Foreign Ownership of Real Estate in Mexico 

By Carol Kirby Williams, White City Properties//

While foreigners own property fee simple in the interior of Mexico, including valuable sites in such tourist Meccas as Guadalajara, Cuernavaca and Mexico City, they are technically prohibited from holding title to properties in the so-called “Prohibited Zone” along Mexico’s coasts and borders.

A land lease for more than 10 years is not legal and never has been.

This restricted area, which was established under the Mexican Constitution, extends 100 kilometers (about 62 miles) inland along the coast. This means that virtually all of Baja California is included in the “Prohibited Zone.”

These are three ways to hold property in Mexico:

• Mexican Bank Trust (Fideicomiso)
• Mexican Land Lease
• “Federal Zone Concession”

This article concerns the Mexican Bank Trust.

The Mexican Bank Trust was created in 1971 to promote tourist and retirement investments along popular coastlines by Mexican President Echeverria, who authorized the 30 year Bank Trust program. This is the most secure method to hold real estate in Mexico.

Your Bank Trust must be established at an authorized Mexican Bank. When you buy property from a Mexican land owner, he will convey title to the Bank which then acts as the Trustees for the foreigner. The Bank Trust is in your name and includes your beneficiary.

The property is yours to improve, enjoy, and sell when you are ready to sell, with all the proceeds going to you as the Seller. The property does not have to “revert back to a Mexican National.” If you sell the property to another foreigner, he simply “assumes the balance of your Bank Trust term” and the legal documents are made to place the Bank Trust in your buyer’s name with his or her beneficiary.

Some condos and subdivisions have “Master Bank Trust”. Please do not “assume” projects have their “Master Bank Trust.” Ask the right questions! Ask to see their trust documents. They should have a certified copy available for you and/or your Mexican attorney to review.

Obtaining a Master Trust is a long legal process for the developer, but it is the absolute best way to purchase. It is possible to get an Individual Bank Trust, even if your property is in a Master Bank Trust, but is more expensive than assuming the balance of the term under the Master Trust.  If you sell you property back to a Mexican, he can cancel the Trust and take free simple title as a Mexican National.

If you purchase a “piece of land” and create a Bank Trust for the property so you can build a home, that is possible and the cost to do this is approximately $3,000. You must commit to the Mexican Government that you will build a property of at least $200,000 market value (including land cost) within a specific period of time, which is a couple of years.

They are no longer granting Bank Trust for land that you that you “put a trailer” on. The Government wants to “clean up the coast”. Any existing Bank Trusts that currently have a “trailer on them” are grandfathered in and those Trusts will remain.

–Carol Kirby Williams, Owner

White City Properties

carol@whitecityproperties.com