What is a fideicomiso in Mexico

Here's a brief explanation of what is a fideicomiso in Mexico.

A fideicomiso in Mexico is a type of trust agreement commonly used for real estate transactions, particularly for foreign buyers purchasing property in restricted zones.

Key Points About a Fideicomiso

1. What is a Fideicomiso in Mexico:

   • A fideicomiso is a bank-held trust that allows foreigners to purchase and control real estate in Mexico while complying with legal restrictions.

   • The buyer (beneficiary) retains full ownership rights, including the ability to sell, lease, or pass the property to heirs.

2. Why It’s Needed:

   • Mexican law prohibits non-Mexicans from directly owning property within 50 km (31 miles) of the coast or 100 km (62 miles) of international borders.

   • Instead of direct ownership, foreigners acquire property through a fideicomiso, where a Mexican bank acts as the trustee.

3. How It Works:

   • The foreign buyer (beneficiary) has all property rights.

   • The Mexican bank (trustee) holds the legal title but has no control over the property.

   • The trust lasts for 50 years, renewable indefinitely.

4. Costs and Fees:

   • Setup Fee: $1,500–$2,500 USD (varies by bank).

   • Annual Fee: $500–$1,000 USD for trust administration.

   • Other closing costs and property taxes apply.

5. Alternatives:

   • If a foreigner forms a Mexican corporation, they can own property directly (mainly for commercial purposes).

Advantages of a Fideicomiso:

✔ Full ownership rights✔ Ability to sell or inherit property✔ Legal protection through a bank✔ Renewable trust