Fideicomiso

By Jeanine Lee Kitchel ©

Fideicomiso
It’s easy to fall in love with Quintana Roo’s gorgeous beaches and laid back lifestyle and to dream about owning a little piece of paradise. It’s the rare tourist who doesn’t ask the inevitable question (no matter how much is in his or her bank account) --- can a foreigner own land here in Mexico?

Mexicans, by birth or naturalization, can buy real estate anywhere in Mexico; for foreigners, however, different rules apply. While foreigners can buy land in Mexico’s interior, foreigners cannot own land that falls within 50 kilometers from the ocean or 100 kilometers from Mexico’s borders (Quintana Roo falls into this restricted zone).

To get around this legality (this law was passed by the Mexican Congress in 1917 shortly after World War I when Germans were on a buying spree for beachfront property and Mexico did not want to give up its beaches and borders) in 1971 the fideicomiso was born. Through the fideicomiso, foreigners can obtain ownership rights to properties in the restricted zone.

The fideicomiso, also known as a real estate trust, is acquired through a Mexican bank with the aid of a notary. Mexican notaries have more authority than U.S. notaries. They are appointed by the governor, and must have a law degree along with three year’s experience in a notary’s office. In Mexico, many real estate transactions are handled by notaries.

While the bank holds technical legal title to the real estate trust, the foreigner is the legal beneficiary of the trust. This gives that person full use of ownership of the property, so that he or she may buy, sell, lease the land, or pass it on to heirs. (Similar to holding title to property in the U.S.).

Until 1993, the rules of the fideicomiso required any foreigner owning land in the restricted zone to have a Mexican partner, with the bank qualifying as that partner. But the Foreign Investment Law of 1993 changed that. Foreigners can now own a full 100 percent of a corporation here and the corporation can buy and own property with a fee simple title. Check with a local notary for full details on this.

The fideicomiso is sanctioned by the Mexican government, provided for under the Mexican Constitution, and secured by the Central Bank of Mexico. Not only are individual land owners bound by these rules, but all foreign corporations and hotels also must secure a fideicomiso for property in the restricted zone. The current duration for a fideicomiso is 50 years with a renewal 50-year period afterwards. Presently there are no limits on the number of times the trust can be renewed.

Fideicomisos have an annual fee that is paid to the bank that has set up the trust. Costs may vary due to land prices or to the individual bank one is dealing with. In Mexico, title insurance does not yet exist, so take care if you are planning to buy property here. Make sure the land is not ejido land (communal agricultural land and not saleable). Ask questions, demand detailed answers, and enjoy the ride.

About the Author:

Jeanine Kitchel lives in Puerto Morelos. Her nonfiction book, Where the Sky is Born: Living in the Land of the Maya, can be purchased at local bookstores of from amazon.com
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