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Can Foreigners own property in Mexico?

There is a large misconception that foreigners cannot own Real Estate in Mexico.  This used to be true and because of that, many people who wanted a home in Mexico were forced to lease land.  This is where the “ninety-nine year land lease” confusion began.  Today, foreigners can purchase property in Mexico through a Fideicomiso or “Trust”.

 

The Mexican Fideicomiso has its origins in the American Trust.  Dating back to the early 20th century, the Fideicomiso was originally adapted from the American trust and tailored to Mexican regulations.  The origin of the term Fideicomiso comes from a Roman contract entitled Pacto de Fuduccia.  The Fideicomiso can be applied to any type of contract as long as the purpose of the Fideicomiso is not illegal.  The current Mexican constitution was issued in 1917.  Within the constitution, Article 27 regulates everything concerning the Mexican Territory, ground, underground, sea, waters, natural resources, and general rules concerning property.  Article 27 also established the “restricted area”.  The restricted area encompasses 100 kilometers along the border and 50 kilometers along the coast.  Article 27 also prevents foreigners from “direct” ownership of property within the restricted area.  For this reason, foreigners are allowed to purchase property in an “indirect way”.  The most common is through a Fideicomiso.

 

With the North American Free Trade Agreement beginning January 1, 1994, the Foreign Investment Act of 1993 was passed by the Mexican congress to promote foreign investment into Mexico.  This law allowed foreigners to own 100% of the shares of a corporation and purchase property.  As a foreigner, you can acquire irrevocable and absolute ownership rights to property in Mexico through a 50 year perpetually irrevocable and transferable Fideicomiso Trust.  This enabled foreigners, as beneficiaries of the trusts, to legally enjoy unrestricted use of land located in the restricted area.  Fideicomiso is the legal equivalent of deeded ownership (commonly referred to in the U.S. as fee simple).  

 

Upon the purchase of land through a Fideicomiso, the Mexican government issues a permit to a Mexican bank of your choice.  Clear, lien-free title to the property is then delivered to that bank.  The bank acts as the trustee designating the purchaser as the beneficiary of the trust.  The bank acts as an employee of the beneficiary in all transactions involving the property.  As the beneficiary, you retain full use and control of the property and make all decisions concerning the property.  Title insurance is also available from U.S. title insurance companies.  Owning land in Mexico under a Fideicomiso Trust gives you the right to use, enjoy, lease, improve, mortgage, sell, profit, inherit and will the property. 

 

Here’s to happy and safe homeownership in Cabo!!!

Posted: Sunday, April 8, 2007 1:50 PM by Nick Fong
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