Real Estate Q&A – Mexican Fideicomiso

Many people are confused by the Mexican system of land ownership; certain land is “restricted”, some is “ejido”, and some is freely available… but what does all this mean? Well, restricted land falls within 100 km of the borders and 50 km of the coasts of Mexico and requires a Fideicomiso if it is to be bought by foreign nationals. “Ejido” land is even more tightly regulated and has no official title; it can only be owned by certain Mexican nationals under certain circumstances and never by a foreigner.

Real on to find out more about the Mexican Fideicomiso

What is a Fideicomiso?

A fideicomiso is a kind of real estate trust in which you, the buyer, are beneficiary and the Mexican bank of your choosing is the trustee. As beneficiary you retain all control over the sale, assignment, improvement, and use of the property. This is not a lease, but much like a US living trust. You are the beneficiary of the trust; the bank simply administers it.

Why do I need a Fideicomiso?

The reasons behind it all are fairly complex, but at the simplest level the Fideicomiso system was setup to make it possible for foreign nationals to buy “restricted land” without amending the Mexican constitution, but also to protect Mexicans and Mexico from the kind of massive land loss they had experienced in the past. This also creates a safe and secure transaction. Many people still choose to use a fideicomiso when purchasing homes outside of the restricted areas.

Is your trust an asset of the bank?

In short, no. As a trustee, the bank holds and administers the trust but has no legal ownership rights to your home. Your property is not considered an asset of the bank and will not be affected by or exposed to any legal action against the bank. Your property is safe when held in a fideicomiso.

For how long does the Fideicomiso last?

Initially the trust is set up for a period of 50 years (which is renewable at any time for a nominal fee, and with the completion of a simple form). The trust is set in 50 year increments which are renewable in perpetuity.

How much does a fideicomiso cost?

At the moment it costs around $500 USD to set up/renew a Fideicomiso.

Can the Government take my Property?

Only for public purposes (e.g. the building of roads), with a legal condemnation proceeding, and with swift and fair compensation that makes allowances for market value and accrued interest. The North American Free Trade Agreement (NAFTA) forbids the expropriation of lands and property under any other circumstances, and so you needn’t worry. It’s common for foreigners, upon learning the system, to worry about their property being expropriated by the Mexican Government. However, there is no legitimate risk.

Can I get a fideicomiso for ejido land?

No. Land declared “ejido” is the only land in Mexico without a title and can only be owned by Mexican Nationals who intend to work the land.