Mexico has long been an attractive destination for foreign investors looking to purchase real estate, whether as a vacation home, a rental property, or a long-term residence. However, due to constitutional restrictions on foreign ownership of land within 50 kilometers (31 miles) from the coast or 100 kilometers (62 miles) from international borders, non-Mexican buyers must use a fideicomiso, a bank trust system that grants them all the rights of ownership while complying with Mexican law.
In this guide, we break down how the fideicomiso works, why it's necessary, and what steps foreign investors need to take to securely purchase property in Mexico.
A fideicomiso is a legal trust agreement established between a foreign buyer and a Mexican bank. Under this system:
- The bank holds the property title as the trustee but has no ownership rights or control over the property.
- The foreign buyer is the beneficiary of the trust, meaning they can sell, lease, remodel, or pass the property to heirs.
- The trust is valid for 50 years and is renewable indefinitely.
This structure ensures that foreign investors can fully enjoy their property while complying with Article 27 of the Mexican Constitution, which restricts direct ownership of land in “restricted zones” by non-Mexicans.
The process of purchasing real estate in Mexico using a fideicomiso follows these key steps:
1. Find a Property and Conduct Due Diligence Before signing any agreements, work with a reputable real estate agent and a Mexican notary public to verify the property’s legal status, ownership history, and any outstanding debts.
2. Make an Offer and Sign a Preliminary Agreement Once you negotiate the terms, a promissory contract (contrato de promesa) is signed, and a deposit (usually 5-10% of the property’s price) is made to secure the purchase.
3. Open a Fideicomiso with a Mexican Bank The buyer selects a bank to establish the trust. The most common banks that manage fideicomisos in Mexico include BBVA, Santander, Scotiabank, and Banorte. The bank ensures that the property transaction is legally compliant and provides ongoing trust administration.
4. Obtain a Permit from the Mexican Government The Mexican Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores - SRE) must grant a permit allowing the foreign buyer to establish a fideicomiso. This process typically takes a few weeks.
5. Finalize the Purchase and Sign the Title Deed Once the fideicomiso is established, the final sales contract is signed in the presence of a Mexican notary. The buyer pays the remaining balance, closing costs, and taxes.
6. Register the Property The notary registers the new trust deed with the Public Registry of Property, officially securing the foreign buyer’s rights.
While the fideicomiso is a secure and widely used mechanism, it does involve some additional costs:
- Initial setup fee: $500 - $1,500 USD (varies by bank)
- Annual trust maintenance fee: $500 - $700 USD
- Closing costs: Typically 4-7% of the property value (includes notary fees, registration, and transfer taxes)
These costs should be factored into the investment decision, particularly for buyers considering long-term ownership.
For foreign investors looking to purchase multiple properties or operate a rental business, setting up a Mexican corporation is another legal alternative. Unlike the fideicomiso, a corporation allows direct ownership of properties in restricted zones but involves additional tax and reporting obligations.
- Best for: Investors planning to buy multiple properties for commercial purposes.
- Not recommended for: Individuals purchasing a single residential home.
Yes, the fideicomiso is a secure and widely accepted method for foreign buyers. Since Mexican banks operate under strict financial regulations, the trust system provides peace of mind by ensuring that property rights remain protected. Additionally, buyers have full control over their assets and can sell, transfer, or inherit the property just like any other owner.
Investing in real estate in Mexico as a foreigner is entirely possible and legally secure through the fideicomiso system. While it involves some additional steps and fees, it provides full ownership rights and the ability to sell or pass on the property. By working with reputable professionals and understanding the process, international buyers can confidently invest in one of Mexico’s most desirable destinations.
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