What a guarantee trust (fideicomiso) is
It is a private contract in which a person or company temporarily transfers ownership of an asset to a third party, to secure the repayment of a debt owed to a creditor. The trust protects the Borrower and the property as much as the lender, and its cost is very competitive.
Key differences between a trust and a mortgage
- Speed. A trust is a far more agile contract than a mortgage, which is what allows approval in a short time.
- Cost. In most cases the trust works out cheaper than a mortgage.
- Security. Because the property is transferred to the Trustee, it is shielded from third-party attachment.
Who takes part in a trust
| Party | Role |
|---|---|
| Borrower | Receives the loan and undertakes the obligations of the contract |
| Settlor (Fideicomitente) | Registered owner of the property. May be the Borrower |
| Trustee (Fiduciario) | The administrator who temporarily receives and holds the property |
| Beneficiary (Fideicomisario) | The lender |
How a trust works
- The property has a single purpose: securing the loan.
- The owner (Settlor) temporarily transfers the property into the trust, managed by an authorized Trustee of the highest standing.
- Nobody, not even the Trustee, can do anything with the property.
- The owner keeps using the property as before.
- Once the obligations of the contract are met, the Trustee returns the property to the Settlor.
Before you sign
- Keep in mind: Privanza is a responsible company. Our aim is simply to collect the interest payments and for the loan to run smoothly.
- Read the contract with your own lawyer or notary. You should come to the signing with no doubts and no concerns.
- Make sure you understand your rights and obligations as Borrower and/or Settlor, as well as the enforcement and return procedures.
After the trust is created
Our interest is a shared one. When the trust is created you receive a document called the “Hoja de Ruta”, setting out what you need to do each month so the contract runs without a hitch.