Foreigners Acquiring Mexican Real Estate

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Many people may think that buying a home in Mexico is somewhat like the same procedures you undergo when you buy property in the United States or Canada. However, you have to keep in mind that Mexico is a foreign country, and purchasing real estate there may not be the same way you are accustomed to in the United States or Canada. You have to take into consideration certain geographical restrictions when purchasing real estate in Mexico. This may give the impression that buying real estate in Mexico is hard, but it’s really not. It’s just not the type of procedure you are accustomed to.

Some tips for Foreigners Acquiring Mexican Real Estate

Some of you have most likely came across information about Mexican “fideicomiso” and the “restricted zone” when inquiring about buying Mexican real estate. Here’s a little background on the situation to help you understand how purchasing Mexican real estate as a foreigner is possible and the fideicomiso is not a scam but their to facilitate and safeguard your purchase.

Fideicomiso for Mexican Real Estate

According to the Mexican Constitution of 1917, foreigners were not allowed to buy and own “fee simple” property titles for real estate found within 62 miles of its borders or 31 miles of the Mexican coastline. It wasn’t until the early seventies that the Mexican Foreign Investments Law granted Mexican business with foreign investors an opportunity to buy real estate within the restricted zone for commercial purposes. This was an attempt to reduce real estate fraud from businesses pretending not to have foreign investments.

Fee simple Mexican Real Estate for Residential use

At the time, even though the permission to purchase commercial property was granted, there was still no provision in the law for purchasing residential real estate. In 1994, the permission to purchase all types of “fee simple” titles in the restricted zones was granted to Mexican companies under the fideicomiso.

Up until that time, the Mexican bank trust system was not designed to accept foreign ownership of real estate within the restricted zone. However, in 1994, the law had provisions allowing foreign individuals and businesses with foreign investors to obtain and use residential real estate within the restricted zone.

How does the Mexican fideicomiso work?

The use of a fideicomiso or Mexican bank trust (fideicomiso) grants permission to foreigners to acquire property in the “restricted zone” because the title is held by a trustee or fiduciary of a Mexican bank. This means the Mexican bank is identified as trustee or “fiduciario” who holds the title, which allows the ownership to be in accordance with the Mexican Constitution. You become the beneficiary of the trust agreement because you are the one who purchased the property.

The laws amended in the constitution in 1994 give you the right to use the property as you see fit. This means you can reside at the property, rent the property out to others, renovate and add on to the property, or sell the property. In return for this provision to own property as a foreign entity, you pay a one-time trust agreement fee to the Mexican bank. After that, you pay an annual stipend for the bank maintaining your agreement for your Mexican reals estate investment.

Even though the bank holds the title to your property, the trustee can not give away or exchange the agreement with another entity unless they have prior permission from you in writing that they have the right to do so. So, you can rest assured that your rights are protected by the constitution while you remain the owner of the property.

If you have any more questions about fideicomiso or Mexican real estate in general, leave a comment below, and I will try to get back to you with an answer as soon as possible.

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