MEXICAN LEGISLATION
27 Article of Mexico’s Constitution of 1917 prohibits foreigners from owning residential real estate within thirty miles (50 km) of any coastline or sixty miles (100 km) o either border. This area is known as the “Restricted Zone”.
FOREIGN INVESTMENT LAW
Since 1973 a constitutional amendment establishes in the Foreign Investment Law allowed non-Mexicans Citizens to acquire coastal and border property through a “trust” (Fideicomiso), that is done through a Mexican Bank. This trust assures the foreign buyer all rights and privileges of ownership, and is needed to own properties into the “Restricted Zone”.
HOW DOES THE TRUST WORK?
Under the bank trust structure, legal title is placed in the name of a Mexican bank, we need to advice and get a permit from the Secretary of Foreign Relations, that a non-Mexican is acquiring property in the “Restricted Zone”. The Mexican bank holds the title home for the buyer/beneficiary of the trust, the non-Mexican who establish the trust right in the property. The bank receives and administrates the property in accordance with the instructions of the buy/beneficiary. The buyer/beneficiary enjoys the same rights of ownership, as does a Mexican national. He may build on the property, tear down existing buildings, modify them, rent, lease or sell at anytime conforming only to internal Bank regulations for this type of trust and to the general laws of the country established for all persons.
The trustee bank cannot do anything with the property unless he receives a written instruction form the beneficiary (to sell, transfer or encumber the property).
The beneficiary may name the parties he or she selects as co-beneficiaries and may name substitute beneficiaries whenever he wants.
A permit to establish a Mexican bank trust (Fideicomiso) can now be obtained for a term of 50 years and can be renewed.
