Foreign ownership

Buying property through a fideicomiso

Foreign ownership

Foreigners can obtain direct ownership of property in the interior of Mexico, but they cannot own property within the 100km land border zone and 50km coastal zone. Within these ‘restricted zones’, foreigners can only own land through a fideicomiso (a trust) by a Mexican bank.

You do not have to be a resident in Mexico to own property there, so there is no need to qualify for resident status in order to have a property investment in Mexico. However there are some legal limitations to foreign property investments that you should be aware of and that are completely independent from your residency status.

The Mexican Constitution previously banned foreign nationals from owning property within the restricted border zones. This old law was intended to protect Mexican soil from foreign invasion. However it also restricted the development of these zones by limiting foreign investment. As the constitution could not be altered, the Government set up a system of land trusts that allows foreigners to ‘indirectly own’ a property within the restricted zones.

Fideicomiso: Mexican Land Trusts

As foreigners are not allowed to enter real estate contracts within the restricted zones, they must have a bank to act on their behalf. The bank will establish a real estate trust which holds the deeds to the property, and you and/or other named persons become the sole beneficiaries to the trust (and therefore the property).

The fideicomiso (trust agreement) obliges the bank to follow the instructions of the trust beneficiary (you), allowing you to do whatever you like with your property. I.e., it can be developed (in accordance with local planning regulations), rented, leased, sold, given away or inherited. In other words the trust’s beneficiary retains and enjoys all the rights of the property, while the bank only holds the official title to the property.

In order to legally enter into such a trust agreement, Mexico requires all foreigners to obtain a permit from the Ministry of Foreign Affairs prior to contracting to acquire real estate in Mexico. This is often done by the trustee and/or the bank at the time a real estate trust is set-up. However since a buyer can now apply for and obtain a trust permit in a matter of days, it is always better to secure the trust permit before entering into any contract.

Further reading

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