Foreigners can easily buy real estate in Mexico, and many people from the United States, Canada and Europe have done so without any problems. There are certain restrictions that apply, which can be simply resolved but which should be taken into consideration so there are no surprises.
Restricted Zone for Foreigners Buying Real Estate in Mexico
The ‘restricted zone’ in Mexico for foreigners buying real estate is designated up to 62 miles from the borders and up to 31 miles from the coast. What this means is that foreigners are not allowed to hold the direct titles to land and property in these areas. So how do foreigners buy real estate in Mexico’s beach destinations? Well, that is where Mexico’s “fideicomiso” comes in to save the day. Essential the fideicomiso is a bank trust that holds the title of the land on your behalf in order to comply with constitutional restrictions.
Background to Fideicomiso
Since 1917, in response to the Mexican Revolution when the Mexican Constitution stated that all foreigners were prohibited from holding any ‘fee simple’ titles on property located in the restricted zones, it has not been possible for foreigners to buy property without a fideicomiso. In an attempt to avoid scams in the 1970s where foreigners would have to “borrow the names” of Mexican nationals to open their businesses, Mexico’s Foreign Investment Laws began allowing corporations to own the titles on properties in the restricted zones, but titles for residential properties were still restricted.
Nowadays, Mexican banks support a law that now lets foreigners own and enjoy any property in the restricted zones legally. Foreigners can purchase the property without just being an investor under a fideicomiso trust.
How does fideicomiso work?
The Mexican fideicomiso will permit non-citizens of Mexico to purchase real estate in the restricted zone if they allow the bank to be the trust holder of the property. The Mexican banks would be the Fiduciary of the property or the trustee. The trustee will take the title of the property and hold it to meet all laws governed by the constitution in Mexico. The trustee is not allowed to sell the property, because you are still the owner. You are the beneficiary of the property, and you hold all rights to the property. The bank and trustee just holds the title of the property, so everything is legal.
There is a fee that you will pay to the Fiduciary Bank for the trustee contract, which is usually somewhere in the region of $500 USD per year and you may also be responsible for any maintenance fees and land taxes. As the beneficiary of the property, you own all rights to the property in the restricted zones, and you can sell the property anytime, remodel, and even rent out the property. The Fiduciary Bank has to follow Mexico’s laws, and they cannot sell the property unless they have written consent by you, the beneficiary and owner.
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