La Amada - Buying Real State in Mexico
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Mexican real estate law allows foreigners to acquire residential real estate located in the coastal and border areas of Mexico through a trust ("fideicomiso"). A trust grants the same rights and obligations as full ownership.

Alternatively, foreigners may acquire title to non-residential real estate located in the coastal and border areas of Mexico through a Mexican company.

Buying Real Estate in Mexico FAQ


WHAT IS A TRUST INSTITUTION?

In Mexico, a Trust Institution is a banking institution that is authorized to open 'fiduciary' accounts and conduct trust operations as Trustee. The Trustee holds legal title to the real estate property during the term of the Trust, and is also empowered with rights and powers necessary to achieve the objectives of the contractual agreement creating the Trust, for the benefit of the trust beneficiaries.

WHAT CHARACTERISTICS WOULD HAVE A TRUST AGREEMENT?

In the Trust deed, the present owner of the real estate would appear as the settlor (fideicomitente) and would thereby convey title of the real estate to the Trustee who will hold title to the property during the life of the Trust (50 years) for the benefit of the Beneficiary. You can renew the Trust perpetually. The buyer (you) would appear as the Beneficiary (fideicomisario), the person having the absolute use and avail of the property.

WHAT ARE THE REQUIREMENTS?

1. A copy of the real estate title or deed indicating the exact surface area, metes and boundaries, a free of lien certificate, receipts of Federal, Local or municipal Taxes (seller provides these documents).
2. Your name, nationality, occupation, address and phone number. Copy of your passport, immigration form (in case), phone or other bill service mail to your address.
3. The name, nationality, address and phone number of the substitute beneficiary (ies) in case of death of the Beneficiary during the life of the Trust (Optional).
4. The agreed purchase price.

WHAT PROCESS FOLLOWS?

Upon receiving the information and documents described above, the Trustee will proceed to apply at the Foreign Affairs Ministry (Secretaría de Relaciones Exteriores) for the permit authorizing the execution o the Trust deed. Once the permit is issued by the Foreign Affairs Ministry, then the Trustee will be able to execute and formalize the Trust deed before a Mexican Notary Public. Notary Public Offices in Mexico have a greater legal status and competence than those in the United States. The Notary Public is an Attorney at Law who is authorized by the State Government to, among other faculties, grant final formality to the title transfer process in his protocol book. The resulting document taken from this protocol book (the Trust deed) is registered at the corresponding Public Registry of the Property, and it will provide evidence of title. In the event that you cannot be present at the execution of the Trust deed before the Notary Public, a duly empowered representative may execute the Trust deed on your behalf. Powers of attorney for representatives must be granted in compliance with Mexican formalities including its formalization before a Mexican Notary Public.

WHAT RIGHTS AND OBLIGATIONS DOES THE BENEFICIARY ASSUME UPON THE CELEBRATION OF THE TRUST DEED?

As the Trust Beneficiary, you will have the use and possession of the property, that is, you may live on the real estate, undertake any alterations and improvements subject to any applicable limitations and/or requirements stipulated in laws and regulations, such as Zoning and construction regulations among others. You also have the capacity to instruct the Trustee on mortgaging the real estate, leasing it, selling, transferring your beneficial interests to another person or corporation, or performing any of the acts that by law derive from the ownership. If you sell the property to another foreigner, you may assign your beneficial interest in the Trust to the new purchaser or instruct the Trustee to convey the property to a newly formed Trust for the benefit of the new purchaser. This assignment of rights must be formalized through a Mexican Public Notary, prior the payment of the federal and local taxes and fees that arise from the transfer of Beneficiary rights. You will have the obligation to pay the duties on the real estate, i.e.: real estate and water service taxes, power supply fees, the condominium maintenance fees, if applicable, as well as the Trustee's annual administration fee.

WHAT HAPPENS IF THE BENEFICIARY OF THE TRUST DIES DURING THE LEGAL PERIOD OF THE TRUST?

The Beneficiary has the right to appoint substitute(s) beneficiary (ies) at the moment of formation of the Trust or in a latter event, who will receive all the rights and obligations that arise from the Trust if the beneficiary dies during the life of the Trust. With this designation of substitute beneficiaries, your heirs will not need to follow any probate proceeding before the Mexican courts, which could take time and Attorney's Fees. They would only have to give notice to the bank of the deceased and show the death certificate and their identifications, and then the Bank will accept and register them as the new owners (beneficiaries) of the Trust Property, without any cost.

HOW LONG DOES A TRUST REMAIN IN EFFECT AND CAN IT BE RENEWED?

It is renewable at the end of its 50-year term and for additional periods of 50 years each. The law provides that if an application is filed no more than 360 or less than 181 days before the end of the original Trust, The Secretary of Foreign Relations must issue a new Trust permit, effective for an additional term of 50 years. The Trust can be renewed for perpetuity.

CAN I SELL OR TRANSFER MY INTEREST IN A TRUST?

A Trust interest may be sold or transferred much like any other interest in real property. Upon the sale of an interest in real estate hold under a Trust, the Secretary of Foreign Relations is required by law to issue a new Trust permit to the buyer. If property hold under a Trust is sold to a Mexican National, the Trust can be terminated and the Mexican National may then own the property in fee simple.

ARE MEXICAN BANKS THE ONLY INSTITUTIONS THAT CAN HOLD TRUST ON BEHALF OF FOREIGN INVESTORS?

Yes, however you have the right to choose which bank you would like to hold your Trust. The Trust is not an asset of the bank. Trusts also allow foreign investors to participate in other sectors of the Mexican economy. Foreign investors are required to use Trusts to acquire certificates of participation representing shares of companies listed on the Mexican Stock Exchange.

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