Mexico's long-established Foreign Investment Law allows non-Mexicans to acquire coastal and border property through bank trusts that are held by a Mexican bank. Under this secure ownership mechanism, the bank holds the deed to the real estate for you. The term of a Mexican real estate bank trust is 50 years, renewable for additional 50 year periods.
This bank trust mechanism was designed to provide safe ownership of Mexican real estate by non-Mexicans, and to protect non-Mexican real estate owners’ rights.
With a Mexican real estate bank trust your Mexican real estate is not part of the bank's assets and cannot be subject to lien, or attached to bank obligations. The trust is not a lease, and you have all ownership rights to the property. Properties do not pass back to the Mexican government at the end of the trust period -- an occasional misconception and unfounded fear of purchasers from the United States and Canada.
I hope that this FAQ about Mexican real estate ownership is helpful to you.
1 - Are non-Mexicans able to own real estate in Mexico? The answer is YES! It is a common misconception that foreigners cannot own Real Estate in Mexico; in realty it's possible to do so. However, there is a "restricted zone", as described below. Properties anywhere outside the restricted zone can be owned on a fee-simple basis; foreign (non-Mexican) ownership of property is both legal and common. An alternative form of ownership is to purchase non-residential property through a Mexican corporation. Corporations can be, under certain conditions, 100% foreign-owned, if there is a provision in the by-laws that the foreigners agree to subject themselves to Mexican law, refusing possible invocation of laws of other countries. Another requirement is that the real estate acquired under a Mexican Corporation has been 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, even inside the restricted zone. For residential purposes inside the Restricted Zone, ownership through a bank trust is required.
2 - Where is Mexico's "restricted zone"? The "restricted zone" is defined as any real estate that is within 30.5 miles (50 kilometers) of Mexico's coast, or within 61 miles (100 kilometers) of Mexico's borders with other nations (Guatemala, Belize and the USA). Within this zone non-Mexicans can own real estate, but are required by Mexico's Foreign Investment Law to do so through a bank trust.
3 - Why did Mexico establish the restricted zone? The restricted zone is enshrined in Article 27 of the Mexican Constitution, and was designed to protect México from possible invasions. While this is certainly a remote possibility today, it is important to remember that Mexico has experienced several invasions, wars, and tremendous losses of territory in its history; the restricted zone is really nothing more than a legacy of that history. From the non-Mexican investor's perspective, the important thing to remember is that Mexico's Foreign Investment Law was designed to facilitate the safe acquisition of coastal and border properties by non-Mexicans, and specifically designed to protect the rights of foreign owners.
4 - What is a Bank Trust? A bank trust, or "fiedicomiso" in Spanish, is similar in structure to a trust in the United States. The trustee is a bank, protected under financial laws, and the beneficiary can be any individual, partnership, Limited Liability Company or corporation, Mexican or non-Mexican (which can also be useful tools for Estate Planning).
5 - Is a Mexico Bank Trust a form of Lease? No. A bank trust is not a lease, and confers on the trust-holder the same rights as "ownership" in the United States or Canada.
6 - Are Mexican Real Estate Bank Trusts safe? Yes! The bank simply holds the deed to the property for you or your assignees and beneficiaries. Major International banks such as Banco Monex, Banco Interacciones, ScotiaBank Inverlat, GE Capital, and Santander Serfin, among many, are very active in the bank trust market. Your property is not part of the bank's assets, and cannot be subject to bankruptcy, lien, or attached in any way to bank obligations. As the beneficiary to a bank trust, the property owner has the exclusive ability to make all decisions and to direct all actions regarding the property. The property can be bought and sold, bequeathed and inherited, etc. ONLY with the direction of the trust beneficiary. For over 35 years bank trusts have proven themselves secure for more than 1.5 million Americans and Canadians who are now enjoying the lifestyle and financial benefits of Mexican property ownership.
7 - Will I be able to will my property in Mexico to my children and grandchildren? Yes. The most common and longest term for a trust is 50 years, renewable for additional 50 year period. In fact, trusts are renewable at any time by simple application. It was never the intent that trust-held properties pass to the government at the end of the trust period, which has been a common misconception of purchasers from the United States and Canada. What happens after 100 years? A new bank trust will be formed to hold the assets for another 50 years, and same rules will apply.
8 - We have been told that a "Notario" will be involved in our purchase and title process. What is a Notario? The Notario Publico is a government appointed lawyer who processes and certifies all real estate and corporate transactions. The Notario is ultimately responsible to the government for the collection of all taxes involved. It is extremely important to remember that a Notario cannot represent you in your real estate transaction; he may offer advice, but he does not, and can not, "represent" you.
9 - Are there Title Processing Companies in Mexico as in the USA? Yes. There are some reputable companies who offer escrow and closing services, as well as US Title Insurance policies to protect your investment. Contact a reputable AMPI Realtor to learn more about which is the best to use in the area you are considering a purchase.