The question we probably get asked the most as realtors is “Can a foreigner actually own property in Mexico?” The answer is yes! Foreigners are absolutely welcome to invest in property, even along the coast. Within 50 kilometers of Mexico's ocean front areas, the Mexican government allows foreigners to own land through a Bank Trust called a Fideicomiso or under a Mexican corporation.
About the Fideicomiso (Legal Bank Trust)
There are three parties are involved in a Fideicomiso: the Trustor (original owner of the property), the Trustee (the bank) and the Beneficiary (the new property owner who will receive the benefits of the trust). A Bank Trust does not give direct ownership to the foreign buyer, rather the bank holds legal title to the property and acts on the foreigner’s behalf. However a Fideicomiso assures the foreign buyer all the rights and privileges of ownership. It is established for a term of 50 years and is renewable at any time during its existence.
It is important to understand that the property is not part of the bank’s assets and cannot be liened or attached to any other obligations. The foreign buyer receives all rights of ownership including the ability to remodel, lease, mortgage, sell or pass the property to their heirs at any time. The Mexican government established the Fideicomiso as protection for foreigner buyers in Mexico. The bank is required by law to check ownership, insurance, and liens against the property.
Setting up a Fideicomiso
Fideicomisos are established by a Mexican Notary and it is recommended you also have the assistance of a real estate agent and/or attorney.
The bank is the link between the foreign buyer and the Mexican government, accepting full technical, legal and administrative responsibilities, which protects the foreign buyer’s interests. Although the bank is the legal owner of the property, the bank has a statutory responsibility to abide by the foreign buyer’s wishes concerning the property so the property is ultimately controlled by the foreign buyer.
When a property is purchased, and there is an existing Fideicomiso, it may be re-assigned naming a new beneficiary or a new Fideicomiso may be created. The costs to establish a Fideicomiso vary from bank to bank however the initial fee is approximately $2,000 to $2,500 USD and about $500 USD annually for maintenance of the trust. All associated costs are paid by the foreign owner directly to the bank that holds the Fideicomiso.
There are three parties are involved in a Fideicomiso: the Trustor (original owner of the property), the Trustee (the bank) and the Beneficiary (the new property owner who will receive the benefits of the trust). A Bank Trust does not give direct ownership to the foreign buyer, rather the bank holds legal title to the property and acts on the foreigner’s behalf. However a Fideicomiso assures the foreign buyer all the rights and privileges of ownership. It is established for a term of 50 years and is renewable at any time during its existence.
It is important to understand that the property is not part of the bank’s assets and cannot be liened or attached to any other obligations. The foreign buyer receives all rights of ownership including the ability to remodel, lease, mortgage, sell or pass the property to their heirs at any time. The Mexican government established the Fideicomiso as protection for foreigner buyers in Mexico. The bank is required by law to check ownership, insurance, and liens against the property.
Setting up a Fideicomiso
Fideicomisos are established by a Mexican Notary and it is recommended you also have the assistance of a real estate agent and/or attorney.
The bank is the link between the foreign buyer and the Mexican government, accepting full technical, legal and administrative responsibilities, which protects the foreign buyer’s interests. Although the bank is the legal owner of the property, the bank has a statutory responsibility to abide by the foreign buyer’s wishes concerning the property so the property is ultimately controlled by the foreign buyer.
When a property is purchased, and there is an existing Fideicomiso, it may be re-assigned naming a new beneficiary or a new Fideicomiso may be created. The costs to establish a Fideicomiso vary from bank to bank however the initial fee is approximately $2,000 to $2,500 USD and about $500 USD annually for maintenance of the trust. All associated costs are paid by the foreign owner directly to the bank that holds the Fideicomiso.
Rights of the Foreign Owner
The foreign owner can occupy the property for the life of the trust. Title to the property can be transferred directly to the foreign owner in the event that he acquires legal capacity to hold such property (by becoming a Mexican citizen), or to any legally qualified person he/she may designate.
The Fideicomiso can also be passed to heirs in naming them as substitute beneficiaries in the event of the foreign owner’s death. The property can also be sold to a person legally authorized to own land or to a different foreign buyer via a transfer of trust.
Although it is a fairly easy process overall, it can seem like a complicated matter...especially in a foreign country and in a different language. However , it is important to remember that professional real estate companies are there to help you with all of these formalities and procedures so don’t be afraid to ask!
The foreign owner can occupy the property for the life of the trust. Title to the property can be transferred directly to the foreign owner in the event that he acquires legal capacity to hold such property (by becoming a Mexican citizen), or to any legally qualified person he/she may designate.
The Fideicomiso can also be passed to heirs in naming them as substitute beneficiaries in the event of the foreign owner’s death. The property can also be sold to a person legally authorized to own land or to a different foreign buyer via a transfer of trust.
Although it is a fairly easy process overall, it can seem like a complicated matter...especially in a foreign country and in a different language. However , it is important to remember that professional real estate companies are there to help you with all of these formalities and procedures so don’t be afraid to ask!
1 comment:
Great article, always wondered whether it was possible for a Canadian to own property in Mexico, and you made it a very easy read.
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