Autor: silmexico

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WHAT IS A RESTRICTED ZONE TRUST?

By Edith Reyes – Student of Public Accounting and Finance at Universidad La Salle, she is currently a member of the Real Legal Research Center and the Legal Department of SIL MÉXICO.

Mexico is a great tourist attraction whose gastronomy, culture, traditions, and beaches stand out.  In recent years, the coastal area has become the preferred destination of residence for foreign tourists, captivated by the majestic views of the beaches. 

However, they face a big problem since it is not possible for them to acquire direct ownership of this land because it is a “Restricted Zone”, this does not mean that it is totally impossible for them to enjoy this as a residence since Mexican laws allow foreigners to acquire properties in this zone through a legal figure called restricted zone trust, but what is the restricted zone, what is the restricted zone trust, what is the restricted zone trust?

The restricted zone is the strip of one hundred kilometers along the borders and fifty kilometers along the beaches, which for no reason may foreigners acquire direct dominion over these lands and waters, as established in Article 27 of the Constitution, section I. 

Now, once the concept of restricted zone is understood, we can go deeper into the restricted zone trust, this is a legal figure, called a contract whose objective is that foreign persons may obtain the use or enjoyment of a real estate property located within what the law establishes as Restricted Zone.

This contract is made up of four essential figures which are:

  • The settlor: 

Understanding the settlor as the person who contributes to the real estate, i.e., the seller of the land (BBVA, 2020).

  • The fiduciary:

The fiduciary can be any credit institution authorized by law, which is going to acquire the domain (BBVA, 2020).

  • The trustee: 

This is the person who has the right to the use and enjoyment of this real estate, also known as the foreign buyer.(BBVA, 2020).

  • The trust property:

It is the real estate on which the trust is constituted.

In order for the trust to allow the use and enjoyment of the trust property, without constituting real rights over it, a permit from the Ministry of Foreign Affairs is required for the credit institutions to acquire as trustees, rights over real estate located within the restricted zone.

In order for these rights of use and exploitation to be granted, the trustees must be foreign individuals or legal entities, as provided in Article 11 of the Foreign Investment Law.

Article 12 of the Foreign Investment Law establishes that the term “use and utilization of real estate” refers to the rights of use or enjoyment of such real estate, including, if applicable, the obtaining of fruits, products, and, in general, any yield resulting from the operation and lucrative exploitation, through third parties or the fiduciary institution.

This figure regulated by Mexican regulations, which confers personal rights of use and enjoyment, represents a great opportunity for people of different nationalities whose objective is to reside or invest and enjoy the benefits that it generates, as long as it is carried out within the required legal framework. It is considered a great legal tool of acquisition since it allows the foreigner to enjoy this type of trust for an initial period of 50 years, extendable, which makes it without a doubt the ideal way to enjoy the wonderful views that the Mexican beaches offer in addition to entering an infinite horizon of gastronomic delicacies and incredible traditions that undoubtedly elevate lifestyle to the maximum.

 References::

  1. Cámara de Diputados del H. Congreso de la Unión. (1917). Constitución Política de los Estados Unidos Mexicanos. https://www.diputados.gob.mx/LeyesBiblio/pdf/CPEUM.pdf
  2. BBVA. (2020). Fideicomiso de Zona Restringida. https://www.bbva.mx/content/dam/public-web/mexico/documents/empresas/fideicomisos-bbva/zona-restringida/conceptos-basicos-fideicomiso-zona-restringida.pdf
  3. Cámara de Diputados del H. Congreso de la Unión. (1993). Ley de Inversión Extranjera. https://www.diputados.gob.mx/LeyesBiblio/pdf/44_150618.pdf



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WHAT IS THE IMPORTANCE OF REVERSION RIGHT IN TRUSTS?

SM-CI-2023-316

By Thorvald Pazos Casas – Law degree from the Universidad Regional del Sureste, is a postulant attorney in criminal, civil, agrarian, and tax matters, and is currently a research attorney and part of the Research Center of SILMEXICO.

Currently, one of the main and beneficial legal vehicles used to carry out large real estate projects and businesses is through trusts, within this attractive legal tool we can highlight the so-called right of reversion, however, what is it, how is it stipulated and what benefits does it provide?

According to the definition provided by BANCOMEXT, reversion is understood as; 

“Act by which the ownership of the assets or rights remaining in a trust at the time of its extinction is returned or retransferred to the original owner”.

The right of reversion refers to the power or right of the settlor to recover the assets contributed but not disposed of to the trust under certain conditions within a specific period of time, this right can be established at the time of the creation of the trust and is subject to the terms and conditions of the trust.

