Mexican Real Estate – Benefits of the Fideicomiso
Obviously, it would be easier and less expensive if you could hold a direct title to your Mexican property. However, the Mexican Constitution states foreigners can not own property within the restricted zone; the fideicomiso is the safest workaround for purchasing this type of property.
The primary purpose of a fideicomiso is to satisfy the Mexican Constitution by bestowing the legal title of the property in the name of the trustee. The trustee’s responsibility is to hold and transfer title deed under the direction of the beneficiary (buyer).
The Benefits of a Fideicomiso
- It allows foreigners to purchase real estate within the restricted zone. Mexico’s restricted zone includes property within 100 km from the border and 50 km from the ocean. The trustee (bank) holds the property for the beneficiary (the buyer). Besides creating a corporation, the fideicomiso is the only legitimate way of acquiring real estate in the restricted zone, allowing foreigners to buy in prime areas.
- Buying through a fideicomiso is a secure way to purchase property, your property is not an asset of the bank, even if the bank enters into bankruptcy your property will not be considered a bank asset.
- The buyer has all the legal rights of a property owner; they may sell, renovate, or rent as they wish.
- The Public Registry contains the names of property owners. However, if the property is held in a fideicomiso, only a trust number is published, providing discretion for those who prefer to keep their real estate assets private.
- In some cases, you will save on the setup fee by taking over the existing trust of a property you are purchasing.
- Within the trust, you will appoint a substitute beneficiary who will receive the property when you pass away. The heir will take over the trust/property, avoiding spending time and the expense of probate proceedings in Mexico.
- The Fideicomiso is quicker to set up and easier to maintain than a corporation. You will pay a setup fee (unless you take over an existing trust) and a yearly fee. If you were to buy through a corporation, you will be burdened with extra accounting obligations and require at least two shareholders, need to submit monthly and annual financial reports, and conduct annual shareholder meetings.