More and more people are realizing that you can own property in Mexico and especially in the restricted zone.

In 1517 a gentleman by the name of Hernandez de Cordoba landed on the Yucatan Peninsula, beginning the rule of Spain over Mexico. It wasn't until 1822 that Mexico declared its independence from Spain, but land still belonged to wealthy foreigners, the church, and wealthy Mexicans. Then in the latter part of the century, to make matters worse, along came a greedy man, Porfirio Diaz. He proceeded to sell off nearly the whole country to foreign interests in his 35 years as ruler.

The poor in Mexico were fed up and decided to have a revolution that turned into one of the bloodiest in Mexican history. This all started in 1910 and by the time it ended, at least a million people had perished. The Mexican Revolution ended and the Federal Constitution of 1917 was enacted, enduring to this day.

The main reason for the bloodshed was the Mexican citizens wanting to own land and never again to be controlled by foreigners. Addressing this problem, the government put restrictions on foreign ownership and on the Catholic Church.

Article 27 of the Constitution gave all ownership of lands and waters within Mexican national borders to the government. It can transfer ownership to Mexican citizens, Mexican companies, and foreigners, provided that: "they agree, because of such actions, to consider themselves as Mexican nationals, with regard to these properties and not to invoke the protection of their governments with respect to such properties, under penalty, in case of violation, of forfeiting to the Government of Mexico, the properties thus acquired". This is for all property ownership anywhere in Mexico, but Article 27 put a twist in it; that is, the restricted zone. Foreigners are prohibited from owning property within 60 miles of the border or within 30 miles of any Mexcian coastline. Also, at that time, Germany was trying to buy land for naval bases, Article 27 stopped that with the backing of the U.S. government.

The problem still existed because the land didn't go back to the peasants and controversy and trouble continued until 1934.l Lazaro Cardenas was elected president and for the first time in Mexican history division of property was to become reality. Cardenas proceeded to break up the huge land holdings of the wealthy and upper class, and redistributed them into cooperative farms (ejidos). Peasants could now work the land for their own benefit and profits were retained. Fifty million acres were divided into community owned property in this manner.

Cardenas also nationalized the entire oil industry and for the next 30 years, Mexico experienced significant industrial growth. Huge deposits of oil exist in the Gulf coast region and the state of Chiapas. Estimates of up to 60 billion barrels of oil are available for production in these areas.

Government overspending and excessive borrowing from international money markets made the mid seventies a tough time and inflation by the early eighties had reached an unbelievable 160%. But relief was near and in 1988 Carlos Salinas de Gortari took over as president. Focusing in the next six years on economic growth and stability, he privatized and expanded industries that imported raw materials and then assembled them into end products for exportation, taking advantage of low labour costs. By the mid-nineties, over three quarters of Mexcian state owned property had been privatized. Salinas also spent $10 billion dollars on public works, including hospitals, schools and roads.

The North American Free Trade Agreement (NAFTA) signed in 1992 by Salinas, was a welcome day for foreign investment. Mexico, realizing the vast potential for income derived from foreign sources, has made huge strides in making buying property possible as seen in the 1973 Foreign Investment Law.

The creation of a land trust (FIDEICOMISO) made it possible for foreigners to own property in the desirable restricted zone. The bank trust is fairly simple. The title to the property is put in the banks name and the purchaser is listed as beneficiary. The beneficiary enjoys the same rights of ownership as a Mexican National and may build, tear down buildings, modify them, rent, lease or sell at anytime as long as all the laws and zoning are adhered to. The bank basically works for the beneficiary to ensure that all administrative and procedural protocols are followed.

This is all set up in a 50 year renewable trust as stipulated by the Foreign Investment Law. This says that you cannot be turned down for renewal and will run in perpetuity (forever) provided that it is renewed within the terms established by law. Protected by the Federal Government against bankruptcy banks, therefore, bank trusts are backed by the government. Due to this fact, many foreigners buying land outside the restricted zone choose to set up a trust for the added security.

Title insurance has been available in Mexico since 1993. With American companies such as Stewart Title, First American Title, and Fidelity Title, the risk of losing your home and investment is no longer a concern. With these major companies confident in doing business here they have taken the perception of risk away and have instilled confidence in Mexican real estate.

Caution is always advised when considering buying real estate in a foreign country and you should always consult a professional who know the ins and outs of trusts and buying in the restricted zone.

Re/Max Cabo San Lucas