Mexico Real Estate – Fideicomiso

Mexico Real Estate has become highly sought after and more people each year are purchasing Mexico real estate.  For a very long time, there has been a huge misconception that Real Estate in Mexico could not be owned by foreigners.  Since this used to be the case, many individuals were unfortunately forced to lease the land.  The idea of the “ninety-nine-year land lease” stemmed from this confusion.  To look at this dilemma and the solution that was formed, we have to look back in the history books just a bit.

The term Fideicomiso came from the Roman contract called Paco de Fuduccia and can be applied to most any type of contract as long as the purpose of it is not illegal. The Fideicomiso was originally, in the early 20th century, adapted from the American Trust and tailored to Mexican regulations.

In 1917 the Mexican Constitution that we now see was issued.  Article 27 of this constitution regulated everything concerning the Mexican Territory, sea, waters, ground, underground, natural recourses and general rules having to do with property.  It also established what is called the “restricted area” or “restricted zone”.  This area is made up of 50 kilometers along the coast, and 100 kilometers along the border. 

Beginning on January 1st of 1994, the North American Free Trade Agreement (NAFTA) was created.  With this, the Foreign Investment Act of 1993 was passed.  The Mexican Congress did this to promote foreign investment into Mexico.  Foreigners were allowed by this law to own 100% of the shares of a corporation and therefore purchase property in an “indirect way”.    The “indirect way” and the answer to all of this, is known as a Fideicomiso.

With a Fideicomiso, a permit is issued to a Mexican bank of your choice by the Mexican Department of Foreign Affairs. This makes the selected bank the trustee, thus making you the beneficiary of that trust.  Ownership of the property still belongs to you, but the bank acts as the trustee as it would in the case of a living will or estate trust.  In all transactions involving the property, the bank acts as an employee of the beneficiary. As the beneficiary, you retain control and full use of the property and make all decisions concerning the property.  Fideicomiso, legally, holds the same equivalent of deeded ownership.  This is also referred to in the United States as fee simple.  The term of trust averages about fifty years.  It is renewable every fifty years.  The length of the trust period means that you won’t have to deal with renewals on a regular basis.

So, what does this all mean for you?  This means that, with a Fideicomiso or Trust, today foreigners can purchase Mexico Real Estate.  Under a Fideicomiso Trust, owning land in Mexico gives you the rights of use, profit, inheritance, and willing of the property, enjoyment, improvements, or leasing.  This gives an effective and safe solution for those that look forward to enjoying Mexico Real Estate ownership, so you can have a stunning property in fantastic surroundings with very little hassles. 

The best part of all is that our very own La Hacienda is a Master Trust Community.  Whenever you are looking at a potential real estate purchase it is very important to ask if the community you are looking at is one.  Very few are.  Simply put this means that if a community is not a Master Trust Community, they cannot issue title to property (sometimes for up to a year after you have paid for it).