The Restricted Zone
Fideicomiso or Bank Trust
Notario Publico or Notary Public
Cost of the Fideicomiso
It is a
common misconception that foreigners cannot own Real Estate in Mexico,
but the reality is that they can. However, there are 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 Fideicomiso.
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.
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.
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:
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.
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 continually
renewed every 50 years. During these periods you have the right to transfer
the title to any other party, including a member of your family.
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.
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.
purposes, even in unrestricted zones many foreigners and Mexican Nationals,
for that matter, prefer to hold their property under a Fideicomiso.
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.
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.
Normally, 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
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 transfer.
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.
to real estate transactions, the Notario Publico, upon request, receives
the following official documents, which, by law, are required for any
certificate from the Public Property Registry based on a complete title
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
a present tariff, the bank charges the person desiring the Fideicomiso
an initial fee (approximately $1000-2000 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