What is a Fideicomiso? Buying Mexico Real Estate

What is a Fideicomiso in Mexico Real Estate?

Are you non-Mexican and you want to buy Mexico Real Estate? Lots of Americans, Canadians, and Europeans buy Mexico Real Estate. For many Mexico is their new home. And for others, Mexico Real Estate offers a great investment opportunity. With the added benefit of a relaxing vacation once in a while.

A fideicomiso is often referred to as a banker’s trust. When you the person give ownership of certain assets to be administered. The fideicomiso is used to hold real estate in Mexico for foreigners. Its held under your name with a Mexican bank. The bank acts as the fiduciary, you and your heirs and assigns are the beneficiaries.

As the beneficiary of the fideicomiso you have control of the property. You can use, maintenance, and have full control over all property decisions.

What are the benefits of a Fideicomiso for foreigners?

Absolute control of your Mexican Property, not the bank.

The fideicomiso gives the beneficiary absolute control of the property. Your property is under a fiduciary. You are the owner. The bank manages your property in Mexico on your behalf.

You have full rights over your Mexican property.

So you can enjoy it, lease it, improve it, mortgage, sell, inherit, give away.

You can assign others to have rights over your Mexican property.

You can assign others to inherit and have rights over your Mexican property.

Whats the purpose of a Fideicomiso?

It allows foreigners the right to buy real estate in Mexico within the “restricted” zone. And to ensure a secure transaction. What’s the restricted zone in Mexico? The “restricted” zone is any land 31 miles (or 50 km) from the coast and 62 miles (100 km) from the border.

Why did Mexico create the Fideicomiso?

When the Mexicans wrote the Mexico Constitution they wrote it to protect the land Mexico. As great loss of land had occurred throughout Mexico’s history.
Instead of amending the Mexican constitution, they created and added the fideicomiso. This promotes a high demand from international investments, often on the coast.

What about buying outside of the restricted zone? Do I need a Fideicomiso?

Foreigners can buy residential properties outside the restricted zone without a fiduciary. Yet often buyers buy their property outside the restricted with a Fideicomiso anyway.

Does the bank own my property?

Your fiduciary is not owned by the bank; they are only administrators. You and your kin are the beneficiaries. The fideicomiso of your Mexican property is granted to you. You are the beneficiary and it is not considered property of the bank.

Can the Mexican Government take my property?

Foreigners need not worry that their property be taken by the Mexican government. Under the North American Free Trade Agreement (NAFTA), Mexico can not, directly or indirectly, expropriate. There is only one exception. When the government needs the land for public works (example: road construction).
Only through legal condemnation is this possible. In the rare case that it is necessary to expropriate land, the government will pay the current price with interest to the owner of the land. This is known as Eminent Domain in the US, Compulsory Purchase in the UK or Expropriation in Canada.

How can the Mexican Government take foreigner’s land?

Have you heard stories of people buying property and the Mexican Government re-taken it? This can only happen if the unfortunate person bought Ejidatario land. This is land without title. Only Mexican citizens can buy Ejido land.

Not 100% sure if you are buying ejido land by mistake? We make sure to check every property you are interested in, for any encumbrances or restrictions. Ask us today.

What if the bank goes bankrupt? What will happen to my Fideicomiso?

Banks in Mexico are protected by the government in case of bankruptcy. The fideicomiso is indirectly guaranteed by the government. Properties in a fideicomiso are not owned by the bank.

In the rare case, a bank in Mexico is economically in trouble, the property will be transferred to another fiduciary bank. The new bank is responsible for managing the fideicomiso. These laws were created by the federal government to protect you.

How to make sure you buy secure property in Mexico

We recommend hiring a lawyer. A lawyer represents you and will protect you legally. A lawyer drafts contracts and reviews the terms and conditions of the sale. Legally only a lawyer with a degree can provide legal advice. International lawyers with no degree to practice law in Mexico shouldn’t advised on Mexican law.

Is there any alternative to the Fideicomiso?

Investors can choose to buy a property through a corporation if their intention is to work and transact business. Such as buying and selling land, renting your property, or owning more than one property.

US citizens can use their retirement account or an offshore corporation for extra protection and privacy. This is a different process to a Fideicomiso. Ask us if you would like more information.

What help can you offer in this process?

We assist you in buying a property with a fideicomiso. We make sure your property has a legal title and has no legal problems. We help you legally close securely on your property.

Do you have any questions for our legal team? Would you like us to help review a property that you are interested in? Ask us today.