How to Buy Real Estate in Baja, Mexico: The Fideicomiso (Trust)
A Fideicomiso is a multi-functional contract that allows foreigners to hold title to a property in Mexico
How to Buy Baja Real Estate: The Fideicomiso
One of the most common misconceptions of Mexican real estate ownership revolves around the Fideicomiso. Often time clients think ownership is not possible for foreigners and that they can only hold land in a 99-year lease, which is not the case. We hope this article, "How to Buy Baja Real Estate," helps to clear up any confusion for you.
What is it?
Simply put, a Fideicomiso is a multi-functional contract that allows foreigners to hold title to a property in Mexico. A Bank Trust is called a fideicomiso (fee-day-co-mEE-so) in Spanish.
Why is it used?
The Mexican Constitution forbids foreigners to own real estate property located within The Restricted Zone.
Who are the parties involved?
Fideicomitente / Trustor / Seller
Fiduciario / Trustee / Bank
Fideicomisario / Beneficiary / Buyer
Is it similar to a lease?
No. A Fideicomiso grants the beneficiary (buyer) all the rights of ownership: the rights to buy, sell, lease, use, bequeath, improve, transfer, and encumber. A lease grants only the right to use. If a lessee makes improvements (such as building a house) on the property, that house belongs to the landlord. Nor can the lessee sell the property or borrow money on it. Before 1971, the bank trust was not available, and leasing was the only option for Americans and other foreign Buyers.
Can the Mexican government take away a foreigner’s property at any time?
No. A Fideicomiso is established by the government and gives foreigners the same rights of ownership as Mexican citizens. The only difference is that they never receive the actual fee simple title. A bank holds it in trust for them. The Trust system of ownership is sanctioned by the Mexican government, provided for under the Mexican Constitution, and secured by the Central Bank of Mexico. This is all exclusively for the purpose and protection of enabling foreign ownership of coastal property in Mexico.