the original documentation for the Mexican owner.

It was the Notario who drew up the Fideicomiso (Trust) and made the arrangements with Scotiabank for us. As I recall, we paid a fee to both initially but we do pay a yearly fee to the Bank for which it does nothing more than satisfy the requirements for foreign ownership under the current Mexican law.

The Bank fee is based more or less upon the assessed value of the property and we have been able to set up an automatic yearly payment via CC.

 

The annual fee paid to the bank seems outrageous, for them doing nothing, nor do they have any liability risks to themselves. Everything falls on you. In land trusts in the states, an owner of property can designate anyone, even a corporation, as the trustee and the trustee has explicit fiduciary duties to uphold. Not the case here

I would guess that you are looking at $1,000-$2,000 USD per year, plus the initial cost for the preparation of the document, for a nicer HZ condo.

As V points out, foreigners cannot own property within 50 m of the sea/ocean, nor within x number of km from the border with another country. This was supposedly provided for in the Constitution, as I understand it, but it is skirted around with a Fideicomiso or a Mexican corporation. Hopefully, some day this can be made right with a constitutional amendment. Nothing is served any longer with this law, other than fattening the pockets of the banks.

Just another heads up. All closing costs, except brokerage fees, are typically paid by the borrower.

Do your homework and have some none represent YOU. Brokers don't have to be licensed, nor do they legally represent you, nor do the Notarios. No one gets paid until there is a closing so they work for themselves, not for you. That said, there are many brokers who are 100% honest, while the contrary also is true. Caveat Emptor.

 

This is an excellent point, and many of us sleepwalk through the process.

One thing about the fideicomiso, and this is getting to fine point of U.S. Tax Law (on which I could be wrong: those who can follow this can judge for themselves), it can help make clear that the property is not commercial property, and avoid the issue of whether the occupant must pay income taxes on the rental value of the property, when they live in the property, rent free. The corporate structure suggests the opposite.

As I understand it, you cannot, under Mexican Law, set up a corporation whose articles declare that it's sole purpose is the allow the purchase of property in the forbidden zone. Since you cannot, the language of the articles will, in all probability, suggest a commercial purpose, making it very hard to argue to IRS that you should not be taxed on the value of the rent free use.

Those who have used the corporate structure (I understand it's commonplace in Playa) to allow them to purchase in the forbidden zone may find, one day, that the annual fee charged by banks for a trust was a reasonable bargain after all.

It irkes me to pay this annual fee, just as it does T.J., but then I remember the very low property taxes I pay here, compared to the U.S., and I'm comforted.

 

I just need to clarify some of the previous points.

Non Mexicans cannot own any property within 50 KM of the borders of Mexico or the ocean. Once you are past the 50KM you do not need to set up the trusts.

Furthermore foreigners can set up a corporation in Mexico except one member of the board must be a Mexican National. Plus the corporation must file monthly tax returns to the authorities. Then at the end of the year the corp. must file an annual return. It really makes no difference if the corporation earns any income or not but these two steps must be followed. All this can be done on line on rather simple forms.

Now as for the trust-This is to be set up for a foreign national by the notary who the buyer hires to do all the legal documentation for the condo or house they purchase within the 50KM zone. The notary registers the property for tax purposes and with the bank for the trust. Scotiabank is the easiest one to work with in Cancun and the fees for the trust run under US $800 per year roughly.

There are closing fees for the purchase of the property which vary depending on the property but expect around 10% of the total purchase price to be the total fees give or take depending on the notary you hire. Once the trust is registered and the notary sends off the paperwork to the authorities you can occupy the unit as your own.

 

I believe the law is that wholly foreign owned Mexican corporations are permitted. The question about who must sit on the board is one I've never investigated.