While many aspects of buying a home in Mexico look and feel like buying a home in the United States or Canada, you should remember that you are purchasing property in a foreign country.
The manner in which you will purchase property in Mexico is probably different from that which you are accustomed to. It is not better or worse, it is just different. There is no doubt that you have heard of and been confused by the bank trust system or the Mexican “fideicomiso”, and the “restricted zone”. To clarify and explanations you might have received in the past, a “fideicomiso” is a bank trust agreement and the “restricted zone” is a strip of land 62 miles from the border front and 31 miles along Mexico’s coast line. For historical reasons, the Mexican Constitution of 1917 prohibits any and all foreigners from holding direct property title to land residing within 62 miles of its border or 31 miles of its coastline.
Back in the early seventies Foreign Investments Law in order to avoid simulations and frauds allowed Mexican corporations even with foreign capital to own direct title to property for commercial purposes but still restricted direct title ownership for residential purposes. From those days up to the present the Mexican bank trust system was designed and encoded into law to permit foreigners (physical persons) to acquire and enjoy legal and safe possession of land within “restricted zone” for residential purpose in a manner consistent with constitutional provisions.
Usage of a Mexican bank trust, a fideicomiso, allows non-Mexican nationals to acquire property in the “restricted zone” by placing the real estate property into a bank trust recorded in a Mexican trustee’s name. The Mexican trustee is a Mexican bank trust department. The Mexican bank’s trust department is designated as the owner of record so that there is harmony with the constitutional provisions prohibiting ownership by foreigners. The trust agreement that governs the manner in which your property is managed stipulates that while the owner of record of the property is the Mexican trust, the ownership rights of the property belong to the trust’s beneficiary. The beneficiary of the trust is the purchaser of the property –you are the beneficiary. Trustees are paid an initial fee for recording the property in their name and are subsequently paid an annual trust maintenance fee. The trustee is prohibited by the trust agreement and by Mexican law from transferring the property or the property or the beneficiary rights to the property without the written permission of the beneficiary.
We are happy to walk through the steps. We are a full service brokerage, we like to maintain our ability to give you personalized service
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