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This is a summary of the characteristics of a fideicomiso trust:

Legal ownership of real estate in Mexico for foreigners comes from the Foreign Investment Law which was approved by President Luis Echeverria in 1971 and became law in 1973. 

This law exists because notaries and other businessmen in Mexico recognized the huge asset Mexico has of its coastline. These leaders realized there was an opportunity to attract foreign investment. To have funds for economic development in the 70s was of paramount importance, and US dollars were highly desired.  How to make this asset available to foreigners and not violate the Mexican constitution was the dilemma.  The key became the fideicomiso or trust.

The 1917 Mexican Constitution banned foreign ownership of any land within the “Restricted Zone” which is within 64 miles of international borders and 32 miles of any coastline. 

The Foreign Investment Law of 1973 allowed a different treatment of real estate within and outside the Restricted Zone. Foreigners can own land outside the RZ without the need of a trust. Chapala and Guadalajara are locations where a number of foreigners own with a simple escritura or deed.  Land inside the RZ would be within a fideicomiso trust. 

The investment trust program was very successful, and in 1989, the Mexican government signed into law the ability for the foreigner to have successive extensions of the trust thorough a simple application process when time for expiration of the original trust period came due.

In 1994, the new Foreign Investment Law allowed a beneficiary to have a trust for 50 years, with the application for extension or renewal still intact.

The trust is privately held in a Mexican bank authorized to act as a trustee. The trusts are not assets on the books of the bank, nor are banks allowed to take any action without written instruction from the beneficiary of the trust. The bank holds title to the real estate in trust, and the foreigner is designated as the holder of the beneficial rights of the trust, which includes the right to sell, improve, and will to heirs, or exercise any legal right under law. 

As beneficiary, the foreigner has the equitable interest in the property through whatever market variations may occur. In other words, any equity or the loss of equity accrues to the holder of the trust, not the bank.

When the actual sale takes place at the office of a notary, the foreign owner may assign his beneficial interest in the trust to the new buyer (for a Mexican National, he endorses the title in favor of the buyer). The new owner may wish to establish a new bank trust where he is named the primary beneficiary. In this case, he will issue instructions to the notary for this purpose.

Closing costs for the buyer are normally: acquisition tax, city appraisal, foreign permits, bank trust set-up and first year administration fee, notary costs, title insurance or survey, if requested.  

Closing costs for the seller include payment of capital gains tax, trust cancellation if applicable, and real estate fees. Capital gains tax is computed using the declared value of the purchase price in the seller’s deed and the tax value, which form a basis to index appreciation or depreciation, and deduct allowable receipts to arrive at an amount of tax.  Each individual case will be different and proper analysis by a qualified professional is necessary. This computation is usually done by the notary closing the sale.

Mexico created a way to release pent-up equity from its valuable shoreline.

By Harriet Murray



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.