What is a BANK TRUST? CORRECT NAME IS: Fideicomiso (FEE-DAY-E-CO-ME-SO)
Foreigners are able to purchase property in the “restricted zone” of Mexico through a trust called a Fideicomiso. The restricted zone is all properties or land within 100km of any border and 50km within any coastline. The real estate trust is similar to those in the United States, however a Mexican bank or corporation must be designated as the trustee, has title to the property, and is the owner of record. The Foreigner purchaser is the beneficiary of the trust allowing him/her to use, enjoy, rent and even sell the property.
The trustee is paid a small fee for administering the trust. The trust is renewable every 50 years. There is a common misconception that once the trust expires, the beneficiary loses all rights and benefits to the property held in trust. This is not true.
The beneficiary has a contractual right to renew the trust and under Mexican Law the bank, as trustee, has a fiduciary obligation to respect the rights of the beneficiary. The law is very specific about the Real Estate Fideicomiso.
Fideicomiso is designed specifically for non-nationals to own land in the formerly restricted areas (beach, border region) and is the ONLY legal way to own this Mexico land. It provides the same legal rights and protection of ownership as a Mexican has under the law. It bestows upon the Beneficiary of the Trust, the foreigner, absolute and irrevocable control over the property. The Fideicomiso is set in 50-year increments guaranteed renewable for perpetuity. It can be improved, mortgaged, bought, sold, inherited & willed.
The restricted zone is in Article 27 of the Mexican Constitution. It was designed to protect Mexico from possible invasions. Although this is not a concern in this day and age, it is important to remember that Mexico has experienced several invasions, wars, and tremendous losses of territory in its history, and the restricted zone is really nothing more than a legacy of that history. It’s important to know that Mexico's Foreign Investment Law was designed to facilitate the safe acquisition of coastal and border properties by non-Mexicans, and specifically designed to protect foreign owners rights.
The "restricted zone" is defined as being any real estate that is within 50 kilometers (30.5 miles) of Mexico's coast, or 100 kilometers (61 miles) of Mexico's border with any other nation. Within this zone, non-Mexicans can own real estate, but are required by Mexico's Foreign Investment Law to do so through a bank trust, also known as the “Fideicomiso”. They are safe because for 35 years, they have been a secure mechanism for the more than 1.5 million Americans, Canadians and other foreigners who are now enjoying the lifestyle and financial benefits of Mexican property ownership.
The Trustee bank simply holds the deed to the property for you or your assignees. Your property is not part of the bank's assets and cannot be subject to bankruptcy, lien, or attached to bank obligations. You have all ownership rights to the property.