Buying Property in Mexico: FOREIGNER OWNERSHIP IN MEXICO
Foreigners can own land fee simple in the interior of Mexico. In the formerly restricted zones – within 50 km (31 miles) of the beach and 100 km (62 miles) of the border, foreigners can own property through a Fideicomiso (Bank Trust).
Foreigners acquire irrevocable and absolute ownership rights to property in the formerly restricted zones in Mexico through a 50-year perpetually renewable and transferable Bank Trust called a Fideicomiso. This Fideicomiso or Trust is a legal substitute for deeded, fee simple ownership and is provided specifically for foreigners to own property in the formerly restricted zones (border and beach areas) of Mexico. The Fideicomiso/Trust system of ownership is sanctioned by the Mexican government, provided for under the Mexican Constitution, governed by the Foreign Investment Law, and secured by the Central Bank of Mexico, thereby offering powerful protection to foreign property owners.
HOW A FIDEICOMISO WORKS:
Title is delivered to a Mexican Bank, authorized to act as the Trustee, designating the foreign buyer as the Beneficiary of the Fideicomiso/Trust (you). The Bank acts like an “employee” of the Beneficiary (you) in transactions involving the property. The Beneficiary (you) retains the use and control of the property and makes all the investment decisions. The rights of use and enjoyent, leasing, imporving, mortgaging, selling, inheriting and willing the property is the same as when owned in fee simple title. It is your Fideicomiso/Trust and not the property of the government or the Bank. A sale becomes final when it is registered, witnessed and recorded through a Notorio Publico in Mexico. From there, title passes to the designated Bank to be held in the Fideicomiso/Trust in your name or entity as the Beneficiary. There are specific Banks authorized by the Mexican government to hold the Real Estate Fideicomiso/Trust. Authorized Banks must pass extreme scrutiny. You have the right to transfer the Fideicomiso to any authorized Bank of your choice. The Bank reviews all paperwork of the current owner to ensure that the documents are complete and legal. A question that often arises – in the event the holding Bank should ever fail, be bought by an unauthorized Bank, etc., what happens to the Fideicomiso? Answer – the Fideicomiso will be transferred to another authorized Bank. The Bank does not own the Fideicomiso, you do! Foreigners often worry about their land being expropriated by the Mexican government. Under the North American Free Trade Agreement, NAFTA, Mexico may not directly, or indirectly, expropriate property except for a public purpose. This is the same as “Eminent Domain” in the U.S. Where it is necessary to expropriate land, swift and fair market compensation must be paid, together with accrued interest.