Buying Property in Mexico’s Restricted Zone as a Foreigner
Under Article 27 of the Mexican Constitution, there is a designated "restricted zone" which includes any land within 100 kilometers (about 62 miles) of a national border and 50 kilometers (about 31 miles) from the coast. Within these areas, foreign individuals are not permitted to directly own property. However, the Mexican Foreign Investment Law allows non-Mexican citizens to hold beneficial rights to real estate in these zones through a legal mechanism known as a Real Estate Trust, or fideicomiso.
What Is a Fideicomiso?
A Fideicomiso is a legal trust agreement involving three parties:
- The seller (known as the "fideicomitente")
- A Mexican bank (the trustee or "fiduciario")
- The foreign buyer (the beneficiary or "fideicomisario")
In this setup, the Seller transfers the Title of the property to the bank, which holds it on behalf of the foreign Buyer. While the bank is the legal titleholder, the buyer retains full rights to use, lease, remodel, sell, or even inherit the property—just as if they owned it directly. These trusts are authorized for up to 50 years and can be renewed indefinitely.
Only banks authorized by the Mexican government can act as trustees. The buyer pays an annual fee (typically around $450 to $550 USD) to the bank for managing the trust.
Rights and Responsibilities of the Beneficiary
As the beneficiary of the trust, you can:
- Live in or rent out the property
- Remodel, develop, or build on the land
- Sell the property or transfer your rights at any time (with proper approval)
- Designate heirs or substitute beneficiaries in the event of your passing
While the bank holds the title, it cannot sell, mortgage, or otherwise encumber the property without your written permission.
Legal Formalities and Role of the Notary Public
All property purchases in Mexico must be overseen by a Notary Public, who is a specialized legal professional authorized by the Mexican government. The notary is responsible for:
- Drafting and legalizing the property deed
- Ensuring all legal requirements are met
- Registering the deed with the Public Registry of Property in the municipality where the property is located
Once the transaction is recorded, the deed includes the full trust agreement and serves as your official proof of ownership rights. The bank receives one copy of the deed, and you, the beneficiary, receive the other.
If you ever need to demonstrate ownership outside of Mexico, you can request an apostilled or legalized copy of the deed for use in international legal or tax matters.
Additional Key Points About the Fideicomiso
- A permit from the Secretary of Foreign Relations (SRE) is required to set up the trust.
- You do not need to be a resident of Mexico to create a Fideicomiso.
- The trust can be canceled if the beneficiary becomes a naturalized Mexican citizen, allowing for direct ownership of the real estate.
- Multiple beneficiaries can be named, and rights can be shared equally unless otherwise specified.
- To sell or assign the property, instructions must be submitted to the bank and processed through a Mexican notary.
- The trust itself is considered the property of the beneficiary, and the bank cannot use it for its own benefit.
Questions?
If you’d like more information about this process, feel free to reach out to your Trusted Real Estate Agent, Vincent Swanlund: [email protected]
