Owning Real Estate in Mexico ?
It is a common misconception that foreigners cannot own real estate in Mexico, while in reality they can do so. A foreigner can acquire any type of real estate outside the Restricted Zone, holding the property as a direct owner under Mexican Law.
However there is an area referred to as the "Restricted Zone" which is 100 km along the border and 50 km along the coastline. The Mexican Constitution regulates this zone and states "a foreigner cannot acquire the direct ownership of the land".
Nevertheless, the latest Mexican Foreign Investment Law, enacted December 28, 1993, provides the option in the form of a Bank Trust or Fideicomiso. Within the Restricted Zone, a foreigner or foreign corporation can obtain all the rights of ownership with a Fideicomiso.
Any foreigner can establish a Fideicomiso (the equivalent to an American beneficial trust) through a Mexican bank in order to purchase real estate anywhere in Mexico, including the Restricted Zone. To do so, the buyer requests to Mexican bank of their choice to act as a trustee on their behalf.
The bank, as a matter of normal course, obtains the permit from the Ministry of Foreign Affairs to acquire the chosen property in trust. The Fideicomiso can be established for a maximum term of 50 years and can be automatically renewed for another 50 year period. During these periods you have the right to transfer the title to any other party, including a member of your family.
The bank becomes the legal owner of the property for the exclusive use of the buyer/beneficiary who has all the benefits of a direct owner, including the possibility of leasing or transferring their rights to the property to a third party or to a pre-appointed heir.
The trustee is responsible to the buyer/beneficiary to ensure precise fulfillment of the trust, according to Mexican law, assuming full technical, legal and administrative supervision in order to protect the interests of the buyer/beneficiary. "Fideicomisos" are not held by the trustee as an asset of the bank.
For practical purposes, even in unrestricted zones many foreigners and Mexican Nationals, for that matter, prefer to hold their property under a Fideicomiso.
The real estate industry in Mexico is similar in many ways to that of the United States, which is probably the most advanced in the world. It is developing quickly, and the trend seems to be paralleling the system as it exists in the USA.