CAN A CANADIAN OR US CITIZEN LEGALLY OWN LAND IN MEXICO??
The answer to this commonly asked question is simple: YES, as long as you have a Mexican property Bank Trust known as a FIDEICOMISO.
The Mexican law states that foreigners cannot own real estate within 60 miles of the U.S. international border, or within 30 miles of the Mexican coast. For this reason an innovative and secure method of holding title was created, a Fideicomiso, which is much like an estate trust in the U.S., and it legally gives the purchaser all of the rights of ownership.
SO WHAT IS A FIDEICOMISO?
A Fideicomiso is a transaction entered into between a Mexican bank and a foreign individual or firm investing in areas otherwise restricted to foreign investment, with the bank serving as a trustee or legal owner with respect to certain real property interest and the investor serving as the legal beneficiary of the trust. . The bank holds title to the property for the beneficiary who retains the exclusive right to own, use and control the property. As a trustee, the bank simply represents the beneficiary in transactions involving the property held in trust, however the beneficiary controls and makes investment decisions regarding the property including assigning, transferring or disposing of the property in interest.
HOW LONG WILL THE TRUST LAST ME FOR??
A Fideicomiso is generally established for an initial 50 year period and can automatically be renewed indefinitely.
WHO IS INVOLVED IN THIS PROCESS?
- The purchaser, also known as the Fideicomisario.
- The seller, known as the Fideicomitente.
- A Mexican Bank known as the Fiduciaria (In my case I recommend BBVA Bancomer Bank due to their quick results and their location since they are the only bank that have their main Fideicomiso offices located here in Mazatlan)
- A Public Notary* or “Notario Publico” (As your real estate agent I will assist you in having you work with the fastest and most reputable public notaries in Mazatlan)
- The Secretary of Foreign Affairs, which releases the authorization for foreigners to own a piece of land in Mexico.
- Beneficiaries. In the case of your death, your beneficiaries will automatically have all the rights for the property without any additional costs. It is a requirement to have a beneficiary in any process with the Fideicomiso.
*The Public Notary is a government appointed lawyer who processes and certifies all real estate transactions, including the drawing and review of all real estate closing documents, thus insuring their proper transfer.*
HOW LONG WILL IT TAKE FOR ME TO GET THE FIDEICOMISO?
You will see many different answers to this question due to the fact it can vary based on the bank you work with or the type of property you are interested in buying. In my experience my clients have all received their Fideicomiso within 10 to 20 days of them turning in all of the proper documentation
WHAT ARE THE COSTS AND DOCUMENTATION NEEDED FOR THIS PROCESS?
In the case of the buyer (the Fideicomisario) the following documentation is needed:
- Valid Passport.
- Immigration Forms & Visas.
- Driver’s License.
- Form filled and signed that grants you permission for “Relaciones Exteriores” to establish the Fideicomiso along with a payment of $1,190 USD
- PEP’S Form, filled and signed
- Form required by the “Institucion Fiduciaria” to allow the traNsaction to take place, filled and signed with a fee of $350 USD.
- Trust Contract with a fee of $450 USD.
- Tax fees for above documentation $120 USD.
- $350 USD annually for the Trust Administration Fee
*All IDs require 3 copied and original at signing
*All forms will be provided for you, they are available in English, though only the Spanish version is valid for processing.
*Total costs amount to $2,460 USD (One time cost fee after that you only pay $350USD annually for the Trust Administration Fee)
HISTORY: THE BANK TRUST FOR OWNERSHIP OF RESIDENTIAL PROPERTY IN COASTAL OR BORDER AREAS
Ownership of real estate in Mexico is different from what we have become accustomed to in many other parts of the world. It is not necessarily better or worse.... just different! It makes sense to understand some of the basics when considering a purchase.
Article 27 of the Mexican Constitution of 1917 prohibits foreigners from owning residential real estate within thirty miles (50km.) of any coastline or sixty miles (100 km.) of either border. This area is known as the "restricted" zone.
In 1973, recognizing that many foreigners would enjoy owning a retirement or vacation home in Mexico, and would bring needed dollars to the country through such ownership, the Mexican bank trust, the Fideicomiso, was established and approved for the purchase of real estate located in the restricted zone. For the first time since 1917, a non-Mexican could invest in a recreation or retirement home and feel safe that his or her investment was secure.
Under the bank trust, legal title is placed in the name of a Mexican bank, in trust, under a permit from the Secretary of Foreign Relations. The Mexican bank holds the title to the vacation or retirement home for the buyer/beneficiary of the trust, the non-Mexican who purchased the trust rights in the property. The bank administrates the property in accordance with the instructions of the buyer/beneficiary. The buyer/beneficiary enjoys the same rights of ownership as does a Mexican national. He may build on the property, tear down existing buildings, modify them, rent, lease or sell at anytime conforming only to internal bank regulations for this type of trust and to the general laws of the country established for all persons. Additionally, the beneficiary may finance the purchase and instruct the trustee bank to enter into the security agreement with the lender.
The trustee bank may not, without express written consent from the beneficiary, sell, transfer or encumber the property.
The beneficiary may name the parties he or she selects as co-beneficiaries and may name substitute beneficiaries upon death of the primary beneficiaries, thus avoiding probate in Mexico. Care must be taken however, in establishing the wording and terminology used in the succession of rights in conformance with applicable Mexican law.
A permit to establish a Mexican bank trust (Fideicomiso) can now be obtained for a term of fifty years and can be renewed. In acquiring a property with an existing trust, the seller may assign the rights in the existing trust and the new buyer will enjoy the term established in the original trust permit. In other words, a trust established in 1995 will expire in 2045. Prior to 1993, the term of the trust was thirty years. Thus a trust established in 1990 would expire in 2010, unless extended or the original trust permit extinguished and a new permit obtained for fifty years.