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Introduction To Real Estate Transaction in Mexcio

(c) 1994 by Dennis John Peyton

(The following is an excerpt from Mr. Peyton's new Book "How to
buy real estate in Mexico" available from Law Mexico Publishing
at:1-800-LAW MEXICO 800-529-6394)

People from all over the world are taking a second look at
Mexico when considering real estate investments.  Mexico has
more than 17,000 miles of coastline, much of it still to be
developed. Its proximity to the United States and its
recreational facilities throughout the country make it even more
desirable. Now, with the recent implementation of the North
American Free Trade Agreement,  it is almost certain that we
will see a boom in the Mexican real estate market.

If you are thinking about investing in real estate in Mexico,
you should first get a clear understanding of the legal
requirements necessary to secure your rights in the property and
know how to properly carry out the transaction. Although the
most basic elements of the transaction are the same as in the
United States, there are some differences of which you should be
aware.

In Chapter Two, entitled "Steps To Take When Buying Property" we
will look at a generic approach for buying most types of
property in Mexico. These steps would usually be applicable to
any transactions involving raw land, houses, or condominiums.
The sections on "Kinds of Property" and "People involved in the
Real Estate Industry" are intended to give buyers who might be
involved in a typical real estate transaction a general idea of
alternatives available to them.

This book is intended to give potential foreign buyers the
fundamental principles and procedures which apply to Mexican
real estate transactions.  Most of the book will deal with
foreigners who want to buy coastal and beach front property,
which, as we shall see, is in the restricted zone.

The second part of the book is a brief overview of the Mexican
laws pertaining to foreign investment and highlights those areas
which pertain to real estate transactions involving foreigners.
I have tried to give as much detail as possible while attempting
to address many of the problems a foreigner may encounter in
Mexico.

APPLICABLE LAWS

The legal foundation for real estate law in Mexico starts with
the Federal Constitution. Each state in Mexico has its own Civil
Code which, especially in the case of the provisions concerning
real estate, is usually exactly the same as the Civil Code for
the Federal District. Nevertheless, it is advisable to check the
Civil Code of the state in which you intend to purchase to make
sure that there have not been any changes.

It is also important to consult a Mexican attorney to make sure
that any of the state or municipal laws do not conflict with the
federal provisions. This book is only intended to give a general
summary of the most general provisions. Most of these principles
are reflected in the various state legislation, but, to be sure,
check with a competent Mexican real estate attorney.

The most basic laws for real estate transactions are:

The Mexican Constitution and international treaties

The Foreign Investment Law and its regulations

The Civil  Code

The General Law of National Properties

Federal  Zone Regulations

Condominium Law

Tax Laws: income tax law, acquisition tax law

The General Law of Negotiable Instrument

Commercial Code

Public Registry

Notary Law and Federal Law of Public Brokerage

Agrarian Law

Corporation Law

FOREIGNERS AND FOREIGN INVESTORS

First of all, it is important to consider what determines the
status of being a foreigner and what is considered foreign
investment in Mexico.

Articles 30 and 33 of the Mexican Constitution specify that
foreigners are those who are not Mexican by birth or
naturalization.

In the case of Mexican nationality acquired by birth, there are
three conditions, any of which, when met, would qualify an
individual for Mexican nationality:

If you were born in Mexico, regardless of your parents'
nationality;

If you were born outside of Mexico and your mother or father is
Mexican; or,

If you were born on a Mexican airplane or ship.

 Mexican nationality by naturalization may be acquired by:

Foreigners who obtain a letter of naturalization from the
Ministry of Foreign Relations, and,

Foreigners who marry Mexican nationals and establish residency
within Mexico.

Article 33 also stipulates that all foreigners are protected
under the civil rights provisions of the Constitution.  The
President has the power to deport any foreigner whose presence
is deemed to be "inappropriate", even though this power is
rarely, if ever, used.

The Mexican Foreign Investment Law, which was published on
December 27, 1993, defines "foreign investment" and "foreign
investor" as:

Foreign investment:

The participation of foreign investors, in any proportion, in
the capital stock of Mexican companies;

That which is made by Mexican companies with a foreign capital
majority; and

The participation of foreign investors in the activities and
acts provided for in the Foreign Investment Law.

Foreign Investor: an individual or legal person of a nationality
other than Mexican and foreign entities without juridical
personality.

