MEXICO CITY -- Mexican legislators, seeking to make their country more attractive to U.S. retirees, may soon lift a major impediment for foreigners who want to own a piece of Mexico’s Pacific or Caribbean coasts.
For the first time in nearly a century, lawmakers are moving to allow non-Mexicans to buy coastal real estate and hold the deeds to it, without having to set up bank trusts or find silent Mexican partners.
Proponents of the change say it pushes Mexico toward the modern era, and is a sign of ebbing nationalism under President Enrique Pena Nieto. They say it will help Mexico compete with Southern U.S. states and tropical Central America for U.S. retirees seeking spots in the sun and by the sea.
The proposed amendment to the Mexican Constitution sailed through the Chamber of Deputies on a 356-119 vote April 23, and is now before the Senate.
But opponents are still rallying, charging in a petition campaign that the change may condemn Mexicans to saying goodbye to ocean views.
“If just one of every 20 U.S. millionaires buys a house with 22 meters (72 feet) of beachfront, no Mexican will see the sea again,” the petition drive says, drawing on the nation’s historic allergy to foreign ownership of its resources.
The allergy has its roots in land grabs in the 19th and 20th centuries. After the 1917 Mexican revolution, legislators who drafted the nation’s constitution, fearing a new invasion by land or sea, barred foreigners from owning land within 31 miles of the coast or 62 miles of any border. Those strips of territory became known as the restricted zones.
Foreign investment laws were modified in the 1990s, allowing foreigners to buy coastal properties through trusts in which banks hold the titles. The 50-year trusts allow trustees to buy, sell and pass property to heirs without restrictions.
But many foreigners found it nerve-wracking to plunk down money for properties but never caress the deeds themselves, putting a brake on land sales.
“I have many clients who say, ‘Why am I going to buy something and have it in the bank’s name?’” said Roberto Rivas, a real estate broker in Tulum, a high-profile tourist destination south of Cancun on the Caribbean.
“Maybe 40 percent of potential buyers have backed away because of lack of clarity that clouds their understanding of what a bank trust is,” echoed Bill Barvitski, an American real estate agent in Puerto Penasco, a resort also known as Rocky Point on the Sea of Cortez near Arizona.
The Foreign Relations Secretariat, which must approve each trust, says 30,755 such trusts were set up from 2006 through early this year, presumably all in the restricted zones.
Manlio Fabio Beltrones, one of the most powerful politicians in the ruling Institutional Revolutionary Party, known as the PRI in its Spanish initials, argued upon submitting the proposal that the current system lends itself to opaque ownership and fraud by lawyers, accountants and public notaries against foreigners.
“Now, they must use straw men – which is most common – set up a corporation or use a subterfuge that is called a bank trust that is kept at the bank and enjoys bank secrecy,” Beltrones told MVS Radio.
Opposition to the change, he said, is “demagoguery dressed as nationalism.”
Another PRI lawmaker, Gloria Elizabeth Nunez, told McClatchy that “many foreigners have been defrauded by straw men purchasers” who later claimed the property for themselves.