Purchasing Real Estate In México

Bank Trust "Fideicomiso"

Considering a Retirement or Vacation Home?

Mexicos close proximity to the U.S. poses a great benefit to the vacationer or retiree. The lower cost of living, availability of quality homes at comparatively lower prices to those sold in the U.S., and top-notch medical facilities make living in México more attractive. Several flights are available to destinations such as Mazatlán, and beautiful locations such as San Felipe are within a two-hour drive from the U.S.-México border.

What Types of Ownership Can a Foreigner Have in Mexico, and What is the Acquisition Process?

On the Mexican mainland, a foreigner can purchase property fee simple (direct deed), except when the property is located in the restricted zone: 50 kilometers (32 miles) from the shoreline or 100 kilometers (62.5 miles) from the borders.

However, buyers can acquire residential properties located in all of the Baja Peninsula, coastal and border areas within the restricted zone, through a Mexican Bank Trust called a Fideicomiso. The bank, for an annual service fee of $300 to $400, serves as a trustee that holds the legal title to the property for up to 50 years. The cost for the permit and other fees to establish a bank trust is aprox. $2,620. U.S. Dollars. To purchase through a Fideicomiso, a foreigner must first register at the Secretaria de Relaciones Exteriores for a permit to establish the trust. Upon receipt of the permit, the trustee bank sends instructions to a Notario (a governor appointed attorney), who prepares the deed (Escritura) to the beneficial rights. Applicable taxes are paid (aprox. five percent of purchase price), and then the deed is recorded in the local municipality.

The foreigner, as a beneficiary of the Fideicomiso, has the right to use, improve, lease, sell, mortgage, and will the property. When the owner dies, the estate becomes the beneficiary. Also, a second beneficiary to the trust can be named through a Mexican will. Co-owners can be listed on a Fideicomiso to avoid probate. Upon expiration, a Fideicomiso may be extended indefinitely in 50-year periods when one pays the renewal fee. Buyers must establish a new 50-year period if they purchase a property that was already in a Fideicomiso.

Commercial or non-residential property in the restricted zone can be purchased fee simple with 100 percent foreign capital as a Mexican corporation, without the need for a Fideicomiso-but through an application process through the Secretaria de Relaciones Exteriores.

Escrow arrangements in México do not typically exist as in the U.S. Some American-based real estate companies work with a hybrid type of escrow, incorporating the closing customs of México and California for U.S.-based buyers.

* This information was condensed from an article written by Fabiola Thébaud, a licensed real estate agent with Prudential California Realty Estate Services.