Find out all you need to know about Mexico’s fideicomiso. Why do you need it? What does it entail? What are the risks? Find out all you need to know with this Fideicomiso Q&A.
Fideicomiso for Mexican Real Estate – What is it?
Fideicomiso is the name of the official Mexican real estate trust that is held by a Mexican bank of your choice for foreign nationals who wish to purchase real estate in Mexico’s restricted zones (thirty-one miles (50km) from the Mexican coastline and sixty-two miles (100km) from the national borders). Without a fideicomiso, non-Mexican nationals cannot purchase Mexican real estate in these restricted areas.
Does fideicomiso mean that the Mexican bank owns your property?
The Mexican bank is not the owner of your property but the trustee. You will be able to designate all the beneficiaries of the Mexican real estate trust in the restricted areas as you wish. If you are a beneficiary of the fideicomiso, you have complete control over the Mexican real estate you purchase, which means that you can sell it, rent it, bequeath it, renovate it just as like any other real estate purchase. You can even add your children as beneficiaries, which will make matters easier in the event of your passing. In effect, the property is placed in a trust that you will be the owner of and the Mexican bank will administer the property on your behalf.
What is the purpose of a Fideicomiso?
The main purpose of the fideicomiso for Mexican real estate is to allow anyone that isn’t a citizen of Mexico to purchase property in Mexico that is located in the “restricted zone.” The bank trust makes this process safe and secure. In the past, there were cases of fraud where individuals would “lend” their name to foreigners who wanted to purchase Mexican real estate.
What is the “restricted zone” for buying Mexican real estate as a foreign national?
The “restricted zone” is land in Mexico that is located within thirty-one miles (50km) of the Mexican coastline and sixty-two miles (100km) of the borders. This is an archaic law that comes from the Mexico constitution, which was intended to protect the land in Mexico from foreign appropriation after the country’s independence. Today, the law remains, despite being somewhat out of date, which is why the fideicomiso was introduced so that there were no limits on foreigners purchasing property. Foreigners can easily acquire residential properties that are not located in the restricted zone without the need of any bank trust, but many buyers prefer to use this option.
How long is the Fideicomiso trust valid for?
Generally, the fideicomiso last for fifty years, then it can be renewed by signing a form and paying a fee. The fideicomiso trust is set up for a fifty-year increments that are guaranteed to be renewable.
What is the cost of a Mexican real estate fideicomiso?
Currently, the cost of a Mexican real estate fideicomiso is $500 USD.
Can the Mexican Government take the property away from you?
Many foreigners express a concern that their property can be taken by the Mexican Government, but the North American Free Trade Agreement (NAFTA) clearly states that Mexico is prohibited from expropriating any property for any public needs or purposes such as creating roads, etc. The only way that this could occur is through a legal proceeding, but this is very rare. If it is a necessity for the government to do this, they will pay a fair market price to you, the beneficiary of the trust, along with any interest.
Is ejido land eligible for a fideicomiso?
Unfortunately, “ejido” land can only be purchased by a citizen of Mexico. Ejido land is land that doesn’t come with a title and is solely intended for Mexicans who want to work and farm the land.