Buying property in Mexico and Fideicomiso

Foreigners acquire irrevocable and absolute ownership rights to property in Mexico through a 50-year perpetually renewable and transferable Bank Trust called a Fideicomiso. This Trust is a legal substitute for deeded (commonly referred to in the U.S. as fee simple) ownership and is provided specifically for non-nationals to own property in the formerly restricted zones (border and beach areas.) The Trust system of ownership is sanctioned by the Mexican government, provided for under the Mexican Constitution, and secured by the Central Bank of Mexico; thereby offering powerful protection.

Title is delivered to a Mexican Bank, authorized to act as the Trustee, designating the foreign buyer as the Beneficiary of the 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 enjoyment, leasing, improving, mortgaging, selling, inheriting and willing the property is the same as when owned in fee simple title. It is your Trust and not the property of the government or the Bank.

A sale becomes registered when it is witnessed and recorded through a Notorio Publico. From there, title passes to the designated Bank to be held in the Fideicomiso (Trust). There are specific Banks authorized by the Mexican government to hold the Real Estate Fideicomiso. Authorized Banks must pass extreme scrutiny. Most properties purchased these days have a Fideicomiso in place and this is transferred to the new owner.

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.

The law is very specific about the Real Estate Fideicomiso. This Fideicomiso is designed specifically for non-nationals to own land in the formerly restricted areas (beach, border region) and is the ONLY legal way to own this land. It provides the same legal rights and protection of ownership as a Mexican has under the law. It bestows upon the Beneficiary of the Trust (you) absolute and irrevocable control over the property. The Fideicomiso is set in 50-year increments guaranteed renewable for perpetuity. It can be improved, mortgaged, bought, sold, inherited & willed.