There are several types of reversion rights, among which the following stand out: 

    • TOTAL: Without conditions or reservations, in this case, the trustor exercises it and the trustee complies with the instruction.
    • CONDITIONED: Under certain conditions for the trustor to exercise this right. If you did not obtain the building permits within the first three months of the creation of the trust.
    • PROHIBITED: Due to the type of trust (in guarantee, in restricted zone, transfer of ownership) the parties agree that the settlor will NOT have this right.

How is the reversion right stipulated?

The stipulation of the right of reversion must be in writing and can be agreed upon at the time the trust contract is executed or subsequently by means of a trust amendment agreement.

At the time the contract or agreement is executed, this reservation must be identified in the clause referring to the patrimony, which will explain the manner in which the trustor may request the reversion of its assets or rights.

Legal basis.

It finds its nature in several legal ordinances, among which we highlight the following:

Fiscal Code of the Federation:

Article 14, section V. The contribution of the real estate made by the trustor will not be considered as alienation, as long as he/she reserves the right to reacquire the trust property from the trustee, either at the time of the execution of the contract or in a subsequent act.

At the moment this repurchase right is lost it is considered alienation, when a person decides to “reserve the right of reversion of the assets contributed to the trust”, he is simply agreeing that he has the power to request the trustee to return to him part or all of the assets that he previously transferred in property or rights.

If the return is partial and does not hinder the achievement of the trust’s objectives, the trust will remain in force. However, if the return, even if partial, makes it impossible to achieve said objectives, the trust will be extinguished, in accordance with the provisions of Article 392, Section II, of the General Law of Credit Instruments and Operations (LGTOC).

It is important to remember that, according to Article 381 of the LGTOC, the assets contributed to a trust must be destined to lawful and specific purposes (which must also be feasible, according to Article 1827, Section I, of the Civil Code of the Federal District, which applies in a supplementary manner in commercial matters). Therefore, if the return of assets, even in part, makes these purposes unattainable, the trust is extinguished.

Benefits of the right of reversion

    1. Control and Protection of the Settlor: The reversionary right allows the settlor to maintain essential control over the assets contributed to the trust. This is especially valuable when the settlor desires the ability to recover the assets in the event of specific circumstances, such as defaults, legal or economic changes, or any eventuality. 
    2. Tax Benefits: From a tax point of view, the right of reversion is essential. According to the Income Tax Law (ISR) and municipal legislation, as long as the trustor retains the reversion right, it is not considered that a disposal of assets has occurred. This implies that no taxes are immediately generated at the time of the contribution to the trust, which can be beneficial from a tax perspective.
    3. Flexibility: The right of reversion can be adapted to the specific needs of the settlor and changing circumstances. It can be established on a whole, conditional, or even prohibited basis, depending on the objectives and agreements between the parties involved. This provides flexibility in asset planning and management.

Therefore, the right of reversion mainly guarantees, controls, and protects the trustor against any eventuality, and as far as tax matters are concerned, the Income Tax Law (ISR) and some municipal legislations consider that the alienation of assets has not occurred as long as the right of reversion has not been lost.

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US – Corporation – What – Why – How

Monday, October 02, 2023, By Shannon Lam- Legal Assistant at SILMEXICO
Legal department

In the United States, there is a wide variety of types of corporations that can be created. These corporations pose opportunities for both entrepreneurs and foreign investors. The six types of corporations are sole proprietorships, partnerships, corporations, limited liability companies, S corporations, and C corporations.

I. SOLE PROPRIETORSHIP

Sole proprietorships are unincorporated businesses owned by a single individual. In a sole proprietorship, the owner retains complete control over the business and is responsible for any of its debts and obligations.

ADVANTAGES
One of its advantages is that it is simple to establish and operate. This is because they do not have to formally register their business. They are, however, required to register their business name and procure the proper licenses and permits.


DISADVANTAGES
Some of the disadvantages are that there is limited growth potential and personal liability. It is not uncommon for sole proprietors to struggle in the process of raising capital and scaling their business.

Since the owner is solely responsible for all of its debts, liabilities, etc., their personal assets are also at risk in the case that their business liabilities exceed what they are able to pay.

TAX ADVANTAGES
Though, one of the main perks of having a sole proprietorship is that you are only taxed on an individual level. This is called pass-
through taxation. The owner reports their profits on their individual income tax return and gets taxed at their individual tax rate while avoiding corporate income taxes, or double taxation.

