Fideicomiso (Fee-day-e-co-me-so)
MEXICAN PROPERTY TRUSTS
Foreign citizens who wish to buy property within designated regions of Mexico known as the restricted zone are required to obtain a “Fideicomiso” (fee-day-e-co-me-so), which functions as a Mexican Property Trust / title to the property.
In 1994, amendments to the Constitution permitted foreigners to purchase and own real estate in Mexico located within the “restricted zone” which is all land within 60 miles of a national border and within 30 miles of the Mexican Coast, which includes all real estate in Los Cabos. This Law permitted ownership through a property trust or “Fideicomiso”.
The way the Fideicomiso is designed for foreigners is the Mexican Government issues a permit to a Mexican Trust Bank department of your choice, the Trust bank acts as the “Trustee” for the Trust/ Title and you are the “Primary Beneficiary” of the Trust/ Title. The “Primary Beneficiary” rights are very similar to Living Wills or Estate Trusts in the U.S.
The bank, as trustee, takes instructions only from the primary beneficiary of the trust (the foreign purchaser). The primary beneficiary has the right to use, occupy and possess the property, including the right to build on it or otherwise improve it. The beneficiary may also sell the rights and instruct the trustee to transfer title to a qualified owner.
Many people refer to the trust arrangement in Mexico as a lease agreement… this is not true. The home or property that you buy will be put into a trust with you named as the primary beneficiary of the trust – you are not a lessee. You have all the rights that an owner of property in the U.S. or Canada has, including the right to enjoy the property, sell the property, rent the property, improve the property, etc. The initial term of the trust is 50 years. An investor can renew the trust for an additional period of 50 years within the last year of each 50-year period, and this process can be continued indefinitely, providing for long-term control of the asset.
