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MEXLAW > MexLaw  > Real Estate Purchase and a Bank Trust Assignment of Rights

Real Estate Purchase and a Bank Trust Assignment of Rights

Foreigners buying property in the restricted zone of Mexico are required to purchase through a (fideicomiso) bank trust. In some cases, the buyer will take over an existing bank trust. This is known as an Assignment of Rights (Cesion de Derechos) and depending on the amount of time left on the existing trust, you may be advised as the buyer to take over the trust rather than pay set-up costs to create a new trust.

In order to create a new trust, there will be added fees and the cost of extinguishing the current trust.

Anytime a person accepts to carry out an assignment of bank-trust rights they agree to comply with all the conditions and obligations established in the bank trust already created.

Currently, the duration of a bank trust for property located in the restricted zone has a term of 50 years. For that reason, it is imperative to verify the remaining years of the trust before proceeding with the transfer of rights. If the trust is close to expiring, it will be necessary to renew a permit for another 50 years, and this procedure may generate expenses for the new owner.

Typically, the process is straightforward and sometimes can take less time than creating a new bank trust. To carry out an assignment of bank trust rights, the Fiduciary (bank) must be involved since it is established within the clauses of any bank trust that the (fiduciary) bank must be notified and provide its approval.

In the same way it is necessary to hire the services of a Mexican Notary Public who will be responsible for preparing the title deed and carrying out the finalizing procedures, including payment of expenses and taxes, registration of the new title deed before the Public Registry of property (Registro Público de la Propiedad).

The requirements that must be taken into consideration before carrying out an assignment of bank trust rights are:

  • The seller must provide an original letter with instructions to the bank to notify their desire to sell the property, the letter depending on the circumstances must be authenticated before a Mexican Notary Public, Apostilled or Legalized in order to take legal effects.
  • The seller must be up to date in the payment of the annual fees of the bank trust.
  • A fee must be paid to the bank for the signature of the assignment of bank trust rights, as well as for the presentation of notices to the government authorities which oversee the bank.
  • Provide information and documents of the new owner and of the person that will be the beneficiary of the bank trust in case of death of the new owner.
  • Obtain a copy of the instruction letter issued by the bank to the notary in which the bank expresses its agreement to proceed with the assignment of bank trust rights.

The other option for the seller is the extinction of bank trust, if the property is being sold to a Mexican citizen or Mexican corporation the trust is no longer necessary, or if the trust is close to renewal the buyer may choose to create their own bank trust. In these cases, the trust will be extinguished.

Please note that is very important to have the written approval of the bank trust sent to the notary or parties involved in the transaction before the parties sign the title deed before the notary public.