APPROXIMATE COSTS
Generally, the costs of establishing a sole proprietorship are low. Fees typically consist of licensing and failing costs.

II. PARTNERSHIP

Partnerships are relationships between two or more persons conducting trade or business. These partners commit to sharing profits and losses, as well as contributing their personal assets and capital.

ADVANTAGES
The advantage of a partnership is that it is collaborative. Unlike a sole proprietorship, you are working alongside multiple partners,
and therefore have access to their network and expertise. With all of these individuals involved, there are expectations. Each partner typically signs an agreement that outlines their rights, responsibilities, and expectations in the partnership.

DISADVANTAGES
Working with multiple people can also have its disadvantages. In a partnership, similar to a sole proprietorship, there is unlimited
liability, and the partners are jointly liable. Additionally, there can be disagreements that arise when it comes to decision-making.

III. CORPORATIONS

A corporation is a legal entity, separate from its owners, that can be entered into contracts, incur debt and have its shareholders elect a board of directors to manage its business.

ADVANTAGES
Some advantages are that it has limited liability, meaning shareholders do not have to take on the burden of the businesses’ debts, and that they live on in perpetuity, meaning they can exist forever regardless of ownership changes.

DISADVANTAGES
The disadvantages are that they do get double taxed, so they have to pay both corporate income taxes and individual taxes based on the dividends that they receive, and they have to follow an abundance of formalities and regulations that have to be strictly followed.

TAX ADVANTAGES
Some of its tax advantages are that owners

IV. LIMITED LIABILITY COMPANY

A limited liability company, more popularly known as an LLC, is a business structure that consists of members as opposed to owners. There is no maximum to the number of members that an LLC can have. You might come across an LLC with a single member.

ADVANTAGES
Some of its advantages are that it has limited liability and flexible management. LLCs are able to be managed by their members or
elected managers.

DISADVANTAGES
The disadvantages are that its members may have to pay self-employment taxes on their share of profits and that they have to adhere to certain legal formalities.

TAX ADVANTAGES
Like sole proprietorships and partnerships, they also have pass-through taxation. LLCs can actually elect to be taxed as a corporation, partnership, or as part of the owner’s tax return. The decision of tax classification is usually done to benefit the members.

APPROXIMATE COSTS
LLCs are costly to form and maintain, in comparison to sole proprietorships and partnerships, with many of the same fees mentioned previously.

V. S CORPORATION

S corporations are corporations that have limited liability and additional tax benefits. Shareholders of S corporations report
income and losses on their personal tax returns, meaning their taxes are assessed at their individual income tax rates. To quality
to be an S corporation, you must meet the requirements as follows:
1. Be domestic
2. Have allowable shareholders (U.S. citizens and residents can be shareholders of an S corporation)
3. Does not exceed 100 shareholders
4. Have only one class of stock
5. Has to be an eligible corporation (cannot be insurance, domestic international sales, etc)

ADVANTAGES
Its advantages are that it’s a limited liability and, like corporations, members can classify themselves as employees to reduce self-employment taxes.

DISADVANTAGES
The disadvantages are its stock ownership restrictions and its cost of maintenance. It can only have one class of stock and no foreign ownership is permitted. The fees to create and maintain S corporations are high since you have to incorporate your business and pay the on-going administrative fees.

TAX ADVANTAGES
Luckily, S corporations have pass-through taxation.

APPROXIMATE COSTS
As mentioned earlier, forming and maintaining a S corporation can be costly.
Some costs include accounting, bookkeeping, filing, and administrative fees.

VI. C CORPORATION

C corporations are legal entities that are taxed separately from their owners. They are referred to as C corporations because they follow the regulations in Subchapter C of the Internal Revenue Code. They are different from S corporations in that they are required to pay both federal and state taxes.

ADVANTAGES
Their advantages are that it is a limited liability, it lives on in perpetuity, and raising funds is simpler with its unlimited shareholders. If they require any funding or capital, then they can sell their stock.

DISADVANTAGES
They are subject to double taxation, but they can reduce this by reinvesting their profits back into the business.

TAX ADVANTAGES
Alternatively, they have a flat rate of taxation and shareholders can identify as employees and take a salary, however, if they were to receive dividends then they would be taxed twice.

APPROXIMATE COSTS
Forming and maintaining a C corporation can be costly with many fees being similar to those of standard corporations.

VII. STATE-SPECIFIC BENEFITS

Now, forming a business in specific states can be more advantageous than others. Two states that hold many business benefits are Delaware and Nevada.


