QUESTIONS AND ANSWERS
We check our e-mail daily and are here to answer your questions, so feel free to contact us as much as you'd like.
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How do I join the El Dorado Home Owners Association?
Please send an email to Rancho El Dorado Home Owners Association for details.
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What is the Condo Association?
Question: Hello, we come down fairly rarely (once or
twice per year) and would have a trouble attending
meetings, but we received a letter from the
ranch concerning our privatization and requesting
that we attend a Condo Association meeting (we
didn't buy a Condo) with our DOL listed on it.
It also offered a limited power of attorney
Proxy for assigning our vote. We simply have
a place near the tower on road 19, and wondered
if the Condo stuff even applies to us. We did
get into the Master Trust, but nothing was mentioned
about being part of a condominium group or area.
Does anyone know anything about this situation,
or this letter? We have other friends around
our block, but few email addresses. Sorry to
bother you, but hope you know something about
this, 'cause we don't. Thank You
Answer: The Ranch
is establishing a Condominium Regime and the
rules and regulations are Condominium Regime
Rules and Regulations. What many people do not
realize about a condominium is that they are
not actually buying the property, they are essentially
buying air space, everything from the ground
up as high as you can see, but not the actual
ground.
As far as the meeting goes, we find
that to be interesting in that they must have
a specified number of property owners present
before the meeting can convene. Since the developer
owns most of the lots, there should be no problem
with having a quorum and convening the meeting.
The same thing goes with the voting since the
developer controls the "lions share"
of the votes, the votes from individuals, such
as yourself, are actually rather meaningless.
Any issue brought up for a vote will most likely
be determined in accordance with the developers
wishes.
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What is the restricted zone in Mexico
regarding property ownership?
Answer: There is a restricted zone in all of Mexico
and it prohibits foreigners from owning
land that is less than 100 kilometers from the
border or 50 kilometers from the
coast.
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Although a foreigner cannot own land
in the restricted zone, can a lease be obtained
for an indefinite number of years?
Answer: No, Mexican law allows for land to be leased,
but only for a maximum of ten years.
The lease may be renewed for an additional ten
years, etc.
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Should you ever contract to buy property
which has a lien against it?
Answer: Absolutely never contract to buy property which
has a lien against it. First, the
seller cannot deliver clear title and without
the title, the land stays in the sellers
name and may be further used as collateral,
or even be taken in bankruptcy proceedings. Before closing, always ask for
a lien certificate, or have the owner
sign a document verifying there are no unrecorded
liens and that if any appear at
any time, he will be responsible for them.
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Under a Master Trust, will owners be
issued individual fideicomisos for their lot,
home, or condo?
Answer: No, individuals are simply designated as beneficiaries
in the Master Trust. The
potential problem with being under the Master
Trust umbrella is that if there are unpaid taxes,
unpaid loans, etc., the land in the Master Trust,
including yours, may be seized to satisfy those
obligations.
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Is there an initial tax when I buy
property?
Answer: Yes, Mexico’s Real Estate Acquisition
Tax must be paid and amounts to 2% of the
property’s appraised value or price paid,
whichever is higher.
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Do real estate agents in Mexico have
to be licensed?
Answer: No, anyone can sell real estate in Mexico. The
old saying, “Buyer Beware”, should
be taken seriously. Consulting an attorney before
you buy may be one of the wisest decisions that you can make. You may find it
beneficial to consult the Mexican
Association of Real Estate Professionals (AMPI)
website for further information.
Their web address is www.ampinacional.com.mx
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I have been told that the rights of
a property remain with the last legally registered
owner (the seller) until the buyer is formally
named as beneficiary in a public document before
a Mexican Notary. Is this true?
Answer: What you have been told is correct. Until the
Notary designates the buyer as the
new owner, the seller enjoys all rights as the
owner. As an example, if you paid
$3,750 to El Dorado Ranch to purchase your property,
the seller is still the owner
until you have appeared before a Notary and
he/she designates you as the owner.
To our knowledge, there are no owners at
El Dorado Ranch.
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In an article that I read which was
written by “Mexico Matters” staff,
it said that“El Dorado Ranch can now sell these lots
and remaining property to foreigners in
the form of a living trust”. What is a
living trust in real estate terminology?
Answer: In all the literature we have researched, we
have not seen a term “living trust”
in
reference to real estate. A Master Trust is
discussed often, however, to our knowledge no Master Trust has been issued since
1996.
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“Not only is the property legally
ready for transfer of title” a quote in
“Mexico Matters”, San Felipe Newsletter
1/15/04 edition. If that is the case, why have
the titles not been transferred?
