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Foreign Ownership of Property in Mexico

13 July, 2014

Under the Mexican Constitution, foreign ownership of Mexico real estate along the coastline was restricted in 1917, but this was later changed in 1970 when the Trust (Fideicomiso) Law. Under the new rules, foreigners were allowed to buy land using a bank trust within the restricted zones, which generally encompassed anything within 50 kilometers of the coast and 100 kilometers from the border.

Under this system, the foreign buyer served as the beneficiary, while a Mexican bank acted as trustee. These trusts could last anywhere from 20 to 50 years and were generally set up to accommodate the wishes of the buyer. If he or she still owned the property, the trust could be renewed after expiration for a fee. 

Later in the early 1990s, a new “Corporation Law” was adopted in Mexico that allowed foreigners to own property in the name of a Mexican corporation that they also owned. This was the first time foreign buyers could actually hold the title to their property without the help of a bank and without incurring trustee fees. In addition, the corporations were expected to “live” at least 99 years, which was almost twice as long as the previous trusts. 

Today,Mexico has changed again with the coming of the electronic age and documents and deeds are recorded on a modernized computer database that will not fall prey to the fading and deterioration of previous paper records, which served as a major reason for the established time limits. This has resulted in Mexico lifting the 99-year time limit on corporations and Limited Liability Corporations (LLCs),which now are allowed to “live” until stockholders choose to dissolve the business entity. In addition, shares of the corporation may be either sold or passed on as inheritance to others. 

An update to property ownership here in Mexico is that the government are in talks to get rid of the Fideicomiso altogether and have simple ownership. So in the future it maybe that when you buy a property here in Mexico then the property will be in your name directly. We will keep you posted on any updates.

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Topics: Real Estate