We will examine the types of foreign investments contemplated by
this law in the chapter on investment opportunities, but for now
let's take a look at the parts of the law that deal with real
estate investments by foreigners.

The Mexican government has put foreign investment in tourism and
real estate development high on its list of priorities.  The
tendency of the Mexican government has been moving from one of
tight restrictions throughout the seventies and part of the
eighties, to a position of encouraging foreign investment in all
areas of Mexico.  The government has been willing to show that
it means business with its new "open-door" policy for foreign
investment by making important changes in the foreign investment
laws.  Whether the investment is a "maquiladora", a tourist
development involving the construction of hotels or
condominiums, or simply the construction of summer homes by
foreigners, the Mexican government has been sending out the
message loud and clear:  Mexico is open to foreign investment.

In spite of the advances and positive changes made in the
Mexican foreign investment law, there are still some aspects of
the law dealing with real estate acquired by foreigners that may
seem overly restrictive, especially when compared to similar
situations in the United States.  Hopefully, we will be able to
dispel some of the confusion and misconceptions often associated
with real estate transactions in Mexico.

THE RESTRICTED ZONE AND "FIDEICOMISOS"

In an attempt to avoid some of the problems Mexico had to deal
with in the past with regard to its territorial rights, the 1917
Mexican Constitution enacted restrictions on property ownership
by foreigners.  Basically the law declared that the Mexican
nation has original ownership to all land and water in Mexico,
as well as minerals, salts, ore deposits, natural gas and oil,
but that such ownership may be assigned to individuals.

The Mexican Constitution prohibits direct ownership of real
estate by foreigners in what has come to be known as the
"restricted zone". The restricted zone encompasses all land
located within 100 kilometers (about 62 miles) of any Mexican
border, and 50 kilometers (about 31 miles) of any Mexican
coastline. However, in order to permit foreign investment in
these areas, the Mexican government created the "fideicomiso",
(FEE-DAY-E-CO-ME-SO) which can be roughly translated as a real
estate trust. Essentially, this type of trust is similar to
trusts set up in the United States, but in this case a Mexican
bank must be designated as the trustee, and, as such, has title
to the property and is the owner of record.  The Mexican
Government created the "fideicomiso" to reconcile the problems
involved in developing the restricted zone and to attract
foreign capital.  This enabled foreigners, as beneficiaries of
the trusts, to enjoy unrestricted use of land located in the
restricted zone.

A "fideicomiso" is a trust agreement created for the benefit of
a foreign buyer, executed between a Mexican bank and the seller
of property in the restricted zone.  Since foreign buyers do not
have the capacity to enter into a normal real estate sales
contract, due to Constitutional restrictions, the bank acts on
their behalf.

The bank, as trustee, buys the property for the foreigner, and
has a fiduciary obligation to follow instructions given by the
beneficiary.  The beneficiary of the trust retains and enjoys
all the rights of ownership while the bank holds title to the
property.  The foreigner is the beneficiary of the trust and is
entitled to use, enjoy and, if he or she should decide to, even
sell the property held in trust at its market value to any
eligible buyer.

In chapter two we will take a look at the procedures for setting
up a real estates trust.  In summary, the following parties are
involved in a real estate trust:

The seller of the property, or trustor (el fideicomitente) who
irrevocably transfers title to the property to the bank.

 The bank, who acts as trustee (el fiduciario) and holds title
to the property and is obligated to administer the property only
for the benefit of the buyer or beneficiary.

The buyer, or beneficiary (el fideicomisario) who is entitled to
use, enjoy, lease, or sell the property held in the real estate
trust without limitation whatsoever.

trust term and 1993 foreign investment law

The new foreign investment law, published in December of 1993,
extended the term of real estate trusts to 50 years and also
allows for foreign owned Mexican corporations to hold property
in fee simple in the restricted zone.

Article 10 of the law states the following: "In accordance with
that which is provided by section I of Article 27 of the Mexican
Constitution, Mexican corporations with foreigners exclusion
clause or which have executed the agreement to which said
precept refers, may acquire ownership of real property in
national territory."

Article 27-I of the Constitution states that legal capacity to
acquire ownership of  lands and waters in Mexico is governed by
the following provisions: only Mexicans by birth and Mexican
companies have the right to acquire ownership of lands, waters
and their easements, or to obtain concessions for the
exploitation of mines or waters.

