About The Bank Trust

It is important to understand why foreigners need a Bank Trust. It is only needed for those properties that are within 50 kilometers from the beach (restricted zone). All properties inside Puerto Vallarta's city limits are in this restricted zone. Also, it is important to understand that the Bank Trust can only be used with properties that have an existing deed, and are registered in the public registry. Ejido properties cannot be put into a bank trust. To learn more about ejido properties please read our article "Yes Foreigners Can Own Property in Mexico".

We will try and describe the bank trust in simple terms instead of the long dictionary definition.

The bank trust is set up in terms of fifty years. This is where a little misconception is involved. Many people think that after those fifty years, you (the owner), has to buy the property again. Or this is where a lot of people think you are only leasing the land. This is not true. The bank trust is set up for fifty years, so that you can switch banks after this term. You can switch banks at any time, but it involves closing costs because a new bank trust has to be issued. If you wish to sell the property, you can at any time. If it is a foreigner buying the property, than he or she or both would have the option to assume the current bank trust, or to set up a new one with a different bank. The property is not part of the banks assets!

During the closing process, when the lawyers are setting up the bank trust, the buyers have the option to write the bank trust as AND, or EITHER/OR. It is important to understand that a group of persons can buy a specific property. In this case the best way to write the bank trust would be AND. This means that everybody would have to sign away the property at the time of selling. Either/Or means that the property can be sold with only one of the signatures. This is a good way or common way to do it for couples who trust each other very well.

"Passing Away"

Beneficiaries are named in the bank trust in case the legal owners pass away. In this case the beneficiaries show up at the bank with a Death Certificate, and the bank would pass on the legal rights of the property to the beneficiaries. This process is actually simple, should not take more than one month, but it does involve writing a new bank trust which means closing costs. The property will never be taken away as a cause of passing away. In the case that both owners and beneficiaries pass away, a court order will be enough to transfer the legal rights. In any case the property is not part of the banks assets, therefore, the bank will never keep the property.

The costs for setting up the bank trust is approximately $1,500.00 usd. This includes a permit from The Ministry of External Affairs allowing foreigners to own property in the Restricted Zone (50 kilometers from the beach), and it includes the first year of maintenance fee of the bank trust. This fee is to be paid every year directly to the bank in US dollars. These fees can range from $350.00 usd to $500.00 usd, depending on the bank. If your bank trust was set up in July, than you pay that fee every year in July, etc.

"Property Taxes"

Every year, in January, the owner of the property is responsible to pay property taxes (predial in spanish). It is a very simple task, show up at the city hall in Downtown Puerto Vallarta, give the teller your propertie's address, or if you have the previous year's tax bill at hand. The teller will than find your property, based on the appraisal value (which is below the market value), the teller will let you know the amount to pay. Make sure to receive and keep your paid tax bill. In Nayarit, the property tax is based on the square meters of the property. Property taxes for properties in Bahia de Banderas Municipality (Nuevo Vallarta, Bucerias, Mezcales, La Cruz de Huanacaxtle, Punta de Mita, San Vicente, San Jose, El Porvenir, San Juan de Abajo, or Valle de Banderas), are paid in Bucerias.

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