Owning in Mexico
Rights of ownership for real property in Mexico’s restricted zone
While the Mexican Constitution prohibits foreign ownership of real estate within its Restricted Zone (100 kilometers from international borders and 50 kilometers from coastlines), the country’s miles of pristine shoreline, endless summer and fabulous resort destinations, coupled with dramatic growth, provide the foreign visitor with a desirable investment opportunity. Recognizing the value of foreign investment in Los Cabos real estate, and in other restricted zone regions, in 1973 the Mexican government liberalized restrictions with the advent of the ‘fideicomiso’, or trust mechanism for ownership.
The legal system for foreign ownership of real estate
Modeled after a law successfully used in Monaco for decades, Mexico’s mechanism for establishing rights of ownership in the restricted zone for foreigners is the fideicomiso, or bank trust. This legal instrument, similar to an estate trust, allows the foreign trust beneficiary all the rights and privileges of fee simple ownership. The rights to build, lease, and sell and even to pass the rights on to a substitute beneficiary are all established in the terms of the trust agreement. A Mexican bank acts as trustee, taking direction from the buyer who is established as beneficiary of the trust. These secure, buyer-friendly revisions to the laws governing foreign investment in Mexico, have allowed thousands of sophisticated investors throughout the United States and Canada, to enjoy the rewards of Los Cabos real estate ownership in Mexico’s restricted zone.
The bank trust
The fideicomiso, or trust, mechanism for foreign ownership of real property in Mexico’s restricted zone, vests title to the property with a Mexican bank of the buyer’s choice. The bank acts in a fiduciary capacity as trustee, with the buyer as beneficiary to the trust. Beneficial rights to the property are recorded in the public registry by a Notario Publico (public notary), who is an attorney appointed by the state governor.
Terms of a bank trust
The Foreign Investment Law was amended in 1994 to allow bank trusts to be granted and extended in 50-year periods. Bank trusts may be perpetually renewed at any time, providing uninterrupted beneficial rights to usage of your property, thereby protecting both your Los Cabos real estate investment, and the ability to pass the asset on to your heirs.
Cost to establish and maintain a trust
Toll Free from US 1 877 414 1121 / Toll Free from Canada 1 877 354 1993
From Los Cabos: (624) 142 5327
The function of the bank
The Trustee bank accepts full technical, legal and administrative responsibility for protecting your interests as the beneficiary. While the bank is the Trustee of the property, they have a statutory responsibility to execute your instructions regarding the property.
Your rights as a Beneficiary
As a foreign owner, you hold beneficial rights to your property as the deeded beneficiary of the bank trust (fideicomiso) inscribed in the Public Registry. Your property can be improved, leased for periods not to exceed ten years, or sold for full market value any time you choose. By law, your property is not an asset of the bank in this agreement. The bank is simply a trustee, operating in similar fashion to a living, or family trust in the U.S., or Canada.
Safeguarding Your Investment
When you opt to purchase or sell your real estate investment in Mexico, the Notario Publico (Public Notary), a specialized real estate attorney, appointed by the State governor, verifies appropriate documents and certifies legal transfer of the property. The Notary is also responsible for calculating and collecting payment of transfer taxes, capital gain taxes and property taxes. Additionally, at Club Campestre San Jose, a title search is in place and U.S. title insurance companies, such as Stewart Title, will provide optional title insurance policies to provide further confidence and insure your ownership rights.