How can a foreign buyer own waterfront land in San Quintin Baja Mexico? What is an Ejido and can Ejido land be purchased safely? Can I get title insurance on my purchase? Can I get financing for purchasing real estate in San Quintin Baja? What will I pay in closing costs in Baja Mexico?
1. How can a foreign buyer own property in Baja?
There are currently only a couple of ways that foreigners can safely own land in Baja. The primary issue is that virtually all of Baja lies within the 'restricted zone' which is all land within 30 miles of the coast and within 60 miles of the border. By law these lands cannot be purchased by foreigners. HOWEVER, since that law proved to be so detrimental to the economy of Baja, subsequent initiatives have made it possible to circumvent the law legally (?). (Mexico is kind of like the US in that they will rarely change a law, they just add another one.)
The first and most common method is the bank trust or fideicomiso. This is a tool used to obtain full rights to a property while a Mexican bank holds the title. It is not a lease. The owner or beneficiary of the trust has all the rights of ownership including right to use, sell, develop, pass on to heirs and insure through a title insurance company. He also has the right to pay property taxes. The term of a fideicomiso is 50 years and then is renewable for an additional 50 years. I honestly can't say what happens at the end of the second fifty years and so far haven't found anyone who knows. My assumption is it would require setting up a new trust. A fideicomiso costs $2,000 - $3,000 to set up and about $500 per year to maintain. I recommend this method for purchase of a home, condo, lot, or other property that is anticipated to remain in one piece.
The second method is to form a Mexican corporation which will own the property. A corporation can be fully owned by foreigners and requires only two shareholders. This could be husband and wife or any two people who agree on a sufficient number of things. One of them can hold as much as 99% of the shares, so they don't have to agree on everything. I recommend the corporation for any property that may be developed or sub-divided, or for anyone who may be buying multiple properties which could all be under the same entity. A corporation can be set up to allow lots of flexibility without requiring revisions along the way as a fideicomiso would. By law, though, a corporation cannot be used to buy a residence for the purpose of avoiding a fideicomiso. It is supposed to be for property purchased for development or investment.
2. What is an Ejido and can Ejido land be purchased safely?
The Ejido system was initiated in Mexico in 1934 by President Lazaro Cardenas. Originally intended to provide land to the landless masses, it has effectively excluded the masses from the benefits of real property ownership. An Ejido is a constitutional and legal concept which allows groups of people to organize and jointly hold the rights to land granted by the federal government under procedures
established in "Agrarian Law". Nearly all of the land in Baja was or is under the Ejido system. It was intended that the land would be "owned" and used jointly and could never be sold.
Finally recognizing the detrimental results of the system, the government, in 1993, enacted changes to the Mexican Constitution which created a process whereby Ejido land could be divided amongst the Ejiditarios, (members of the Ejido), and titles of ownership created for their parcels. This system made it possible to sell land and actually remove it from the Ejido.
However, in order to benefit from this system, called PROCEDE, an Ejido must first accept the process through a vote of its membership, and then follow the rules in dividing and registering the land parcels. Unfortunately for some Ejidos, they failed to do this, sometimes for lack of interest or understanding, other times because to register meant the possibility of paying property taxes. And the sad fact is that now the opportunity to use government funds for surveying and doing all the paperwork has expired. Most Ejidos who didn't use that opportunity are now unable to afford the cost of the process and, therefore, are unable to divide and sell their land. Anyone attempting to purchase from an Ejido in this position is very likely in for an arduous and expensive ordeal that may never get anywhere.
But those Ejidos who did elect and then follow the process can sell their land, and the buyers can get clean titles and remove the land from the Ejido and from the control of Agrarian Law. And that is the number one question to ask when attempting to purchase from an Ejido.
When an Ejido divides its land, it issues a Certificado Parcelario for the newly created parcel. This document is registered with RAN (Registro Agrarian Nacional) and becomes a certificate of ownership for the person named. While it is not a title, it gives the holder the right to apply for and receive a title. Again, that further step is usually not completed because it requires subsequent payment of property tax. However, a Certificado Parcelario cannot be sold except to a fellow Ejiditario. So when selling land under that document, the original owner must first apply for the title and wait for it to come from Mexico City before legally closing the sale.
A purchase from an Ejido requires a full understanding not only of the applicable Agrarian Laws, but the individual Ejido rules and customs, written and unwritten, which may affect the purchase. If the leadership of the Ejido doesn't have the trust of the Ejiditarios, it is not likely that any transaction will be approved. For an agreement to be successful and free from future dispute, the process must follow the very formalistic rules of the Agrarian Law, as well as the internal rules of the Ejido.
Now, for the good news. If a purchase is made from an Ejido, following all the rules, including the Ejido's internal rules, the Agrarian Law, checking the tax, civil, administrative and other registries, the land can achieve Dominio Pleno status. It is removed from the Ejido and from Agrarian Law and is truly private property under Civil Law. It can be insured for title insurance and can no longer be subject to any prior claim. In this sense, it can be safer to purchase than land already under private ownership.
