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Q: I've always heard that foreigners can't buy coastal property in Mexico, is that true?
No. While it was once true, times have changed. Prior to 1973, foreigners were not allowed to hold legal title or exercise direct rights to real property in an area within 64 miles of Mexico's borders and 32 miles of its coasts. But laws passed in 1973 and1993 have made it possible for foreigners, foreign firms and Mexican firms with foreign participation to acquire interests in coastal real estate through a bank trust (Fideicomiso).
Q: Who is involved in this bank trust?
Three parties. The seller of the property is the Trustor. The bank is the Trustee. (Fiduciario), and the buyer, or Beneficiary (Fideicomisario).
Q: How does the trust function?
Title to the property is transferred to a trust with a Mexican bank acting as Trustee. The Trust Agreement is formalized by the issuance of a permit from the Mexican Ministry of Foreign Affairs. The lot or home buyer is designated as Beneficiary in the Trust and the beneficiary rights are recorded in the public record by a Notary Public.
Q: What are my rights as a buyer?
The trust is a legal substitute for fee simple ownership, but in this case, the Trustee is the legal holder of the property. As Beneficiary, you have the right to sell your property without restriction. You may also transfer your rights to a third party, or pass it on to named heirs.
Q: Is the trust renewable?
Yes. According to the Foreign Investment Law passed in 1993, trusts can be renewed for an indefinite number of successive 50 year periods. In effect they run in perpetuity.
Q: If at a later date, I decide to sell my property can anyone buy it?
Yes. If the buyer is also a foreigner, you simply assign beneficial rights. If the new buyer is a Mexican National, you can instruct the bank to endorse the title in favor of the buyer.
Q: If the buyers is a foreigner, is his interest limited to the balance of my 50 year trust?
No. Upon application, a foreigner automatically receives his own renewal 50 year permit. This, however, is not mandatory.
Q: Do many foreigners currently own coastal property in Mexico?
Yes. Today thousands of foreign owners enjoy their ocean side resort property; many have benefited from the appreciation of their property.
(Special thanks to Marco Ehrenberg for writing much of this article)
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