Mexican Real Estate – Your Questions Answered about Fideicomiso

Mexican Real Estate - Your Questions Answered about Fideicomiso

Fideicomiso is a Mexican real estate trust which a Mexican bank of your choosing holds on your behalf. A fideicomiso is necessary for all foreigners wishing to purchase Mexican real estate that is located within the restricted zone (by the beach and near the international borders). Find out more about fideicomiso here.

Do I need a fideicomiso?

In Mexico, not all lands are allowed for acquisition by non Mexican nationals. There is a “restricted zone” which is any land within 31 miles (50 km) of the coastline and 62 miles (100 km) of the borders. The fideicomiso was created and added to the constitution designed to protect Mexican real estate and land to prevent further land loss to foreign entities as had happened in the past. A fideicomiso allows foreigners to buy prime Mexican real estate inside the “restricted zone”. It is also created to encourage foreign investment in these highly desirable areas, especially those along the coastline. Some foreigners may opt to use fideicomiso even for their properties outside of the restricted zone because the trust ensures safe and secure transactions and can help avoid certain expenses in the event that the beneficiary dies.

What is a fideicomiso?

When you choose a bank for your fideicomiso, the bank acts as a trustee. You and others you designate are the beneficiaries of the trust. What are the benefits that you can get from fideicomiso? As a beneficiary of the trust, you have the complete control over it. You retain its use and make all the decision regarding its investment. In contrast to a lease, fideicomiso is like a Living Trust in the US. You as the beneficiary has all the control over your property and you have the right to enjoy, lease, improve, mortgage, sell, inherit, and use your property in your will. You simply allow the Mexican bank to administer over your property on your behalf.

How much does a fideicomiso cost?

At present, it costs $500 USD and should be renewed each year for about the same amount.

How long does the fideicomiso last?

The initial term for a fideicomiso is 50 years but it is renewable anytime by simply completing a form and paying a nominal fee. The trust is set in 50-year increments and guaranteed for perpetual renewal.

Is your trust an asset of the bank?

No, your trust is not an asset of the bank since the bank only acts as its steward. You and those designated by you are the beneficiaries. Since the trust to your Mexico real estate property is only held by the bank for the beneficiary, it is not exposed to any legal action the bank may be involved in. The trust is definitely the property of the beneficiary.

Can the government take my property?

As a foreigner, you might worry about having your land expropriated by the Mexican government. It is helpful to note that under NAFTA or the North American Free Trade Agreement, Mexico may directly or indirectly expropriate properties which are for public purposes like roads. A legal condemnation procedure must be followed. If the government has the need to expropriate a land under rare circumstances, it will provide swift and fair market compensation to the land’s owner with accrued interest.

Can I get a fideicomiso for an ejido land?

Only Mexican nationals under strict circumstances are allowed to own an ejido land. Since it is the only land in Mexico without a title and is intended for Mexicans who work the land, an ejido land cannot have a fideicomiso.

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