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Opportunities for investors

La Ribera  

Beachfront lot : 2 Hectares 

Beachfront : 500 meters lineals

Location : Cabo San Lucas

Status : SOLD 

Turistic development : Rolling Hills

Price : $ 10 usd by square meter

Fractional properties in Mexico

Fractional Properties


New Trend.

Fractional Properties are among the newest trend in the Baja Real Estate market. 

This option is usually available for luxury homes where each  co-owner (at 1/4th or 1/8th interest in the property) has the right to use the house or condo for a specific amount of time. If properly structured, this product gets you into your million-dollar dream-home at a "fraction" of its value for a limited time each year.

Ownership, US LLC or Mexican Corporation vs.  Fideicomiso.

On one hand, some fractional properties are offered having a US LLC or a Mexican Corporation as the owner of the property; however, although it may seem simple, this option raises a couple of questions. First, Corporations (whether Mexican or not) are taxed each year with a Tax on Fixed Assets owned by the corporation, which includes any type of real estate. Second, the property is still used for residential purposes and such a fact takes us back to square one, to the Restricted Zone and to the need for a Fideicomiso.

On the other hand,  a properly structured  Fractional Property uses the Fideicomiso structure to set the ground rules. Being the Fideicomiso nothing else but a Bank Trust, it allows to achieve a double goal. 

1) Compliance with the Law on Foreign Investment and the Mexican Constitution with regards to the need of a Fideicomiso for residential properties within the Restricted Zone.

2) Sets the ground rules for the operation, administration and any other stipulation that shall govern the relationship between the co-owners of the property, including but not limited to: costs and expenses, payments, date availability, selling their interest, liens on the property and any other future agreement between the buyers of a fractional interest. It may also specify the forum and applicable Law in case of certain controversies among the owners.

The Closing for a Fractional Property may vary depending on how the deal is structured. Having the offer, contracts and any other relevant documents reviewed by a Mexican attorney is highly recommended.


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