Answer: Before the property can be legally ready for
transfer of title, all of the subdivision
work must be completed by the developer/owner.
The lot must be legally described
and an individual property tax number issued.
This individual property must be registered
in both the Property Tax Office and in the Public
Registry of Property. Until this is completed,
legal title cannot be granted since there is
nothing to describe. “The result is that
the purchaser has paid money for the acquisition
of the property, but cannot receive legally
recorded title or beneficiary interest in a
Mexican Bank Trust” - from Mitch Creekmore,
Stewart Title Company
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When I paid my $3,750 to El Dorado
Ranch in November of 2003, why wasn’t
the
legal beneficiary interest conveyed to me at
that time?
Answer: Most likely because the condominium regime had
not been filed of record, the
necessary subdivision approvals had not been
obtained, or the land had not been
properly regularized for bank trust entitlement.
Only the developer knows for certain.
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Assuming that I ever receive beneficial
interest in a Master Trust, when should I
pursue obtaining my individual fideicomiso?
Answer: Immediately. You should get out from under the
umbrella of the Master Trust as
quickly as possible to avoid responsibility
for any future liens on the property, whether
they be for taxes or otherwise. Remember that
as long as you are under the Master Trust, your
property can be subject to seizure for collection
of debts incurred by the development.
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With a "By Owner" sale should we get and attorney, a notario and a fidecomiso? What do we do with the Ranch?
Question: We are considering buying
property at El Dorado and are reading your website
info with great interest. The seller is selling "By Owner." It is not yet clear (after
reading what we have) what you recommend. We
should get and attorney, a notario and a fidecomiso.
What do we do with the Ranch?
Do we have to pay them, anything or can we do
this sale without them?
Can you point us to competent attorneys familiar
with the selling of property? Any idea the range
of fees we can expect?
Thank you for any help you can provide.
Answer: Your purchase of property from
an individual seller will be handled just as
any other sale, but you may be required to enter
into the master trust. Entrance into the master
trust currently costs $3,750 and you can negotiate
that payment with the seller and possibly split
the cost with the seller. In addition, there
is a transfer fee of $500 that the Ranch collects.
Has the seller paid the $3,750 already and is
in the master trust? If so, where is the property?
The reason we ask is that if the seller is in
the master trust, the new buyer cannot be in
the master trust and must obtain an individual
trust (fideicomiso) outside of the master trust.
We know of no one that has an individual
trust. So, it's important that you know the
status of the property. Without being able to
go into your own individual trust, you really
have no means to register the property that
you acquire and it is in limbo. If you have
to go into the master trust, it is recommended
that you obtain an individual fideicomiso at
the earliest possible time. For that you will
have to have a notario, no exceptions. They
research the property title, furnish you with
a certificate of no liens, make sure that taxes
have been paid, etc. An attorney can coordinate
all of this and make the process a smooth transition,
especially since most of us are not familiar
with real estate laws in Mexico.
Hiring an attorney
would be money well spent. We can put you in
touch with an attorney to assist you with the
purchase process if you have an interest. By
the way, the fees will vary in accordance with
the work to be done, but they are very reasonable
when you consider the peace of mind that you'll
have knowing that the process has been completed
in accordance with the laws of Mexico. Hope
this helps, but if you have more questions,
please feel free to contact us again.
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When you say "the regulations state" do you mean the El Dorado condominium regulations or some Mexican regulations?
Question: Once again, many thanks for
your help. Forgive me for not understanding
certain things yet...
When you say "the regulations state" do you mean the El Dorado condominium regulations
or some Mexican regulations?
If the seller pays the $3,750 and enters the
master trust before I buy, then when I buy where
are we with respect to the master trust?
What do we pay for the steps to our part in
the master trust and/or individual fideicomiso?
If the seller does NOT pay the $3,750 where
do we as buyer stand on the same issues? It
is not clear whether the seller should pay or
not. Also, you said " Once you're in the master
trust, you are theoretically able to obtain
your individual fideicomiso. You will not get
an individual fideicomiso at closing, you have
to go through the individual trust process on
your own after you're in the master trust and
that's when you'll need the assistance of an
attorney." Why theoretically? Have others in El
Dorado obtained them? If so, why not make it
a condition of sale? If not, what is holding
the process up?
Answer: I'll try to make the theoretical
part a bit clearer. The reason that I said "theoretically"
is that no one has yet been able to obtain an
individual trust/fideicomiso, at least at El
Dorado Ranch and at La Ventana del Mar. Up to this point, the reason that
none has been issued is the lots had not been
registered and recorded at the Office of Public
Registry in Mexicali. Recently, this registration and recording has been done. Before a fideicomiso can
be applied for, the individual lot must be surveyed
and recorded in the office I just mentioned.