DELAWARE
Delaware is a popular state for incorporating corporations for a couple of reasons. Firstly, they offer a variety of corporate structures, which allows for some flexibility. Secondly, they value privacy. Shareholders are not required to disclose their names in public filings, unless they choose to do so. Thirdly, judges in Delaware are well-versed in business matters, since this is what they primarily deal with, and it allows for more consistency in legal proceedings.

NEVADA
Nevada is known for its favorable tax environment. They do not have state corporate taxes and their extensive asset protection laws can be attractive to companies with significant assets. Instead of corporate taxes on income, they tax corporations’ gross receipts. And like Delaware, they also value privacy and allow businesses to nominate officers and directors, which is helpful in the case that a business wants to maintain discretion.

VIII. WHAT TYPE OF COMPANY DO FOREIGN INVESTORS CHOOSE TO CREATE?

Most foreign investors choose to create LLCs in the United States. This is because of their liability protection, pass-through taxation, and operational flexibility. As a foreign investor, it is important that the business is straightforward and that the complexities are kept low so it can run as streamlined as possible. Because, unlike domestic investors, they will not always be familiar with that country's regulations and laws, and may not be able to handle erupting business issues in person.

References:
Business structures. Internal Revenue Service. (n.d.). https://www.irs.gov/businesses/small-
businesses-self-employed/business-structures
Crail, C. (2023, June 3). Why incorporate in Delaware? Benefits & Considerations. Forbes.
https://www.forbes.com/advisor/business/incorporating-in-
delaware/#:~:text=The%20most%20famous%20reason%20Delaware,not%20pay%20corporat
e%20income%20tax.
The Nevada Advantage. Nvsos.gov. (n.d.). https://www.nvsos.gov/sos/businesses/the-nevada-
advantage

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STUDY OF SOIL MECHANICS

Friday, September 29, 2023, By Jessica Hernández, Real estate advisor and marketing analyst in SILMÉXICO

In a previous post, we talked about soil classification and how important it is to identify them when planning a construction project. To do this, it is necessary to carry out a soil analysis, which will be discussed below. 

Soil analyses allow us to know the chemical, physical, and mechanical characteristics of the land where the work will be carried out, the layers or strata that make up the soil as well as its depth.

The study of soils or soil mechanics is made up of 3 stages:

1. Exploration and land testing

In this first stage, a reconnaissance of the site is carried out, strategic points are explored and soil samples are taken, which will be analyzed later in a second stage in the laboratory. These samples are taken through various techniques and tools such as:

    • Calicata: to make excavations of small or medium depth in chosen points of the ground. This seeks to have a direct view of the terrain that is generally not seen, for its characterization and analysis.
    • Penetrometer: consists of the penetration of the soil with the introduction of this tool into the ground, which generally has a conical shape.

Probes: Through these, the ground is drilled with a cylindrical probe that extracts the soil trapped inside the cylinder. As the samples are taken, they are placed in order of depth in boxes, to determine the type of soil at different depths.

2. Laboratory work

In this second stage, all the samples taken in stage 1 are taken to the laboratory for analysis. Laboratory tests will allow us to know issues such as humidity level, consistency limits, pressures, and sky components, among others.

3. Preparation of final report

The last stage consists of writing the final report of the study carried out, in which all the observations, results of the samples, and the characteristics of the land are detailed, whether it is suitable or not to carry out the construction project, it is delimited the amount of weight the soil can support, and recommendations on materials and construction are also issued.

 

Have you ever wondered why the Tower of Pisa is tilted? This was not precisely the design or the intention for this historical and tourist monument, the reason for its inclination is that at the beginning, the work was vertical, but over time it was inclined because it is located on unstable ground and does not have foundations to support the weight of its 56 meters high. That is why the study of soil mechanics is important, it allows the land to be prepared according to the structure that is intended to be built, which will determine whether or not it can deal with the passage of years, possible telluric movements, etc. Correctly carrying out this study can save lives, as well as preserve large and important buildings.

 

Interested in a soil study for your new project? At SILMÉXICO we have an expert construction team, in charge of carrying out all the relevant work prior to the start of a project. Come to us and get to know about all our services.

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WHAT IS THE TRUST MANAGEMENT?

By Thorvald Pazos Casas, SILMÉXICO Research Center, Translated  by Jessica HernándezJessica Hernández

Trust is a fickle legal instrument, which has been transformed over time and has become popular in commercial practices. Recently, we can say that it is the rise of this very flexible legal vehicle, there is certainly no specific law that regulates all aspects of this figure, however, the Trust has been strengthened through a solid legal foundation that depends on the type of trust that is intended to be established, which implies the consultation of various current Mexican laws. In this article, we will focus on one of its most significant variants: Trust Management.

