Buying Real Estate in Mexico
Trust / Fideicomiso:
In the past foreigners could not legally own property in Mexico, in 1994 amendments to the Constitution were made and according to article 27th foreigners can purchase and own Real Estate located within the “restricted zone” which is all land within 50 miles of a national border and within 30 miles of the Mexican Coastline, to attract this is done trough the “Fideicomiso”. (FEE-DAY-E-CO-ME-SO), which translates to a Real EstateTrust.
A “Fideicomiso” is a Mexican Trust, created for the benefit of a foreign buyer, the way it works is the Mexican Government issues a permit to a Mexican Bank of your choice, allowing the bank to act as Trustee on Behalf of the Buyer of the property. You are the Sole “Beneficiary” of the Trust. The “Beneficiary” rights are very similar to Living Wills or Estate Trusts in the US.
The law authorizes Mexican banking institutions to act as trustees. The bank, as trustee, must get a permit from the
Ministry of Foreign Affairs to establish a real estate trust and to act as Trustee of the property located
within the restricted zone.
A trustee takes instructions only from the beneficiary, you the Buyer, of the trust
. The beneficiary has the right to use, occupy and possess the property and enjoy all the rights of ownership while the
bank holds title to the property. The beneficiary may also sell the rights and instruct the trustee to transfer title
to a qualified owner or designate second beneficiaries, otherwise heirs to the property.
The initial term of the trust is 50 years. An investor can renew the trust for an additional period of 50 years within the last year of each 50 year period, and this process can be continued indefinitely, providing for long term control of the asset.
If you buy a property with an existing Fideicomiso/Trust you can have it transferred to your name for the remaining time in the Trust and extend it. This will save you some money since the permit for the Trust has already been paid.
