For historical reasons, due to concerns over national sovereignty, the Mexican constitution prohibits non-Mexicans from holding legal title to real property located within the so-called "Restricted zone".

The restricted zone is that area of Mexico, which is located 31 miles (50
Kilometers) from any coastline and 62 miles (100 Kilometers) from any borderline
of Mexico.

Although foreigners cannot own " fee simple title " to real property in the restricted zone,
Mexican law does allow foreigners to own all the beneficial use and
enjoyment of such property trough the use of a Mexican Fideicomiso (FEE-DAY-ECO-
ME-SO).

Under Mexican fideicomiso law, the fideicomiso is essentially a contractual
arrangement, which in all material respect is identical to the type of trust commonly
used in the United States to hold property for estate planning and other purpose.
Contrary to the commonly held misconception, a Mexican fideicomiso is not a
lease, it is a form an ownership in which real property is transferred into a
fideicomiso for the benefit of the real owner or Beneficiary. Although the beneficial
owners do not hold legal title to the property, he is the owner for all other purposes
and is essentially able to enjoy all attributes of ownership including use and using
the property as collateral, and to sell the property and retain all net profits from
such sale.

Since a Mexican fideicomiso is a contractual arrangement, the trust instrument can
be adapted to the specific needs of the beneficiary or owner. In this way, an
investor can insure himself that the trust will be totally compatible with his
investment development objectives.

The Mexican fideicomiso involves three parties: the Trustor, the Trustee and the
Beneficiary.

The Trustor is the individual or entity that creates the trust (in most cases the
original Mexican landowner).

The Trustor in a Mexican fideicomiso must be a bank authorized to act in that
capacity under the General law of Credit Institutions. These banking institutions are
strictly regulated and controlled by the Ministry of Finance and Public Credit, Bank
of Mexico and the National Banking Commission.

A Trustee may not be a beneficiary of the fideicomiso. The Trustee receives
instructions from the Beneficiary and is empowered with the rights and necessary
powers to achieve the objectives set forth in the trust agreement, according to the
Beneficiary's instructions.

In most cases, the fideicomiso empowers the Beneficiary who acts as the only
representative to all the business and purposes of the fideicomiso without
limitations.

The foreign investor of investors will be the Beneficiaries under the fideicomiso. As
the Beneficiary under fideicomiso, the foreign investor has a personal and
exclusive right to use, occupy and possess the trust property, including the right to
build upon it or otherwise improve it, subject to applicable construction and coning
regulations.

Further, the Beneficiary may transfer or assign his beneficial interest to any person
and may keep all of the profits from the sale of the property, subject, of course, to
applicable tax laws and expenses of state.

PURPOSE OF THE FIDEICOMISO (TRUST)

The trust agreement contains a statement of the reason for the formation of the
fideicomiso. The purposes will vary according to the type of fideicomiso and may
be adapted to the needs of the parties. For example, a fideicomiso can be tailored
to meet the divergent needs of an individual investor purchasing a single-family
residence for his own use or for a developer who is developing a residential
subdivision, condominium or timeshare project.

PROCEDURES TO ESTABLISH A FIDEICOMISO (Trust)

The steps necessary to set up a fideicomiso for foreign investment are quite
simple. A foreign investor must obtain a permit from the Foreign relations Ministry
in order to acquire beneficial interest under a fideicomiso covering real property
located.

The following documents to the Trustee:

•
Copy of legal title of the property to be purchased.
•
Letter stating the official limits and bounds of the property
•
Location plot of the property.
•
Distance from the Federal Marine Zone (coast)
•
Personal data concerning the purchaser and his or hers beneficiaries
(name, address, telephone number, date and place of birth, marital status,
occupation, immigration status).
With the above-mentioned documents, the trustee will apply for the permit with the
foreign relations Ministry to establish the Fideicomiso. After obtaining the required
permit, the Trustee will instruct a local Notary Public to prepare the trust
agreement. The Notary Public will request from the seller (Fideicomitente) the
following information:

•
Deed of title of the property to be acquired.

•
Commercial Appraisal of the property, Certificate of no encumbrance,
Certificate of no due property taxes, Personal data of seller and buyer.
After all parties sign the public deed of trust, the Notary Public shall record the
deed at then appropriate Public Registry of Property where the real estate is
located. At the same time the Trustee will register the deed before the Foreign
Investment Registry in Mexico City. In the case of a foreign corporation, in addition
articles of incorporation of the company as well as certain other information
concerning the company.

Term of a Trust

In the case of a trust involving real estate located in the Restricted Zone, the trust
has a maximum duration of fifty years. However, a trust may be automatically
renewed for successive fifty years terms. The foreign Relations Ministry must issue
a new trust permit, effective for a new term of fifty years, if an application has been
filled no more than 380 days before the end of the original trust term or 181 days
after the end of the original trust term so long as the Beneficiary to the trust and its
purposes remain the same.

If the Beneficiary of the trust sells his rights and obligations of said trust, to another
foreigner during the term of the trust, the new Beneficiary (owner) upon the sale of
the trust interest may obtain a new trust permit from the foreign Relations Ministry
to establish a new fifty-year term for the trust. Thus, the new buyer assumes the
remaining term of an existing trust or obtains a permit to establish a new fifty year
term would usually depend on the time remaining in the trust and the extent to
which the buyer is willing to undertake the additional steps of establishing a new
trust.

Expiration of the Trust

Upon expiration of the trust or when instructed to do so by the trust Beneficiary, the
Trustee will sell the property to a person or entity legally capable of holding title
according to the instructions of the Beneficiary. Typically, this would be a Mexican
national or entity that is allowed to own real estate in the Restricted Zone, or
another foreign investor using a different trust. The proceeds of any such sale are
turned over to the Beneficiary. The trust Beneficiary may designate a buyer and set
whatever price he wishes.

As explained before, the trust Beneficiary is entitled to the rights and powers of an
absolute owner, including all the rights regarding the enjoyment and transfer of the
property.

Disclaimer

The information is provided for informational purposes only, and should not be
construed as legal advise on any subject matter.

Financing

Available to citizens and legal residents of the United States and Canada, buyers may
qualify for U.S. dollar based financing through El Cid for purchasing lots directly from El
Cid (not for re-sales) and for new homes built by El Cid.

It is a short process with no application fees, no points, no loan fees and no waiting for
approval. All that is required are proof of citizenship or permanent residence, a social
security number, basic income and assets information, work history and recent credit
information.

Normal terms include a down payment plus a 2.2% acquisition tax. The term is 5 years and
the interest rate is 5.5 points over LIBOR (London Interbank Offered Rate). The interest
rate for this type of loan based on the last 12 months' LIBOR rates.