Fideicomiso or Bank Trust
As a foreigner purchasing property in the restricted zone, you will be required to purchase through a bank trust called a fideicomiso.
The bank trust was created in order to comply with the provisions of Article 27 of the Mexican Constitution in which foreigners are limited from acquiring the direct title of lands or waters within a range of 100 kilometers from any national border and within 50 kilometers from any coast, these areas are called restricted zones.
- The bank is the owner of the property. However, the beneficiary has all rights over the property, and the rights allow you to: sell, rent, remodel, build, etc.
- The trust must be managed by a financial institution, such as Scotiabank, Banco del Bajío, Banorte, etc.
- The bank cannot sell or dispose of the property without the beneficiary’s written consent.
- To establish a trust for a property in the restricted zone, it is necessary to obtain a permit from the Secretaría de Relaciones Exteriores (Secretary of Foreign Relations) which has a duration of 50 years and is perpetually renewable and transferable.
- The beneficiary must pay an annual fee to the bank for the administration of the trust, which, depending on the bank the fee, will vary between $500 to $600 USD.
- The bank’s approval is required to sell or assign property rights. Instructions must be provided to the bank through a letter, and the sale or assignment must be made before a Mexican notary public.
- You do not need to be a resident in Mexico to create a trust.
- The trust can be extinguished when the beneficiary becomes a Naturalized Mexican. As a Mexican citizen, you can own property in a restricted zone with direct Title.
- The heirs can be assigned in the trust, and are known as beneficiaries in the case of death, which can be removed or changed upon instructions provided to the bank.
- The properties held in trust are not considered a bank asset.
- It is important to obtain the legal advice of a professional for any real estate transaction and understand the benefits, options, and implications of setting up a fideicomiso. Consult with MexLaw to determine if the trust is the best option for your real estate purchase. [mexlaw.ca]