What is Real Estate and Real Property Law?
The definition of Real Estate or real property is land and the buildings on it. Real Estate law governs who may own and use the land. This simple concept includes a wide range of different legal disciplines. First, Real Estate may be either residential or commercial. It can be owned by one person but used by another through rental arrangements.
Land can be bought or sold, and due to its high value, there are many local laws that ensure Real Estate transactions are properly performed and recorded. Land may also pass between family members through estate planning, or may be owned by more than one person. Finally, state and local governments have rules concerning the purposes for which land may be used for example, each plot of land must be used according to local zoning laws, and landowners may not damage the surrounding environment.
Terms to Know
- Title: A legal term describing who officially owns the land.
- Mortgage: A loan that covers the price of a house. The new homeowner must give the lender partial ownership of the house as collateral.
- Foreclosure: The process by which the lender takes control of a house if the owner fails to pay back the mortgage.
- Closing: The meeting in which ownership of Real Estate is officially transferred.
- Escrow: Money or property held by a third, disinterested party for safekeeping.
- Real Estate Agent: A professional licensed to negotiate and conduct Real Estate transactions.
Real Estate law is called thus because it’s about real property. The real property is land as opposed to personal property which is objects. Fixtures that are permanently on the land like buildings or other large structures are also a part of real property. There are many aspects of Real Estate law like deeds, titles, purchase financing, zoning, taxes and estate planning.
If you’re thinking of buying a property in Mexico, there are legal basics you need to know in order to make your purchasing process easier. First, you need to know that buying a house in Mexico as a foreigner is different from it is for a Mexican; the reason is that there are different laws that apply to foreigners. You will also need the help from your agent; or even better, from a team of professionals to guide you through all the purchasing process.
The Restricted Zone
To begin with, according to the article 27 of the Mexican Constitution, a foreigner can’t directly acquire a property within 50 km from the water and 100 km from the border. This area is known as the restricted zone. However, Mexico’s Foreign Investment Law allows Foreign Investment Law allows foreigners to acquire indirectly a property in the restricted zone through two legal entities:
- Bank trust: This is when a bank is hired on the client’s behalf to hold the title deed. The client pays a yearly maintenance fee, which can be around $400-$800 USD. However, the bank maintains all the rights of the ownership. Although, it is the beneficiary who enjoys the use of the property and can benefit of it: use it, sell it, rent it, modify it, etc. This entity only allows one property per bank trust.
- Mexican Corporation: It requires two shareholders and one of them must have a Mexican Tax ID; for which he needs to get and maintain a permanent resident visa. With the Mexican Corporation, you can own multiple properties. Nevertheless, it requires the corporation to do a monthly and an annual report of taxes. It is a good idea to hire an accountant if you choose this entity.