TRUST MANAGEMENT

What is the Trust? The Trust in accordance with the contemplated provisions in the General Law of Credit Titles and Operations2 (LGTOC), in its number 381. It is a contract or a legal transaction through which a person called Trustor, transfers the ownership or ownership of assets and/or rights to a financial institution, called fiduciary so that it conforms to the purposes and objectives of the contract that manages the assets or rights in favor of the trustees or beneficiaries. 

From the previous concept, it is important to address two questions; Who can participate in a trust? Can all assets and rights be transferred? According to the first of the questions raised, article 381 of The LGTOC mentions that people with capacity can be subjects, this is in relationship with the Civil Code of the State of Oaxaca in its numerals 21 and 25 respectively, they mention that people are divided into: Natural Person and Moral person. This means that both individuals and legal entities (companies, etc.) can participate in a trust, as long as they comply with the legal requirements and can exercise their rights and obligations. For its part, regarding the second question, it is important to focus on that, people have the ability to decide what to do with their assets and/or rights freely, except and with the exceptions that these are found in commerce, are lawful and do not affect third parties. That is, in the example of not affecting third parties, it refers to the fact that you cannot transfer food rights, or use a trust to avoid your responsibilities in that regard. In this sense, it is mentioned that certain assets and rights cannot be transmitted through a trust if its transfer violates laws or affects the legal sphere of third parties. Knowing the previous generalities, we are going to study one of the variants that the Trust has, which is known as “Fideicomiso de administration”. Rodolfo Batiza states that “TRUST MANAGEMENT” is known in which the trustor delivers real estate to the trustee who is responsible for the execution of lease contracts, the collection of rents, the promotion of eviction or eviction trials, payment of various taxes levied on real property, etc., all in the interest of the beneficiary”.

Manuel Villagordoa Lozano3 points out that management trusts “are those by virtue of which certain assets or assets are transferred to the trustee rights, so that the fiduciary proceeds to carry out the custody operations, conservation or collection of products of the trust assets entrusted to him the trustor, delivering the products or benefits to the trustee”.

What we can interpret from the two previous definitions, the function of administration trust is to transmit to the trustee certain assets and rights (real or personal property, real or personal rights, including securities, titles, credits, and cash) for him to keep, guard, manage, collect and transmit in your favor or to a third party. Then the question arises, when can we use trust management? There will be trust management provided that the trustee is prohibited (because it is not part of the purposes of the trust) the provision of assets in favor of the trustee or a third party.

The activities that the trust carries out are those related to the custody and conservation of the assets that make up the trust assets, as well as the collection of products or returns that they generate and transmit to a third party. Likewise, you may make the investment of trust assets through the acquisition of goods of another nature.

The constitution of Trust Management not only protects your personal assets from external threats, but it can also improve your financial situation by reducing the tax burden. It is a smart strategy to effectively manage and safeguard your assets, offering you the peace of mind and security you need on your path to financial success. Commercially, Trust Management is a flexible legal instrument that adapts perfectly to the needs of the operation, and additionally provides great benefits such as, Can the assets of trust be seized? They cannot be seized by creditors or debts against the trustor. The assets and rights are in the name of the trustee and not in the name of the trustor. Only the rights are seized (but if there are no instructions (from the committee) of payment, nothing is delivered). 

Does the trust pay taxes? The trust as such does not, since according to the Art 1 of the LISR, those obliged are the Natural Persons and the Legal Persons, however, the Trust is not a person. Therefore, those who must pay the taxes are the settlors and the trustees. 

1 Mendoza, C. (29 de marzo del 2022). El Fideicomiso y sus implicaciones tributarias. Colegio de Contadores Públicos de México. https://www.contadoresmexico.org.mx/Vida-colegiada/Fideicomisos-y-sus-implicancias-tributarias

2 Ley General de Títulos y Operaciones de Crédito. DOF 22-06-2018.

https://www.diputados.gob.mx/LeyesBiblio/index.htm#:~:text=22/06/2018-,PDF,-WORD 

3 Mendoza, C. (29 de marzo del 2022). El Fideicomiso y sus implicaciones tributarias. Colegio de Contadores Públicos de México.

https://www.contadoresmexico.org.mx/Vida-colegiada/Fideicomisos-y-sus-implicancias-tributarias 

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DO YOU KNOW THE SOIL CLASSIFICATION FOR CONSTRUCTION PURPOSES?