However, the Mexican government may grant these rights to
foreigners, provided that they "...agree before the Ministry of
Foreign Relations to consider themselves as nationals and not to
invoke the protection of their governments in matters relating
thereto; under penalty, in case of noncompliance with this
agreement, of forfeiture of the property they had acquired to
the benefit of the nation."

Article 10 goes on to state that in the case of Mexican
companies whose by-laws include the agreement provided in
section I of article 27, the following shall apply:

They may acquire ownership of real property located in the
restricted zone, intended for carrying out non-residential
activities, duly registering said acquisition with the Ministry
of Foreign Relations; and,

They may acquire real property in the restricted zone, intended
for residential purposes, in accordance with the provisions of
the chapter on real estate trusts in the restricted zone.

In other words, a foreign owned Mexican corporation may own
property in the restricted zone provided that the property is
going to be used for non-residential activities.  The key term
here is "non-residential activities". When this book was going
to press, a high level official at the Ministry of Foreign
Relations indicated that "non-residential activities" refers to
commercial, industrial, and hotel activities; whereas
"residential activities" refers to any activity in which the end
use of the property is for residences, as in a place in which
people live.  This would include, he said, all residential
tourist developments, condominiums, etc.  When pressed as to how
a trailer park, for example, would be considered, he indicated
that it would most likely be considered as a residential
activity, but each case would have to be examined on an
individual basis.

The official, who asked not to be identified, went on to explain
that new foreign investment regulations are currently being
drafted which will replace the present regulations which were
published in 1989. The new regulations will clarify the
application of the new law. However, until the new regulations
are published the 1989 regulations will continue in effect in
all provisions which do not contradict the new law. It is
unfortunate that the new regulations were not published at the
same time as the new law. Until they are published we will be
somewhat in the dark about what activities are and are not
considered as residential.

Although the final version of the law did not include the same
language as the version which was initially sent to Congress,
the Ministry official said that, in general terms, a
foreign-owned Mexican corporation may be used to own property
used for any commercial, industrial, or "hotel" activity.

On the other hand, a representative of the Ministry of Commerce
and Industrial Development (SECOFI) indicated that in the
opinion of SECOFI, residential activities would be limited to
the end user of the property only.  In other words, if someone
built condominiums, let's say, for the sole intention of selling
them, a trust would not be required because the activity
involved would be commercial (i.e. the sale of the condos)
rather than residential.  He went on to explain that the new
foreign investment regulations will clarify questions and in
particular they will determine who will be responsible for
setting up the real estate trust: the developer or the end user.

For the purposes of this book, since its focus is primarily on
the purchase of residential property in its various forms, the
importance of the interpretation of what "residential
activities" are will not have much impact on the foreign home
buyer in Mexico.  The only difference will be who is required to
set up the real estate trust.  Either the developer will have
the trust already in place when the residential units are sold,
or the buyers of the units will have to apply for an individual
trust for each unit as they are sold.

As for trusts for real estate (fideicomisos) in the restricted
zone, Article 13 of the new law extends the duration of trusts
to a maximum of 50 years, and they may be renewed. This
provision also applies to trusts already in existence, but in
order to take advantage of the new term you must apply for the
new term before the Ministry of Foreign Relations. Anyone
interested in doing should contact the trustee bank and have
them contact the Ministry. The official I spoke with indicated
that the fee involved for the extension of the current 30 year
trusts to 50 year trusts would be minimal and would not be
considered as a renewal.

The bank, as trustee, must get a permit from the Ministry of
Foreign Relations to establish a real estate trust and acquire
rights on real property located within the restricted zone. The
purpose of the trust is to allow the trust's beneficiary the use
and exploitation of  the property without constituting real
property rights. The beneficiaries of the trust
(fideicomisarios) may be:

Mexican corporations with foreign investment, and;

Foreign individuals or legal entities.

The law defines "use" and "exploitation" as the rights to the
use or possession of the property, including its fruits,
products or, in general, any revenue which results from its
operation and exploitation by third parties or from the trustee
institution.

The law does not clarify how trust permits will be issued.
Article 14 of the law states that the Ministry shall decide on
issuing the permits "...considering the economic and social
benefit which the realization of such operations imply for the
nation." The basic criteria used to determine such benefits is
likely to change somewhat with the publication of the new
foreign investment regulations. However, it is reasonable to
anticipate that some of the unwritten rules used by the Mexican
government in the area of real estate trusts will be included in
the new foreign investment regulations. I would also think that
some of the confusing elements will be eliminated For this
reason it is important to understand the application of the
current regulations, even if they are going to be replaced, as
well as some of the unwritten policies the government has used
in the past.

