Are you considering purchasing real estate in Mexico? If you are, then we have provided some quick questions and answers below:
What is a Mexican Fideicomiso?
Have you been told that you need a Mexican Fideicomiso to purchase real estate in Mexico and you are wondering what it is? A Mexican fideicomiso is a real estate trust that will be held by a Mexican bank on your behalf. The bank that you select will represent you and those individuals that you have named the beneficiaries of the trust. As beneficiary of the trust, you have complete control and power over the property. A Mexican fideicomiso is equal to a “Living Trust” in the United States. You being the beneficiary of the trust gives you control over the property, allowing you to sell the property, lease the property, will the property, enjoy the property, improve the property, and will out the property. To put it plainly, the property will be placed into a fideicomiso trust that you will still own, but the Mexican bank will administer the property on your behalf.
Why do I need a Fideicomiso to purchase real estate in Mexico?
Any foreigner that would like to purchase prime real estate in Mexico that is located within the “restricted zone” will need a Mexican fideicomiso. The “restricted zone” refers to any land that is within 31 miles (50 km) of the coastline or 62 miles (100 km) from the borders. Any residential properties that are not within the “restricted zone” area can be purchased without the Mexican fideicomiso, but many foreign buyers still use this option because it makes your purchase safer and more secure.
Will the trust become the bank’s asset?
Absolutely not! The trust is yours and it will never be an asset of the bank as the bank will be stewards to your trust. You and those that you have chosen are the beneficiaries of the trust. The bank is only holding the trust of your Mexico property and it will never be considered as the bank’s asset. Therefore your trust will be safe and secure and will never be exposed to any legal actions that the bank may be involved in.
How long is a fideicomiso valid for?
A Mexican fideicomiso trust is valid for up to 50 years, and you or beneficiaries will have the option of renewing the trust for a further 50 years ad infinitum.
What is the cost for a fideicomiso trust?
Today the fideicomiso trust cost for real estate is approximately five hundred dollars USD.
Can the Mexican Government expropriate my land?
The North American Free Trade Agreement or NAFTA clearly states that real estate bought with a fideicomiso trust, may not be expropriated by the Mexican Government, so foreign buyers will not need to worry about that. The only time that property may be considered is for building roads, and in those rare cases, legal proceedings will be conducted and you will receive a fair market value for your property along with any interest.
Can ejido land be purchased with a fideicomiso?
No, ejido land is not considered real estate and can not be purchased with a fideicomiso trust. Ejido land comes without any deed or title as this land is designed for Mexican ejidos who are working the land. If you have heard of any cases where foreigners have had their land taken away from them, it is likely that they bought ejido land erroneously.