Wednesday, September 20, 2023, By Jessica Hernández, Real estate and marketing analyst in SILMÉXICO

One of the most important aspects to consider when starting a construction is the type of soil, as this will determine what will or will not be suitable for the work, or how the soil should be prepared for the building so that it turns out as expected plans. 

In Mexico, the classification of soil types is in charge of the INEGI (National Institute of Statistics, Geography and Informatics), and the categories are listed below:

According to geography

The geographical location of the land provides context for what it is like. In Mexican territory, the main types of soil are:

    • Regesol: this is the loose material on the rock and is where most of the mountain ranges are located.
    • Litosol: predominates in forestry, agricultural, and livestock functions.
    • Xerosol: it is arid in the center and north of the country.

Meanwhile, the Yucatan Peninsula, due to geological events thousands of years ago, has different characteristics from the rest of the country and the types of soil that predominate are:

    • Leptosol: which is shallow and dominates the landscape. 
    • Histosol: with organic material accumulated on the coast of the peninsula.
    • Vertisol: abundant in clay and changing with temperature.

According to the texture

In construction issues, we can talk about types of soil according to their texture, which are classified as:

    • Sandy: very light in texture and with little organic load, so it does not work in fertile soil. However, it is a useful source of construction materials.
    • Clay: It has a heavy and sticky texture abundant in organic matter. Likewise, clay is a useful material for construction.
    • Silty: contains no organic matter and is sterile by definition.
    • Stony: composed of rocks of different sizes. These kinds of soils are waterproof so they prevent water circulation. It is a good base to support a foundation, it is a good land for carrying out multi-level projects.

According to its integrity

This classification is even more important in the field of construction, since depending on the integrity of the soil, it will be the foundation that must be used in the work, this will give certainty that the soil will be able to support the construction. They are classified into:

    • Rock: Capable of supporting large buildings, and within them stony soils can be found.
    • Fine soils: As their name indicates, they are composed of fine materials
    • Granular soils: This type of soil also has fine material, such as gravel and sand, alone or in a mixture. As expected, we can include sandy soils here. Just like fine soils, their foundation requirements are more complex than those of rock soils. 

As mentioned at the beginning, the identification of the type of soil is necessary in the planning of the work, for this, it will be necessary to carry out the corresponding soil study, which we will talk about in a future publication.

Interested in construction services? Contact us at https://silmexico.com/contact-us/.

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TYPES OF FINISHES FOR INTERIOR WALLS

Wednesday, September 13, 2023, By Jessica Hernández, Real Estate Advisor & Marketing Analyst in SILMÉXICO

The finishes are the coatings that are placed on a black work, whether on the walls, floors, roofs, openings, or ceilings, that is, they are the final details whose purpose is to protect, seal, or waterproof said surface, giving at the same time aesthetics to the construction. There are different types of finishes depending on where you want to place it and what function you want to fulfill.

In this section we will focus on the types of finishes for interior walls, of which there are two; horizontal and vertical.

Horizontal finishes:

They are subdivided into rigid pavements, continuous pavements, and false ceilings.

False ceilings: They have the function of hiding the evacuation pipes or installations that pass through the ceiling. They are usually made of plaster and reduce the height of the room.

Rigid pavements: These are those composed of rigid pieces such as tiles, paving stones, or tiles and are made of stone, cement, ceramic, concrete, wood, and steel sheets.

Continuous pavements: They are executed on-site and possible joints must be taken into account to avoid cracking. Continuous pavements are paving, gravel, printed concrete, or micro cement. For the final finish, it is usually necessary to use other materials known as intermediates that go between the final finish and the load-bearing elements.

Vertical finishes:

  • Within which we can find:

    Plastering: It is used to achieve a smooth wall surface thanks to the application of mortar, cement, or plaster base.

    Interior paints: This layer on the interior is purely aesthetic and is applied over the plaster.

    Tiling: It is usually used in humid places such as bathrooms or kitchens and consists of a wall covered in tiles, its function is to waterproof the wall.

    Stucco: Stucco is a paste of slaked lime and pulverized marble, It is applied in several layers and is used to cover both interior and exterior surfaces.

    Whitewash: Whitewash is a mixture of lime, powder, marble, and water. It applies like paint.


    Remember to choose the finish that best suits the design of your property considering that it fulfills its basic function of sealing, protecting, or waterproofing, and that it can also be maintained from time to time without having to replace it so often.

