Acquiring Land in Mexico
Foreigners Purchasing Land in Mexico The Mexican bank trust is an instrument commonly used for non-Mexican nationals, to purchase coastal land in Mexico. This bank trust in Mexico is known as a Fideicomiso. A bank trust is used to acquire property here in Mexico only on land that is within the restricted zone. This Restricted Zone, sometimes also called the Prohibitive Zone, is coastal land between 60 feet from the highest tide line; up to 31 miles inland from the ocean, and up to 62 miles from international borders.
Mexico uses the term – restricted - due to Mexico’s constitution reserving it for Mexicans. In 1973, Mexico changed its foreign investment laws to encourage foreign investment in both real estate and corporations using Fideicomisos (Bank Trust) to acquire land, and in 1998, the length of the term was extended from 30 to 50 years.
There are three parties that all play a part in the creation of a Mexican bank trust, or Fideicomiso; the buyer/beneficiary, the seller, and the Mexican bank. The buyer of the Mexican real estate is the beneficiary of the Fideicomiso. A Mexican bank serves as the trustee, and has a fiduciary relationship with the buyer, meaning that the Mexican bank is working in good faith for the buyer/beneficiary and in their best interests. The bank holds title to the property and carries out duties related to the property that serve the desires of the beneficiary.
The property deed is deposited with the bank; the bank cannot sell, depreciate, or receive any benefits from the property as they do not have control of the property. If the bank servicing the trust files bankruptcy, then the Fideicomiso is transferred to another Mexican bank to continue servicing the trust on behalf of the beneficiary.
The buyer/beneficiary has control of the property, and will account for the property as an asset on their desired books for their accounting purposes. They have the right to occupy it, enjoy it, lease it, improve it, depreciate it, 1031 exchange it, borrow money against it, bequeath/will it, add beneficiaries to the trust to avoid Mexican probate, or sell it. The trust is renewable after the 50 years.
El Patron Properties offers our Clients an ongoing service with respect to land maintenance issues such as yearly tax issues, water issues, general and local accountability and due to our proximity to your new asset, we strive to support all of the overall needs of our Clients. Quality service is our goal in assuring our Clients comfort level, for at the level of affluence and influence that our Clients command, our primary method of marketing is the preferred - word of mouth.