Under the terms of the current regulations, published in 1989,
the Ministry of Foreign Relations may grant real estate trust
permits in accordance with the following criteria: 1. The
property must be used for tourist or industrial activities; and,
2. Rural properties are limited to twenty hectares. Given that
the new foreign investment law does not define "residential" it
is helpful to see how they defined tourist or industrial
activities in the 1989 regulations. Even though this part of the
regulation is no longer applicable, it is useful for
understanding the evolution of how trust were authorized in the
past.

The regulations define industrial and tourist activities as the
construction, sale, rental, establishment, and operation of the
following:

Industrial parks, hotels and residential subdivisions;

Hotels, motels, inns and other lodging establishments, as well
as camps and trailer parks;

Stores, warehouses and industrial facilities;

Houses and buildings used as dwellings for workers and employees
of industrial and tourist enterprises;

Commercial centers for which the administrative provisions
establish a special system for their operation  are:

Research centers;

Tourist developments or complexes;

Tourist marinas;

Piers and the industrial, tourist and commercial facilities
established there; and

Establishments for restaurants, cafeterias, bars and commerce in
general

It is likely that the above list will be simplified or
eliminated altogether. The new regulations will most likely
require a trust only when the investor is going to use the
property for residential purposes. I suspect that this will
simply mean that if the property is residential, and you are the
end user, you will be required to set-up a real estate trust to
hold title.

Article 17 of the regulations states that "In order to grant
permits to set up trusts to carry on residential activities and
tourist activities with residential purposes, including
condominiums, located on the Peninsula of Baja California and
the restricted zone of the country's borders, the Ministry of
Foreign Relations shall decide in accordance with the applicable
legal criteria."  It is important to point out that Baja
California has been treated differently than other coastal areas
in Mexico. It is not clear if this policy will continue with the
new regulations, but I was given some assurances by the Ministry
of Foreign Affairs that all applications for trust will be
treated equally regardless of where the property is located.

Article 20 of the 1989 regulations states that The Foreign
Affairs Ministry shall issue permits requested for the execution
of new trusts with respect to the same real property located in
the restricted zone if the following requirements are satisfied:

That the foreign investors that are beneficiaries of the trusts
to be extinguished, or the duration of which is about to
terminate, are the beneficiaries of the new trusts.

That the new trusts are executed on the same terms and
conditions as the trusts to be extinguished, or the duration of
which is about to terminate, with regard to the purposes of the
trust, the use of the real property and the characteristics
thereof.

That the respective permits are requested within a period of
three hundred sixty to one hundred eighty-one days preceding the
termination of the corresponding trusts.

That the provisions of the Law, the Regulations and the General
Resolutions are observed.

These provisions will most likely simplified or omitted. In any
event, if the renewal above conditions are met, as well as the
investment commitments agreed to in the original trust permit,
the Ministry must issue a trust permit.  In other words, the
applicants do not have to comply with any other additional
conditions, and the Ministry does not have any discretional
powers to deny the new trust application. If the original trust
permit was issued without investment commitments, the Ministry
may not impose new investment commitments because none were
required for the original trust permit.

The new Foreign Investment Law repealed all general legal,
regulatory and administrative provisions which opposed this Law.
Additionally, until regulations for the new Law are published,
the 1989 regulations shall continue to be in force insofar as
they are not opposed to the new Law. Therefore, in the opinion
of this author, the general principles of the 1989 regulations
for the renewal process, and limits on land area for real estate
trusts are still in effect.  Unfortunately, the 1989 regulations
do not define "non-residential activities". However, I believe
that the general provisions related to real estate in the
restricted zone will not be substantially changed in the new
regulations.

In the meantime, trust permits will be issued without delay for
properties included in already recognized developments. An
official at the Ministry of Foreign Affairs added that permits
may be issued for properties in other underdeveloped areas, but
to facilitate the process, trust applications should include as
much information as possible to help them determine the benefits
of granting the permit.

Any petition for a trust permit which complies with the
requirements stipulated by the Ministry must be granted within
30 working days following the date of its presentation.  The
registration with the Ministry of property acquired by foreign
owned Mexican corporations must be resolved within a maximum
period of 15 days following the filing of the petition.
Otherwise, in both cases, the corresponding permits or
registration shall be considered authorized.