3. Can I get title insurance on my purchase?
Yes. A few US title insurance companies are now insuring property in Mexico. The three primary players are Stewart Title, www.stewart.com.mx , Fidelity National Title, www.gs.fnf.com , and First American Title, www.firstam.com
4. Can I get financing for purchasing real estate in Baja?
Yes. There are several sources for financing Mexican properties from the US. Check with www.FinanceNorthAmerica.com, Stewart Title Latin America or www.emexicomortgage.com
5. What will I pay in closing costs in Baja?
In Mexico it is typical for the purchaser to pay all closing costs with the exception of any capital gains taxes due. These costs can be quite high when figured as a percentage of the sale when the property is inexpensive. For example, a lot costing $25,000 may have closing costs of 30% of the price including a fideicomiso and the first year's maintenance. This is because the fideicomiso and some other costs are the same regardless of the price of the property. On the other hand, a $500,000 property may cost less than 5% to close under some circumstances.
In Mexico, unlike the US, the buyer is expected to pay for things like an appraisal, a survey and a certificate showing that the owner doesn't owe back taxes on the property.
While some items in the closing costs are fixed prices, there are a few that are based on percentage of the sale. The acquisition tax is 2% and a couple other fees are based on land value. But the charges can change annually and vary in different locations. Please ask for a good faith estimate for your specific transaction and avoid an unpleasant surprise at closing.
Thinks to consider
ELECTRICAL POWER vs DESALINATION PLANT: know the cost to bring power line to your property and the cost to set your a desalination plant will play a key factor in deciding what is going to be more sustainable and profitable for your project: In January 2011 the approximate cost per kilometer of three phase electricity is about $21,000 Dlls. The cost per post including the all the transformers need it within the property lines is about $4,200 Dlls per pole, each transformer provides enough power to run 8 houses.
In January of 2011 the cost per square foot for a finished dissent house in the Valley of San Quintin Baja is about $27 Dlls.
The BLS Realty Group in San Quintin BC provides you with a list of contact information of key players when planning your project to build your house in the Valley of San Quintin BC.
SOIL TEST IN SAN QUINTIN BC
Company A.T.O.C. Phone (616)166.4542 E-mail email@example.comAddress: Col. Vicente Guerrero BC.
SATELLITE INTERNET IN SAN QUINTIN BC
Name: Elpidio Romo Phone: (616)165.2048 Address: Col. Lazaro Cardenas BC E-mail: firstname.lastname@example.org ($35 Dlls a month, $150 Dlls for instalation and speed up to 1.5 M)
SOLAR POWER IN SAN QUINTIN BC
Name: Mike Diogo / Light of the world, Solar energy Baja Phone:(616)166.2403 Address: Col. Vicente Guerrero BC.
Thinking in drilling in San Quintin Baja?
As land broker in Baja Land Solutions we are commited to give you as much information you need before you buy or invest. As follows you will find information that will help you understand the process to optain federal concession for underground water rights for domestic use in the Valley of San Quintin Baja
At the moment the water department underground waters for the San Quintin BC basin (Please know there is one in Colonet BC, San Telmo BC, Camalu BC, Vicente Guerrero BC, San Quintin BC, San Simon and El Rosario BC) has many restrictions for permits to drill for water but there is one that still opens DOMESTIC USE, this federal concession is good for 30 years and it gives you the permit to drill and to use from 600 m3 up to 1,000 cubic meters of water every year. Only a national or through a Mexican corporation or none profits can apply for this water concession in San Quintin BC.
At the moment the water is being extract at a deep of 10 mts to 16 meters deep.
What are the requirements to submit a water concession in San Quintin BC for domestic use?
1. Copy of picture ID.
2. Copy of CURP.
3. Certified copy of property title.
4. Certified copy of Mexican corporation.
5. Pay for local administration fee.
6. Payment for federal administration fee.
once you drilled, you will need to place a meter wish cost around $1,500 Dlls.
If you are interest in submitting an application for a 30 year water concession in San Quintin Baja Mexico or have more questions fell free to contact your Certified Land Broker in Baja Mexico: Jonathan Mendez M.
water rights in San Quintin Baja Mexico
How much would we be asking for in the inititial application? To submit the application is laround $1,000 Dlls (500 dll for government fee, 250 dlls for engeneer , 250 for notary fee) and if they do granted it will be good for 15 to 30 years and we do not have a say how long we want it but the government does. Part of the application process is to pay a civil engineer to make a survey where we will drill and to take the property title up to Ensenada BC to the public notary to cross checked the property title.
Do the folks who would tell us where we would drill have any thoughts about the possibilities for fresh rather than salt water?The drilling company has not introduce to me the people who have done this service of finding fresh water jet, obviously this will come to past if we hire their services…. But could ask if they can tell me what are our chances to find good water.
Is there a difference in the water rights permit and/or cost if we're drawing salt water? I asked if they there was any difference but rather a concern to dry the water bed underground and make all the good water salty.
Land Brokerage in Baja Mexico Baja Land Solutions provides all real estate services related to buying and selling waterfront land and lots.
Closing coordination and Escrow services.
Residential and commercial brank trusts or Master Trust
Land developing planing and consulting
We also assist in the development of properties through our own expertise and our network of qualified professionals. We can find the right piece to fit your need.
Application and renewer of water rights concessions
Application and renewer of mineral rights concessions.
Federal concession residential and commertial concessions.
www.imipens.org IMIP Instituto municipal de investigación y planeación de Ensenada BC