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Los Cabos Real Estate: Safety First
Carol S. Billups
Broker/Owner, Realty Executives Los Cabos
www.reloscabos.com The creation of wealth is never without risk – nor is the pursuit of pleasure. Whether your chosen investment vehicle is real estate or the stock market risks will always be involved. The successful investor researches and mitigates those risks. Investing in real estate anywhere offers great rewards and Los Cabos is no exception. But here we have an additional benefit: you don’t get just great returns but you also get to enjoy a fabulous lifestyle while you gain them. But those rewards come to investors who do their homework. Investing in a vacation or income property in Los Cabos is safe and secure. Many visitors would like to enjoy our laid-back resort lifestyle but hesitate because they’ve never invested in foreign real estate. The process is actually straight-forward and safe. In Los Cabos foreigners (that would be US and Canadian citizens as well as all others) can buy property outright as long as they own it in a trust known as a Fideicomiso. This trust, which is similar to a living trust, exists to hold title to one piece of property. If your property is located within 50 Km from a sea coast or 100 Km from an international border this is the only way in which you can take title. In Los Cabos that pretty much defines all of our real estate. But we’re not complaining because not only is the Fideicomiso system safe it offers tax and estate planning advantages. What you need to know are the terms of the trust. When Bob & I got our first trust we were so excited we immediately got the trust translated from Spanish to English. Which is when we understood the whole process. The trust stated that for the purposes of this piece of paradise the government of the United Mexican States hereby granted us all the rights and benefits of Mexican citizens. In return we agreed not to seek redress with any foreign government. In other words: the Alamo is NOT going to happen again. In very simple terms the trust owns the land and you own the trust. You have the rights to buy, sell, rent, improve, build upon, or pass the property to your heirs without probate. All you have to do is maintain the trust with a Mexican bank and renew it every fifty years. Backing up the trust is your title insurance policy. Only recently available in Mexico, three companies now offer the same policies you’re familiar with in the States and Canada. The same company that covers your primary home will provide identical coverage on your vacation home here in Mexico. Unlike the US, where title insurance is often mandatory, here in Mexico it is an option. However the wise investor would never pass on it. Last, let’s talk escrow. Again, this was not an option until recently. Buying property here came down to a matter of trust. You gave your money to the seller or their agent with the understanding that after receiving it they would then sign over the property in question. Scary? You betcha! But now we have US-based escrow services. In fact, many agencies are asking, in addition to your earnest money, for an additional $500 deposit with the offer. Why? The $500 opens an escrow account with a US bank in which your earnest money and subsequent deposits reside until the transaction is complete. The seller is not compensated until he delivers the property to you. It’s hard to imagine what the risks to buying property in Los Cabos are now that we have title insurance and escrow service. After all, can that beach-front lot actually decrease in value? Just remember – safety first! Get the title policy and close through a reputable agency. Carol S. Billups is Broker/Owner of Realty Executives Los Cabos, located on the L. Cardenas (the main street) between Amerimed and Lenny’s Deli. She can be reached at (624) 147-7541 or via email at
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. You can visit her website at www.reloscabos.com. |
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