There is a common misconception among foreigners investing in
Mexico that once the trust expires the beneficiary looses all
rights and benefits of the sale of the property held in trust.
This certainly is not the case. On the contrary, even though the
beneficiary does not have title to the property held in trust,
he does have contractual right under the trust agreement with
the Mexican bank to all benefits which may result from the use
or sale of that property, and under Mexican law the bank, as the
trustee, has fiduciary obligation to respect the rights of the
beneficiary.

It is important to point out that a real estate trust is not a
lease. The beneficiary can instruct the bank to sell or lease
the property at any time, or develop and use the property to his
or her liking and benefit, within the provisions of the law.  As
noted above, The 1989 Foreign Investment Regulations limit the
use of the real estate trusts to industrial and tourist
activities.  The Foreign Investment Regulations provide a
well-defined list of those areas that are considered as either
"industrial" or "tourist" activities. Generally, most activities
engaged in by foreigners are allowed by the law.

Trusts IN BAJA CALIFORNIA AND BORDER ZONES

In the past, when it came to granting real estate trust permits,
the Ministry of Foreign Affairs treated property in the Baja
peninsula and the border zones differently than other property
in the restricted zone. It is still not clear if this policy
will continue.  It is very likely that the new Foreign
Investment Regulations will codify the policies that the
Ministry has been using, albeit unofficially, in a clearly
defined procedure. We may even see some of these policies being
used in all restricted zones in Mexico.

Ministry's current unofficial policy for granting trust permits,
as explained to me by a representative in Mexico City, is
basically broken down into three different permit procedures:

Automatic approval;

Discretional approval; and,

Approval by resolution.

Automatic Approval

Automatic approval of trust permits applies to any applications
which deal with real estate which is not in the Baja Peninsula
or a border zone, provided that the requirements of the
regulations are met.

The permits are automatic because, if one complies with the
requirements which the Foreign Investment Regulations establish
for the Ministry of Foreign Affairs to grant the trust permit,
the Ministry has the obligation to grant the permit.  Under no
circumstances may the Ministry refuse to grant the permit,
unless the information provided was incomplete, or one of the
requirements was not fulfilled. As long as the provisions
established in Articles 17, 18, 19, and 20 of the Foreign
Investment Regulations are complied with the Ministry shall
grant the permit; therefore, any application pursuant to the
restricted zone of the country, with the exception of Baja
California and the border zone, fall within the automatic
approval.

Discretional Approval

Discretional approval refers to the Ministry's right to use
discretion in granting trust permits, as provided for in Article
19 of the old Foreign Investment Law, and article 14 of the new
Law.  The Ministry official stated that such use of discretion
"only applies to the Baja California Peninsula and the border
zones in this State (Baja California Norte)". He went on to
explain that the reason that Baja California is not included in
areas for automatic approval, is due to the "many irregular
(illegal) cases of real estate in the hands of foreigners,
particularly in the Baja California Peninsula" which were
encountered shortly before publishing the Regulations.  For this
reason, "it was thought to be better if the use of discretion is
maintained... to prevent such irregular cases and, on the other
hand, to try to resolve those (cases) from years ago, and in
this way, begin to reform."

The following considerations were given by the Ministry as
factors for determining whether to grant a trust permit in Baja
California and the border zones:

The declaration of the amount to be invested in improving the
trust property.  On this point the official was not altogether
clear.  At any rate, he did make it perfectly clear that there
is no magic number for the amount to be invested.  He
categorically denied that a minimum investment of $100,000.00
dollars is required, regardless of the size of the property.
After a long discourse on why it is impossible to simply
categorize types of property in order to determine investment
requirements, he did clarify that four factors are used in
determining investment requirements for trust permits in Baja
California and the border zone: 1. size of the property; 2.
existence of utilities, such as electricity or gas; 3. the
number of properties the investor owns; and, 4. the location of
the property with regard to other developed properties.

The term necessary to complete the investment for improving the
trust property.  As a general rule, the larger the property is,
the longer the term will be for completing the investment.  The
official recognized the fact that there are many investors who
wish to acquire property for retirement purposes, and,
therefore, they won't begin any improvements until they retire
five to eight years down the road.  Here again  he stressed the
fact that each case must be dealt with separately; and although
he did not set any clear guidelines for these cases, he did say
that such cases are possible, provided that "the investors are
serious and are actually going to carry out the investment."

