Mexican law prohibits foreigners from owning land within 100 km of any international border and within 50 km of any coast. To encourage foreign investment, the Mexican government created the fideicomiso in 1973. If a property is put in a bank trust known as a fideicomiso, then foreigners can use the property as if they own it. The trust is a 99-year instrument, and is renewable for another 99 years.
While the bank technically holds the title in trust, the foreigner is granted all the rights of an actual owner. They can reside in the property, sell it, modify it, rent it out, and leave it to their beneficiaries. The trust places legal title in the name of a Mexican bank under a permit from the Secretary of Foreign Relations, so the bank may administrate the property on behalf of the buyer/beneficiary, who enjoys exactly the same rights of ownership as a Mexican national.
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The Foreign Investment Act is a federal statue which provides a legal framework for foreign investment and establishes rules for channeling international capital into Mexico. This act regulates the acquisition of real estate and trusts (fideicomisos) as well as foreign corporations and their investments. The Act sets forth strategic areas of land reserved for State ownership or control and economic activities exclusively reserved for Mexican nationals.
Fees of the Fideicomiso
To initiate a fideicomiso you pay a bank a setup fee and the first two annual maintenance fees. Fees vary by location but are around $500 US per year.