Foreigners can own
Mexican Real Estate
Fideicomiso or Bank Trust Process
Notario Publico or Notary Public
Cost of the Fideicomiso
is a common misconception that foreigners cannot own Real Estate in
Mexico, but the reality is that they can. However, there is a restrictive
zones, as described below, and we have to consider the following alternatives:
the Restricted Zone, a foreigner or foreign corporation can acquire
any type of real estate as any Mexican National, holding the property
as a direct owner complying with Mexican law.
the Restricted Zone, a foreigner or foreign corporation may obtain
all the rights of ownership but it must be in a bank trust known as
alternative is to purchase non-residential property through a Mexican
corporation which can be, under certain conditions, 100% foreign-owned,
with a provision in its by-laws that the foreigners accept to be subject
to Mexican laws and agree not to invoke the laws of their own country.
that the real estate acquired be registered with the Foreign Affairs
Ministry and is used for non-residential activities. In other words,
under said conditions, foreigners can acquire, directly, properties
destined for tourist, commercial and industrial use.
Mexican Constitution regulates the ownership of the land and establishes
that "...in a zone of 100 kilometers along the border or 50 kilometers
along the coast, a foreigner cannot acquire the direct ownership of
the land." These areas are known as the "Restricted or Prohibited
Zones". Nevertheless, the latest Mexican Foreign Investment Law,
which became law on December 28, 1993, makes the allowances mentioned
or Bank Trust
foreigner or Mexican National can constitute a Fideicomiso (the equivalent
to an American beneficial trust) through a Mexican bank in order to
purchase real estate anywhere in Mexico, including the Restricted
Zone. To do so, the buyer requests a Mexican bank of his/her choice
to act as a trustee on his/her behalf.
bank, as a matter of normal course, obtains the permit from the Ministry
of Foreign Affairs to acquire the chosen property in trust. The Fideicomiso
can be established for a maximum term of 50 years and can be automatically
renewed for another 50 year period. During these periods you have
the right to transfer the title to any other party, including a member
of your family.
bank becomes the legal owner of the property for the exclusive use
of the buyer/beneficiary who has all the benefits of a direct owner,
including the possibility of leasing or transferring his/her rights
to the property to a third party or to a pre-appointed heir. During
this period, the foreigner is considered as a Mexican National.
trustee is responsible to the buyer beneficiary to ensure precise
fulfillment of the trust, according to Mexican Law, assuming full
technical, legal and administrative supervision in order to protect
the interests of the buyer/beneficiary. Fideicomisos are not held
be the trustee as an asset of the bank.
practical purposes, even in unrestricted zones many foreigners and
Mexican Nationals, for that matter, prefer to hold their property
under a Fideicomiso.
real estate transactions are "opened" after a written purchase
offer is accepted by the seller and when a purchase-sale agreement
(promissory contract) is signed by both parties. In most cases, a
deposit is required by the broker in order to transmit the offer to
the seller. If the transaction is being conducted directly with the
seller, it is highly recommended that a real estate broker or a lawyer
be consulted before signing any papers or handing over any money.
some areas it is common practice to deliver to the seller, as an advance
payment, the equivalent to a 20-50% (including the initial deposit)
of the total price upon signing the purchase-sale agreement which
should contain a penalty clause applicable in case there is a breach
of contract by any of the parties.
when signing the escritura or official deed, which needs to be certified
by a Notario Publico or notary public, the balance is paid and the
property is delivered. This should not take more than 45 days. In
certain resort areas the custom of using "escrows" is being
Publico or Notary Public
Notario Publico is a government appointed lawyer who processes and
certifies all real estate transactions, including the drawing and
review of all real estate closing documents, thus insuring their proper
all powers of attorney, the formation of corporations, wills, official
witnessing, etc. are handled and duly registered through the office
of the Notario Publico, who is also responsible to the government
for the collection of all taxes involved.
connection to real estate transactions, the Notario Publico, upon
request, receives the following official documents, which, by law,
are required for any transfer:
nonlien certificate from the Public Property Registry based on a complete
A statement from the Treasury or Municipality regarding property assessments,
water bills, and other pertinent taxes that might be due.
An appraisal of the property for tax purposes.
of the Fideicomiso
on a present tariff, the bank charges the person desiring the Fideicomiso
an initial fee (approximately $500 US) for the drawing up of the agreement
and establishment of the trust, plus a percentage according to the
value of the property. In addition the bank charges an annual fee
(depending on the value of the property) to cover its services as