So, when I said theoretically, I meant that
if all of the proper steps are complete, a fideicomiso
can be obtained. Getting a fideicomiso as a
condition of sale could not be complied with
at this time since the lot has not been officially
identified in the Office of Public Registry.
I hope that this clears that up. It's a little
confusing, yes?
When I referred to regulations,
I was referring to what El Dorado Ranch themselves
put into their purchase contracts regarding
a master trust beneficiary selling his/her property
to another party. I do not know if that particular
stipulation is Mexican law or not, but it is
what El Dorado expects the buyer to adhere to,
yet they are not complying with that particular
term in the contract themselves. As I told you,
the same stipulation is on the Certificate of
Beneficiary Rights document and I would assume
that it was a requirement from the Ministry
of Foreign Affairs, the government entity that
approves and issues permits for master trusts.
If the seller has paid the $3,750 and entered
into the master trust, then the person that
he sells his property to cannot (under the terms
of the purchase contract and the Certificate
of Beneficiary Rights) have any part in the master
trust. The new buyer cannot be a part of the
master trust, but must obtain their own individual
trust outside of the master trust and that cannot
be accomplished at this time.
If the seller
has not paid the $3,750, the new buyer will
have to pay the $3,750 and become a beneficiary
interest holder in the master trust. That is
not a negotiable item. What I had alluded to
in my earlier e-mail was that if you're going
to have to pay the $3,750 as a condition of
the purchase, you might as well negotiate with
the seller to pay a portion of that amount.
You are correct in your understanding that you
must be a part of the master trust before you
can persue your own individual trust/fideicomiso.
Don't apologize for not understanding the process
entirely. It's a somewhat complicated procedure
in terms of the steps that have to be taken,
especially when the Ranch has not complied with
their obligations, which would make everything
much easier to understand and deal with.
Clarifying
questions is an important part of what our association
does and we're glad to help. So, it the waters
still seem a little muddy, please feel free
to ask away!
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If a seller has not paid to get into the Master Trust, should they do this before the sale? Can we get to an individual trust directly without going through the ranch's Master Trust?
Question: The owner has not paid to
get into the Master Trust. Should they do this
before the sale? If not, at what point do we
enter the Master Trust (or do we?).
Can we get to an individual trust directly without
going through the ranch's Master Trust? (Also,
we are told that the fee has gone up again
to $6,000)?
Do we get an individual fideicomiso as a precondition
to the closing?
Thanks again for your help.
Answer: The regulations state that a new buyer must
enter into the master trust if the seller had
not done so previously. The seller can pay the
master trust fee at anytime prior to the sale
and I would assume that it can be done at the
time of sale as well.
The point is that you
will be in the master trust as the new owner
and it will supposedly cost $6,000. Unfortunately, you cannot bypass the
master trust and go directly to an individual fideicomiso. Once you're in the master trust,
you are theoretically able to obtain your individual
fideicomiso. You will not get an individual
fideicomiso at closing, you have to go through
the individual trust process on your own after
you're in the master trust and that's when you'll
need the assistance of an attorney.
Our HOA attorney can assist you with the individual
trust process.
His name is Sergio Martin del Campo and he may
be reached at 011-52-686-568-4363 if you're
calling from the states, or 576-4363 if you
are dialing locally from San Felipe.
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Does Butler own the land or is he still leasing it?
Question: What is the worst case from
an ownership point of view?
Does Butler own the land or is he still leasing
it?
Will/can the lease we have run out?
Thanks again,
Answer: Butler does
have a valid deed to the property that was recorded
at the Office of Public Registry in the last
week of December 2002 and that negated the
lease from the Ejido on the entire property.
There are approximately 26 Ejidatarios challenging
the sale claiming that a fair price was not
paid and they are seeking additional money or
the return of the property. So far, they have
been unsuccessful in the court system.
The lease that runs out in 2020 for residents
who did not enter into the master trust is still
valid. At that time, if the homeowner has not
become a part of the trust, the property reverts
back to the developer. However, many people
believe that the developer becomes owner of
the land and the improvements, but we have been
told by our attorney and others that the developer
must pay fair market value for the property,
not just take it as it stands. For those in
the master trust, the trust is in effect for
fifty years. We have seen certificates of beneficiary
rights that have no expiration on them, but
fifty years is the general rule. If a person
held their property for fifty years under a
master trust, they would have to obtain their
individual fideicomiso at the end of the fiftieth
year.
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This web site is the property of Asociación de Colonos de Rancho El Dorado, A.C. and is not affiliated with the El Dorado Ranch development in any way
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