Alternative

It is a common misconception that foreigners cannot own Real Estate in Mexico, but the reality is that they can.
However, there is a restrictive zone, as described bellow, and you will have to consider the following alternatives:

Out side the Restricted Zone, a foreigner or foreing corporation can acquire any type of real Estate as any Mexican
National, Holding the property as direct owner complying with Mexican Law.

Within the Restricted Zone, a foreigner or foreing corporation may obtain all the rights of ownership but it must be
in a bank trust, known as a 'Fideicomiso'.

The Restricted Zone

The Mexican Constitution regulates the ownership of the land and establishes that in a zone of 100 kilometers
along the border or 50 kilometers along the coast, a foreigner cannot acquire the direct ownership of the land.
these areas are Known as the Restricted or Prohibited Zones.
Neverthelees, the latest Mexican Foreign Investment Law, whichbecame law on December 28, 1993, makes the
allowances mentioned above.

Fideicomiso or Bank Trust

Any foreigner or Mexican National can constitute a Fideicomiso (the equivalent to an American beneficial trust)
through a Mexican Bank in order to purchase Real Estate anywhere in Mexico, including the Restricted Zone. To do
so, the buyer request a Mexican bank on his/her choice to act as trustee on his/her behalf.

the bank, as a matter of normal course, obtains the permit from the Ministry of Foreign Affairs to acquire the
chosen property in trust. the Fideicomiso can be established for a maximum term of 50 years and can be
automatically renewed for another 50-year period indefinitely. During these periods you have the right to transfer
the title to any other party, including a member of your family.

The Bank becomes the legal ownwer of the property for the exclusive use of the buyer/beneficiary who has all the
benefist of a direct owner, including the possibility of leasing or transferring his/her rights to the property to a third
party or to a preapponited heir. During this period, the foreigner is considered as a Mexcican National.

The trustte is responsible to the buyer beneficiary to ensure precise fulfillment of the trust, according to Mexican
Law, assuming full technical, legal and administrative supervision in order to protect the interests of the
buyer/beneficiary. Fideicomisos are not held by the trustee as an asset to the bank.

For practical purposes, even in unrestricted zones many foreigners an Mexican Nationals, for the matter, prefer to
hold their property under a Fideicomiso.

The Real Estate Industry

The Real Estate industry in Mexico is a similar in many ways when compared to that of the United States, which is
most probably, the most advanced in the world. It is developing quickly taking advantage of today`s technology.
However; Mexico seems to be paralleling the system, as it exists in the U.S.

Licesing

At this time, there are no Government license laws regulating Real Estate brokerage and sales in Mexico. Anybody
can, in effect, offer properties for sale and thereforce, caution should be taken to search for an established and
reputable Real Estate company such as Mayan Island.
A potential buyer may want to check with the local Chamber of Commerce Associations or prominent law firm.

Financing

The future of financing in Mexico is moving towards a secondary mortgage market, which should open
international financings resources to possible desirable mortages at reasonable rates.
For foreign, however, this devaluation has created some excellent values for Real Estate purchases
for mortage purposes.

Escrow, Title Insurance and Home Insurance

It is the Notario Publico who, in effect, acts as a Holding agent for the involved parties and for this reason there are
few escrow companies in Mexico.

At the present time there is no general use of title insurance in Mexico, although some American companies are
providing coverage in some resort areas of the country. On the other hand, insurance companies do provide full home
coverage throughout Mexico.

Purchase-Sale

Most Real Estate transactions are "opened" after a written purchase offer is accepted by the seller and when a
purchase-sale agreement (promissory contract) is signed by both parties. In most cases, a deposit is required by the
broker in order to transmit the offer to the seller.

Normally, when signing the 'escritura' or official deed, which needs to be certified by a Notario Publico or Public
Notary, the balance is paid and the property delivered. This should not take more than 45 days.

Notario Publico or Public Notary

The Notario Publico is a government appointed lawyer who processes and certifies all real Estate transactions,
including the drawing and review of all Real Estate closing documents, thus insuring their property transfer.

Furthermore, all powers attoyney, the formations of corporations, wills, official witnessing, etc. Are handled and duly
registered through the office of the Notario Publico, who is also responsible to the government for the collection of all
taxes involved

In connection to Real Estate transactions, the Notario Publico, upon request,receives the following official documents,
which, by law, are required for any transfer.

* A non-lien certificate from the public property registry based on a complete title search.
* A statement from the treasury or municipality regarding property assessments, water bills, and other pertinent taxes
that might be due.
* An apprasial of the property for tax purposes.

Closing costs

It is common practice that the buyer pays the tramsfer or acquisition tax as well as all other closing
costs including the notario fees and espenses, and the seller, pays his capital gains tax and the brokers commision.

Since January 1, 1996 the federal law regarding the real estate transfer tax, wich was 4% for all the republic
of mexico, was modified in order to allow each of the mexican states to determine its own tax. The range may be
from 47%, depending on the particular state. These percentages are applied to the value of the amount for wich
the property is sold.