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WHAT IS NEEDED TO BUILD IN MÉXICO? ALL ABOUT THE BUILDING PERMIT

Thursday, August 7, 2023, By Jessica Hernández, Real Estate Advisor & Marketing Analyst in SILMÉXICO

The construction permit is with which authorization is requested from the government either to modify, repair, expand, install, demolish or build a property. On the contrary, if the process of said permit is not carried out, you may be creditor of sanctions such as the definitive closure of the work.

The construction permit not only applies to the construction of homes, buildings, premises, warehouses, but also to make changes to the street, such as sidewalks. In this case, the permit is even more important, since it would be modifying a space that It is for shared use and is paid for by the citizens themselves with their taxes.

How is this permission obtained?

In Mexico there is a government institution that is in charge of granting the construction permit, this is the Ministry of Urban Development and Housing, in the same way this permit is granted through the mayors or municipalities to which the land or site belongs, wherever want to build, or make modifications.

Once the permit has been granted, the construction will have a limited time to finish, which must be respected in the same way, otherwise a fine can also be credited. 

It is important to highlight that construction permits vary according to the size of the work to be carried out, they are differentiated by minor works and major works. Likewise, a building permit will not be the same if the construction will take place in natural areas or reserves, such as coastal areas.

What are the necessary documents to process the construction permit?

  • Land use permit.
  • Deed or property title registered in the Public Registry of Property.
  • Proof of payment of Property Tax for the fiscal year in which the request is made.
  • Drinking water contract or receipt.
  • Road and access Geometric Design Plan, calculation of the number of parking spaces.
  • Plan endorsed by the Municipal Coordination of Civil Protection.
  • Geotechnical study and plans with the specifications, in case the project generates soil stability alteration conditions.
  • Construction project with indications in accordance with the regulatory code.
  • Plan of the structural and foundation design signed by the expert in the matter.
  • Structural calculation signed by an expert in the matter, attaching a copy of his professional certificate.
  • Plans of electrical, hydraulic, special, sanitary and gas installations, with their respective descriptive and calculation reports.
  • Approval of the location and land use of the construction, in accordance with the provisions of the Territorial Code.
  • Power of attorney to carry out the process or notarized Power of Attorney in case the owner does not sign the application.
  • Valid official identification with photograph of the owner.
  • Current official identification with photograph of the person processing.
  • Request letter signed by the expert, in which he presents his registration as Project Manager and, in turn, must sign all the plans with his expert number.
  • Vo.Bo. of the Drinking Water and Sewerage System, in case the project has a swimming pool and/or micro treatment plant (septic tank).
  • Study of visuals of the public road and adjoining areas in which it is demonstrated that the existing levels of the environment are respected, and that the sunlight and ventilation of the neighboring properties are not obstructed. Carried out by the expert responsible for the work.
  • Evaluation of the Environmental Impact Statement or respective risk study, Civil Protection Opinion and Urban Compatibility Study, with a positive resolution, in the case of the construction of gasoline, diesel and/or carburetion service stations.
  • Conformity document of the Ministry of Energy, in the case of carburetion stations for the supply of L.P. Gas.

Can you build without a permit?

The only works that can be carried out without a construction permit are those carried out by the government in order to make improvements to the infrastructure that provide benefits to society.

In the event that construction begins without permission, as mentioned at the beginning of this section, you may be subject to a fine, which will only generate extra and unnecessary expenses within the budget allocated to the work, in addition to third parties, such as construction workers, would also be affected.

At SILMÉXICO we are used to carrying out construction projects from scratch, taking care of every single detail, from the processing of the corresponding permits, to the delivery of the final product.

For advice about our construction services, call 9511271380, write to info@silmexico, or visit our offices in Oaxaca City and Santa María Huatulco.

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WHAT IS A JOINT VENTURE CONTRACT?

Wednesday, September 6, 2023, By Jessica Hernández  (Real estate advisor & marketing analyst in SILMÉXICO) ft. Karla Soto (lawyer in SILMÉXICO)

This contract, as well as others, is an agreement of wills of two or more persons who have an object in common, its main characteristic is that the parties that participate in it look for a strategic ally for a business or an economic activity they want to carry out since this or these allies can make a significant contribution for economic growth or a social impact, being this main purpose of a joint venture contract. 

In simple words, it is a temporary agreement in which the parties are reunited to achieve a business goal, and that is why it can be short, medium, or long-term. The persons who participate in it can keep their individuality and legal independence, so that each of the parties can contribute with knowledge, Know-How, and even monetary, material, and human resources, being that, the intervention of each is under the regulations and rules stipulated in the contract.

Likewise, it is necessary to emphasize that a joint venture contract is not expressly regulated by Mexican legislation, so in legal terms, it is an “atypical contract”, in which clauses are established that contain the rights, obligations, responsibilities, contributions, and possible risks, as well as the extent to which the parties will assume them in the event that the main business can not be carried out. 

