Complete Guide to Trusts (Fideicomiso) for Foreigners Buying Property in Restricted Areas of Mexico

Are you a non-Mexican thinking about buying property on the beautiful beaches of Mexico or near its borders? There is a legal tool called a trust (fideicomiso) that allows you to do so without complications. In this article, we will explain what a trust is, how it works, and the steps you need to take to acquire your property in restricted areas of Mexico.

What is a Trust or Fideicomiso?

A trust (or fideicomiso in Spanish) is a contract in which a property owner (trustor) transfers the title of the property to a Mexican bank (trustee), which manages the property for the benefit of the foreign buyer (beneficiary). This mechanism is mainly used so that foreigners can acquire properties in Mexico’s Restricted Zone.

What is a Restricted Zone?

The Restricted Zone in Mexico includes all areas within 100 kilometers of the borders and 50 kilometers of the coasts. In these areas, foreigners cannot acquire properties directly but can do so through a trust.

Some examples of Restricted Zone cities are:

• Cancún, Playa del Carmen, Isla Mujeres, Tulúm
• Puerto Vallarta, Bucerías
• Cabo San Lucas, San José del Cabo, La Paz
• Mazatlán

Parties Involved in the Trust

• Trustor (Fideicomitente): The original seller of the property.
• Trustee (Fiduciario): A Mexican bank authorized to hold the title of the property.
• Beneficiary (Fideicomisario): The foreign buyer who acquires the rights to use and enjoy the property.

Rights of the Beneficiary

One of the biggest concerns for foreigners is whether they will truly have control over their property when using a trust. Rest assured, as a beneficiary of the trust, you will have extensive rights that provide you with full control and flexibility over your property.

• Use and Enjoyment: You can live on the property, rent it out, or use it as you wish.
• Sale: You can sell the property to another foreigner or a Mexican citizen.
• Inheritance: You can designate beneficiaries to inherit the property.
• Modifications: You can make improvements and modifications to the property.

1. Use and Enjoyment

As the beneficiary, you can use the property as your primary residence, vacation home, or rental property. You have the right to enjoy the property in the same way any property owner would. This includes:

• Living on the Property: You can reside on the property year-round or seasonally.
• Renting the Property: You can lease the property to tenants and collect rental income.
• Vacation Home: Use it as a personal retreat for holidays and special occasions.

2. Sale

If you decide to sell the property, you have the full right to do so. The process is straightforward:

• Selling to Another Foreigner: The new foreign buyer would need to establish their own trust.
• Selling to a Mexican Citizen: The property can be sold directly without the need for a trust.

3. Inheritance

You can designate heirs to inherit the property. This ensures that your investment can be passed down to your family members or other designated beneficiaries without complications.

• Designating Beneficiaries: You can specify who will inherit the property in your trust agreement.
• Smooth Transition: Upon your passing, the property can be smoothly transferred to your beneficiaries, providing them with the same rights and benefits you enjoyed.

4. Modifications and Improvements

You have the right to make any modifications or improvements to the property. Whether you want to renovate, expand, or simply update the property, you are free to do so.

• Renovations: Undertake major renovations to improve the property’s value and comfort.
• Upgrades: Make upgrades such as adding a pool, landscaping, or modernizing the interior.
• Personalization: Personalize the property to suit your tastes and needs.

5. Financing

You can obtain financing for the property. Many Mexican banks offer mortgages to foreigners with a trust. This makes it easier to fund the purchase or improvement of your property.

• Mortgage Loans: Access to mortgage loans can make purchasing or renovating more feasible.
• Leverage Your Investment: Use financing to leverage your investment and potentially increase returns.

Duration and Renewal of the Trust

The trust is established for an initial period of up to 50 years and is renewable for additional periods of 50 years, with no limit on the number of renewals. This ensures that you can enjoy your property in the long term.

