No. While it was once true, times have changed. Prior to 1973, foreigners were not allowed to hold legal title or exercise direct rights to real property in an area within 64 miles of Mexico’s borders and 32 miles of its coasts. But laws passed in 1973 and1993 have made it possible for foreigners, foreign firms and Mexican firms with foreign participation to acquire interests in coastal real estate through a bank trust (Fideicomiso).

Three parties. The seller of the property is the Trustor. The bank is the Trustee. (Fiduciario), and the buyer, or Beneficiary (Fideicomisario).

Title to the property is transferred to a trust with a Mexican bank acting as Trustee. The Trust Agreement is formalized by the issuance of a permit from the Mexican Ministry of Foreign Affairs. The lot or home buyer is designated as Beneficiary in the Trust and the beneficiary rights are recorded in the public record by a Notary Public.

The trust is a legal substitute for fee simple ownership, but in this case, the Trustee is the legal holder of the property. As Beneficiary, you have the right to sell your property without restriction. You may also transfer your rights to a third party, or pass it on to named heirs.

Yes. According to the Foreign Investment Law passed in 1993, trusts can be renewed for an indefinite number of successive 50 year periods. In effect they run in perpetuity.

Yes. If the buyer is also a foreigner, you simply assign beneficial rights. If the new buyer is a Mexican National, you can instruct the bank to endorse the title in favor of the buyer.

No. Upon application, a foreigner automatically receives his own renewal 50 year permit. This, however, is not mandatory.

Today, countless foreign property owners enjoy coastal properties, capitalizing on rising real estate values. Since 1972, Mexico’s Foreign Investment Law has empowered non-Mexicans to acquire coastal and border properties through a “Fideicomiso” or trust, in collaboration with a Mexican bank. This legal framework, crucial for the “Restricted Zone” within 50 km of coastlines or 100 km of borders, mandates a 50-year trust term, extendable in subsequent 50-year periods under the 1993 Foreign Investment Law.

Administered by a “Notario Publico,” the Trust Agreement secures foreign buyers. After compiling required documents and obtaining a bank trust permit, the Notary oversees the signing at their office. The bank, as the “Trustee,” safeguards the property’s Deed for the “Beneficiary” (buyer), ensuring complete ownership rights. Importantly, the government does not reclaim properties at the trust period end. The Beneficiary has an additional 10 years beyond the initial 50-year period for trust renewal, assuring lasting security for foreign property owners. Trusts can be renewed at any time, dispelling concerns and ensuring continuous ownership.

Yes, Americans and other foreigners may obtain direct ownership of property in the interior of Mexico. However, under Mexican law, foreigners cannot own property outright within the restricted zone. Instead, a real estate trust must be set up to hold title for the foreigner. Since foreigners are not able to enter into contracts in buy real estate, they must have a bank act on their behalf, much as a trust is use to hold property for minors because they also can not contract. The following is a brief outline of the law regarding such trust, known as “fideicomisos”, but potential buyers should always get advice and have all real estate transactions overview by a licensed Mexican attorney.

Normally, there are three to four players involved in any real estate transaction in the restricted zone:

  • A real estate company
  • The buyer’s lawyer
  • A bank
  • A public notary

While Mexican real estate transactions may appear similar to those in the United States, crucial distinctions exist, demanding careful consideration. Despite shared terminology and paperwork, Mexico lacks the regulatory framework of its U.S. counterpart. Real estate agents and brokers are not legally licensed, leading to varied professionalism and the absence of safeguards typical in the U.S. The adage “buyer beware” aptly applies.

Given the absence of a Real Estate Commissioner or Department of Real Estate in Mexico, relying on American Embassy resources is only a partial solution. Engaging a Mexican attorney is imperative for a secure transaction. They assist in contract drafting, title searches, and navigating the unregulated landscape. Only licensed Mexican attorneys should provide legal advice. Beyond formalizing transactions, attorneys use their network to secure competitive costs, advise on tax planning, and guide buyers on trust arrangements. In essence, legal guidance is indispensable to navigate Mexican real estate nuances and optimize financial outcomes.

The Mexican legal framework asserts original ownership of all land, water, minerals, salts, ore deposits, natural gas, and oil within the country. Despite similarities in real estate terminology, Mexico prohibits direct foreign ownership in the “restricted zone” encompassing areas within 100 km of borders and 50 km of coastlines. To facilitate foreign investment, the Mexican government established the “fideicomiso,” a real estate trust. This trust involves a Mexican bank as the trustee, holding title to the property for the foreign buyer, known as the trust beneficiary. The “fideicomiso” enables foreigners to enjoy unrestricted use of land in the restricted zone without violating constitutional restrictions.

A trust permit from the Ministry of Foreign Affairs is mandatory before contracting to acquire real estate in Mexico. The trust permits are typically issued within specific time frames, and the Ministry evaluates economic and social benefits for the nation in the application process. Contrary to a common misconception, once the trust expires, the beneficiary retains contractual rights to benefits from property use or sale. This legal structure allows flexibility for foreigners to develop, lease, or sell the property at their discretion within the confines of the law. Understanding the nuances of real estate trusts is crucial for foreign investors in Mexico.