Once the above has been specified, it is said that there are 3 main types of joint venture contracts: 

1. Joint Venture: strategic alliances

In this type of Joint Venture, it is not carried out for an economic contribution, but for the sum of characteristics of each of the parties in the business or main objective of the business.

2. Joint venture: co-inversion

In this type of Joint Venture, the main characteristic is the monetary or asset contribution made by the parties, generating the same direction, whose purpose is to obtain greater profits than those that could be achieved individually through the incorporation of new markets and economies of scale.

3. Joint venture: contractual

In this type of Joint Venture, the parties involved carry out a common activity, establishing collaboration agreements that stipulate clauses that govern the activities that each party will carry out, the way of distributing profits and risks, and the use of auxiliary agreements and contracts. satellites. It is worth saying that there is strict regulation of entrepreneurship.

Are there risks and benefits?

The answer is yes, its main advantage is that being a legal link where everything is shared, all the parties involved assume the same level of responsibility, likewise, by sharing costs these are considerably reduced, in the same way, due to their union becomes a stronger and more efficient competition.

However, in terms of risks, the most outstanding is a possible conflict of interest by any of the partners, as well as the dependence between them for making important decisions.

The answer is yes, its main advantage is that being a legal link where everything is shared, all the parties involved assume the same level of responsibility, likewise, by sharing costs these are considerably reduced, in the same way, due to their union become a stronger and more efficient competition.

However, in terms of risks, the most outstanding is a possible conflict of interest by any of the partners, as well as the dependence between them for making important decisions.

For a joint venture contract to be successful, possible measures must be considered, always implement effective and efficient communication between the parties and the way in which their agreements and decisions should be made.

And, finally, a correct integration process, since if the Joint Venture occurs between people from different countries, it could generate conflicts due to differences between cultures, markets, legislation, and the planning of resolution strategies.

Final comment.

Joint Venture contracts, as well as their satellite contracts, will always be a good tool for legal or physical persons who have business activities, since they can help them increase their business alliances with other businessmen with the same interests or objectives, always giving support and legal protection for any eventuality.

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WHAT IS THE DUE DILIGENCE IN REAL ESTATE?

Monday, August 28, 2023, By Julio Velázquez, Lawyer in SILMÉXICO

When we think about buying or selling a property, we generally focus on some elements such as the price, delivery date, date of signing of deeds, etc. For this reason, we omit to analyze the background of the process that will result in a successful operation, such as the passage of due diligence or due diligence, however, what do we mean when we talk about this topic in the world of Real Estate? 

The process of buying and selling properties is made up of various stages, one of them, and perhaps the crucial and important stage is due diligence, in which the property information must be analyzed to provide suitable legal certainty for the celebration of said operation.

Therefore, a legal team of specialists in real estate consulting must objectively and in detail analyze all the documents that make up the transaction file, this analysis must result in a favorable opinion to later give the green light, this in order to provide security and legal certainty to the purchaser or seller of the property.

TIME OF THE DUE DILIGENCE

Once the initial document is signed, the due diligence time varies; everything will depend on the negotiation of the parties or the conditions in which the operation is carried out, although the final opinion must be given by the expert adviser who is studying the operation, since, due to his/ her experience, he/ she will be able to assess the time that is performed documentation inspection thoroughly. 

 

Normally an average term is from 10 to 30 business days, in the most delicate operations; either because a large amount of resources is handled or due to a condition that greatly compromises the same parties involved, the due diligence period could exceed the time contemplated; This is so that, in case it is required, process or obtain a missing document or an indication that conditions between the parties have the window of time.

ELEMENTS TO VERIFY IN THE DUE DILIGENCE

Once we have identified the average terms of analysis and study, it is time to know what are the elements that are studied in this due diligence.

In each operation, the parties must have a checklist on which they rely to request information on the property, the owner, and the legal status, among others. Normally the most important elements are made up of:

 

  • Public deed.
  • Registration of the deed before the RPP (Public Property Registry).
  • Identity and quality of the seller, which is detailed in the public deed or power of attorney (as well as the corresponding record of power).
  • Compliance with tax obligations, that is, payment of taxes.
  • The property has basic services, such as electricity and water.

 However, these points and the checklist will depend on each operation, since they are all different.

 At SILMÉXICO there is a strong and consolidated legal team of specialists in real estate consulting that will be able to help review each of your operations in detail, making you feel comfortable and legally secure.