The History of Buying Property in Mexico

Buying property as a foreigner in Mexico hasn’t always been simple and in the Mexican Constitution of 1917, it was made law that only Mexicans were allowed to be landowners. In fact, buying property in Mexico for foreigners has only been possible since the Foreign Investment Law that was passed in 1973. The law permits foreigners to acquire property in Mexico, as long as it is located outside of the so-called ‘Restricted Zones’, which include any land within 100 kilometres of foreign borders or within 50 kilometres of the sea, as an attempt to prevent foreign invasion. As a consequence, this law largely prevented development in those zones and, subsequently, was modified in 1993 by the Mexican government. Foreigners are now allowed to buy property in the restricted areas but only indirectly through a ‘Fideicomiso’ or trust agreement between the buyer and a Mexican Trust Bank.

How Does the Fideicomiso Trust Work when Buying Property in Mexico?

Mexican trust banks are authorised by the Mexican Government to carry out the acquisition of properties located in the restricted zone. The respective bank owns the land and acts on behalf of the foreign buyer. Nevertheless, the purchaser holds all rights and responsibilities of selling, leasing, mortgaging and entrusting the property. Furthermore, it is possible to transfer the trust to another foreign buyer. The bank is the holder of the trust deed and is responsible to check if the property is free of liens or any claims to the property. This trust remains valid for 50 years and can be renewed at any time for another 50 years. In the case that the purchaser should miss out on renewing the trust, they have a further period of 10 years to do it.

On the contrary, Mexican corporations which are 100% foreign-owned can own properties in restricted areas without a trust. But if the property is intended to be used for commercial purposes, there are more requirements and restrictions that come into play, such as higher rates for water, electricity and more, making it less advantageous than buying it through a Fideicomiso Trust.