Process for Establishing a Trust

1. Permission from the Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores or SRE): You must obtain permission from the SRE to establish the trust.
2. Selection of the Bank: Choose a Mexican bank that will act as the trustee.
3. Trust Agreement: Sign a trust agreement with the bank.
4. Public Deed: Formalize the agreement in a public deed before a notary.
5. Registration: Register the deed with the Public Registry of Property.

Associated Costs

When acquiring property through a trust, consider the following costs:

• Establishment Fee: A one-time payment for creating the trust.
• Annual Fee: Annual payment to the trustee bank for managing the trust.
• Notarial and Registration Fees: Costs for the public deed and its registration.

Benefits of the Trust (Fideicomiso)

Using a trust to purchase property in restricted areas of Mexico provides numerous advantages for foreign buyers. This legal mechanism is designed to offer both security and flexibility, ensuring that your investment is protected and easily manageable.

Here are the key benefits of using a trust:

• Legal Security: Protects your rights as a property owner.
• Flexibility: Allows you to sell or inherit the property according to your needs.
• Ease of Management: The trustee bank manages the title of the property.

1. Legal Security

One of the foremost advantages of a trust is the robust legal protection it offers.

• Ownership Protection: The trust structure ensures that your rights as a property owner are legally safeguarded. While the Mexican bank holds the title, you retain all beneficial rights, providing you with the security of ownership without the direct title.
• Compliance with Mexican Law: The trust complies with Mexican regulations, eliminating the risk of legal complications. This compliance is critical for long-term stability and peace of mind.
• Protection Against Disputes: By formalizing the property ownership through a trust, you minimize the risk of disputes over property ownership, as the terms are clearly outlined and legally binding.

2. Flexibility

A trust offers significant flexibility, making it an attractive option for foreign investors.

• Freedom to Sell: You have the right to sell the property whenever you choose. Whether you want to sell it to another foreigner (who would establish a new trust) or to a Mexican citizen (who can hold the title directly), the process is straightforward and legally supported.
• Inheritance Planning: You can designate beneficiaries to inherit the property, ensuring that your investment can be smoothly passed on to your heirs. This aspect of flexibility is particularly valuable for estate planning and long-term family security.
• Use and Enjoyment: You have the freedom to use the property as you wish, whether as a primary residence, vacation home, or rental property. This ensures that your investment can serve multiple purposes, adapting to your changing needs over time.

3. Ease of Management

Managing property through a trust is simplified by the involvement of a professional trustee.

• Trustee Bank’s Role: The Mexican bank, acting as the trustee, manages the title of the property. This includes handling legal documentation and ensuring compliance with local regulations, which reduces the administrative burden on you as the beneficiary.
• Administrative Support: The trustee bank provides ongoing administrative support, including the renewal of the trust and any necessary legal filings. This continuous support ensures that your property remains in good standing without requiring extensive personal involvement.
• Simplified Transactions: Any changes in ownership, such as selling the property or transferring it to heirs, are facilitated by the trustee, streamlining the process and ensuring all legal requirements are met efficiently.

In summary, using a trust to purchase property in restricted areas of Mexico provides a secure, flexible, and manageable solution for foreign buyers. It ensures legal protection of your ownership rights, offers the freedom to sell or inherit the property as needed, and simplifies property management through the expertise of a professional trustee.

This makes a trust an ideal choice for foreigners looking to invest in Mexican real estate while enjoying peace of mind and convenience.

In Conclusion

Acquiring property in the beautiful restricted areas of Mexico is entirely possible and safe for foreigners thanks to the trust. This mechanism not only provides legal security but also flexibility and full control over your investment. If you are considering buying property in Mexico, a trust is the ideal option for you.

As real estate advisors specializing in the sale of Mexican properties for non-Mexicans, Homes in Mexico‘s team will be happy to assist you in your purchasing procedures, property search, fideicomiso procedures and all legal procedures, for so that you can enjoy your real estate purchase under the sun.

Ready to invest in Mexico? Contact us today!

📞Phone or SMS: +1 437 374-5544
💬WhatsApp: click here
📧 Email: contact@homesinmexico.com