A TRUST FUND or “FIDEICOMISO”
Foreigners may lease and own real estate and other properties in Mexico. However, there are several guidelines that must be taken into account before purchasing real estate:
Article 27 of the Mexican Constitution grants the Mexican Nation ownership of the land and water within the territory and provides that the Nation shall oversee the transfer of ownership rights to individuals, by creating private property.
Although Section I of the aforementioned article, grants the right to acquire the dominion of land and water only by Mexican individuals and companies, it also gives the State the power to grant the same right to foreigners, subject to the condition that these foreigners agree before the Ministry of Foreign Relations to consider themselves as Mexican nationals regarding the acquired property and not to invoke the protection of their country of origin.
A foreign individual or company may directly own land in Mexico except in what is described by Article 27 of the Mexican Constitution as the "restricted zone." A zone within one hundred kilometers (sixty-one miles) of the international border and fifty kilometers (thirty-one miles) of the seacoast.
Foreign individuals or companies and Mexican companies 100% owned by foreigners may purchase of real estate within the "restricted zone" through a trust fund for fifty or more years. The trust fund is established through a Mexican bank which will retain the property title but the foreigner is the beneficiary and may use and enjoy such premises and sell or even inherit the rights to it. However, all operations regarding the property must be notified and approved by the bank.
Note: Mexican companies with 100% foreign capital may own property directly in the "restricted zone " for other non-residential purposes.
The acquisition of real estate must be conducted before a public notary, judge or property registrar officer and two witnesses to obtain or produce a deed.
The acquisition may be done personally or through an agent with representation (power of attorney valid according to Mexican laws).
A permit must be obtained from the Ministry of Foreign Affairs or any of its delegations in the States of the Republic. This will be an agreement to be considered as a Mexican citizen in connection with the property, meaning that diplomatic protection from a foreign government will not be invoked, and that that the alien will submit to the jurisdiction of the Mexican courts in all cases.
Source: Foreign Affairs Ministry UK http://portal.sre.gob.mx/conreinounido
In 1994, amendments to the Constitution permitted foreigners to purchase and own real estate in Mexico located within the “restricted zone” which is all land within 60 miles of a national border and within 30 miles of the Mexican Coastline. This law permitted ownership through a land trust or “Fideicomiso”.
A “Fideicomiso” is a Mexican Trust. The way it works is the Mexican Government issues a permit to a Mexican Bank of your choice, allowing the bank to act as purchaser for the property. The bank acts as the “Trustee” for the Trust and you are the “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. A trustee takes instructions only from the beneficiary of the trust (the foreign purchaser). The beneficiary has the right to use, occupy and possess the property, including the right to build on it or otherwise improve it. The beneficiary may also sell the rights and instruct the trustee to transfer title to a qualified owner.
Many people refer to the trust arrangement in Mexico as a lease arrangement, this is not true. The home or property that you buy will be put into a trust with you named as a beneficiary of the trust, you are not a lessee. You have all the rights that an owner of a property in the US or Canada has, including the right to enjoy the property, sell the property, rent the property, improve the property, etc.
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.
All foreign residents acquiring property within the restricted zone will need the services of a) a qualified attorney who will process the authorization by the Foreign Affairs Ministry, supervise and review the Trust Fund and conditions and guide you through the entire process, b) a Mexican Bank authorized to establish Trust Funds which can be suggested by the above mentioned attorney and c) the services of a Public Notary who will register the Trust and its contents in its records and the Public Registry Office.
At RE/MAX PARADISE PROPERTIES in Tulum we have a team of professionals readily available to make your land purchase a walk in the park.