Fideicomiso/Bank Trust in Mexico
What is a Fideicomiso?
In Mexico, during the year of 1917 there was a restricted zone established that was defined in the constitution and clearly stated that no non Mexican is allowed to own land or real estate of any kind within 30 miles of any Mexican coast line and 60 miles from any Mexican border. This law still remains in effect but like many constitutions it has been modified through the years.
During the past 15 years the real estate and investment market has boomed in many parts of Mexico and especially in Mazatlan making Mexico a viable and lucrative investment destination. Because of this, the Mexican Government recognized that it was crucial to make foreign investment in Mexico much safer and easier than ever before so a new method of holding a title was created for foreigners who wish to purchase land or real estate of any kind in Mexico. This new method allows ownership through a Mexican Property Trust and is called a “Fideicomiso” and is a trust agreement, much like an estate trust that gives you all of the rights of ownership.
The Department of Foreign Affairs issues a permit to the bank or trust company of your choice, allowing the bank or trust company to act as the purchaser of the property. The bank or trust company plays the role of the “Trustee” for the trust and you are the “Beneficiary” of the trust. The property is not an asset of the bank or trust company. They simply act as the Trustee to hold the trust. The Fideicomiso is not to be confused with a land lease. The property you purchase is placed in a trust with you named as the beneficiary of the trust – you are not a lessee!
The initial trust that is set in place is good for 50 years and it can then be renewed for an additional period of 50 years indefinitely, providing for long term control of the property.
What rights do I have with a Fideicomiso?
The Mexican bank or trust company follows instructions only from the beneficiary of the trust which is you. You are the property owner and have all the rights to the property including the right to sell the property, rent the property, remodel the property etc. The property owner (the beneficiary) has all of the same rights to the property as a Mexican National would.
What are the costs of the Fideicomiso?
The approximate cost for starting a Fideicomiso costs around $2,400 USD but the exact amount depends on the bank or trust company you choose to use. That amount includes administrative fees and other document fees as well.
When purchasing a property with a Fideicomiso that is already in place the buyer is assuming that Fideicomiso and the years left on it. Generally the amount is less than what it would be for starting a new Fideicomiso and the approximate cost is around $1,500 USD but again that amount depends on the trust provider you choose.
Please note that both of the above fees include the first year of administration of the trust.
There is a annual fee for the Fideicomiso administration which is approximately $400 USD a year depending on which bank or company administrates the Fideicomiso.
Check out this video made by one of our preferred Mexican Banks - Bancomer!
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