FREQUENTLY ASKED QUESTIONS
The Basics of Buying and Selling Property in Mexico
CAN I OWN PROPERTY IN MEXICO?
Yes! Foreigners (buyers without Mexican citizenship) can own property in Mexico. While much of the process of buying property in Mexico is similar to the process in the United States or Canada, there are several significant differences!
WHAT IS THE HISTORY OF PROPERTY OWNERSHIP BY FOREIGNERS IN MEXICO?
The laws related to foreigners owning property in Mexico date back to 1917. These laws were enacted to protect Mexico from foreign invasion. The goal was to stop foreign interests from purchasing strategic coastal and border areas of the country. While the notion of foreign attack seems somewhat antiquated, this law remains a founding chapter in the Mexican Constitution.
In the early 1970s, a presidential amendment to the Mexican Constitution allowed foreign ownership of property in the restricted zones by way of a bank trust, or Fideicomiso.
WHERE ARE THE RESTRICTED ZONES?
The restricted zones are within 100 kilometers of the border and 50 kilometers from the coastline. The entire Baja California Peninsula is considered a restricted zone.
WHAT IS A FIDEICOMISO OR BANK TRUST?
Under a fideicomiso, a foreigner can buy property in the restricted zones with the property held in trust by a Mexican bank. Under the bank trust agreement (also referred to as a fideicomiso), the foreign owner, as a Beneficiary under the Trust, is able to enjoy the same rights as a Mexican citizen owning property in Mexico, i.e., they are able to build, rent, sell, etc.
HOW DOES THE FIDEICOMISO WORK?
The Mexican government issues a Trust Permit to a Mexican bank. The bank acts as purchaser, maintains the official Title of record to the property, and is designated as the Fiduciary or Trustee. As Beneficiary of that Trust, the purchaser is entitled to enjoy, develop, and use the property as he or she so desires. The Beneficiary may also instruct the bank to sell the rights of that Trust at market value.
Under Mexico’s Ministry of Foreign Affairs, a fideicomiso is a Trust granted for a 50-year period, which is renewable at any time (for another 50-year period) by submitting an application to the bank. If property is purchased that already has a fideicomiso, it can be transferred to the new owner and will be good for the remainder of its 50-year period, or the Trust may be renewed.
WHAT ARE THE RISKS ASSOCIATED WITH OWNING PROPERTY VIA A FIDEICOMISO?
Banks have a statutory responsibility to follow instruction submitted to them by the Beneficiary – an obligation that is not to be taken lightly. Banks are highly regulated in Mexico and their fiduciary responsibility is pivotal to the fideicomiso. They are the cornerstone upon which the entire process functions.