 The size of the property. Article 17 of the Foreign Investment
Regulations establishes a limit of twenty hectares on the
surface area of undeveloped property held in trust.  Therefore,
any  property larger than this limit would require prior
authorization to obtain a trust permit.  Moreover, in cases
involving property in Baja California and border zones, the
investor must show that the size of the property is necessary
for the type of development to be carried out. In short, every
trust application will be studied to determine if the size of
the property requested is necessary to carry out the
improvements in question. Proposals should clearly indicate why
and how the property is going to be developed, while showing a
direct relation between the size of the property and specific
elements of the proposed development.

He emphasized that currently the Ministry of Foreign Affairs
denies approximately only 12% of the trust applications
submitted for property in Baja California, and that the majority
of these denials are due to the fact that not even the minimum
requirements were met.

He also stressed that foreign investors should use caution when
selecting someone other than a lawyer or professional with the
bank to carry out the trust procedures.  He explained that there
are people who process trust documents for foreigners using
information that is totally false in order to complete the
procedure.  "Afterwards, when we arrive to inspect (the
property) ... the problems begin; because the first one to be
surprised is the foreigner: he never knew that he assumed an
obligation before the Mexican Government, he never knew that
there was a specific term (for the investment) etc."

Approval by resolution

Under the old Foreign Investment Law, this approval process was
handled through the Foreign Investment Commission.  It is not
clear if this process will still exist when the new Foreign
Investment Regulations are put into effect. I suspect that
something similar will continue in one way or another, but it is
still not known if another branch of the government will be
involved.  Presently the Foreign Investment Commission is no
longer involved in the process. Nevertheless, I believe the
following information may be helpful until they publish the new
Foreign Investment Regulations.

The most common  type of these approvals, were those which
involved undeveloped property with a surface area of more than
20 hectares. In those cases the Ministry of Foreign Affairs
could not exercise any use of discretion in granting trust
permits since they had to comply with the resolutions of the
Foreign Investment Commission. In such cases, prior
authorization from the Commission was required and were  then
submitted to the Ministry of Foreign Affairs.  At that moment
the approval was automatically granted.

outside of the restricted zone

Property outside of the restricted zone may be bought by
foreigners in fee simple. This change took place in 1989 when
the Foreign Investment Regulations were passed. Although new
regulations need to be published, in light of the fact that a
new Foreign Investment Law has been enacted, it is not likely
that the government will revert back to old policies.

The regulations state that outside the restricted zone, a permit
shall not be required from the Ministry of Foreign Affairs for
the acquisition of ownership of real property by companies in
national territory. A permit is only required for foreign
individuals and legal entities to acquire beneficiary rights in
trusts whose assets are composed of land, waters and their
accessions located outside of the restricted zone, when, by
virtue of those trusts, real estate rights on said property are
constituted or granted to the beneficiaries.

However, it is necessary for the foreign buyers of property
outside the restricted zone to agree to the Calvo clause with
the Ministry of Foreign Affairs. Strictly speaking this is not a
permit but rather an agreement, therefore, the Ministry of
Foreign Affairs does not have the capacity to deny consent to
carry out the transaction. This simply means that the buyer must
notify the Ministry of Foreign Affairs that he or she agrees to
the conditions included in the Calvo clause, and the Ministry
will issue a document of recognition so that the notary may
finish the transaction.

This requirement stems for article 27 of the Constitution which
states that legal capacity to acquire ownership of national
lands and waters is governed by the following general provisions:

In principle, only Mexicans by birth or naturalization and
Mexican companies have the right to acquire ownership of lands,
waters and their easements and concessions.

 The Mexican government may grant this right to foreigners
provided they agree before the Ministry of Foreign Affairs to
consider themselves as nationals and agree not to invoke the
protection of their governments in matters relating to their
property or water rights, under penalty, in case of
noncompliance, of forfeiture of the property or water rights
they have acquired to the benefit of the nation. This is know as
the Calvo clause.

Under no circumstances may foreigners acquire direct ownership
of lands or waters within a zone of one hundred kilometers along
the borders and of fifty kilometers along the beaches of the
country.

A native of Wisconsin, Mr. Peyton graduated from the University
of Wisconsin and one of only a handful of Americans licensed to
practice law in Mexico.  He is a member of the international law
firm of Peyton, Muriel and Associates with offices in San Diego,
Tijuana, Los Cabos, Cuidad Juarez, Guadalajara and Mexico City.