Restricted Zone

The Mexican Constitution does not allow foreigners to register deeds to land in their own names in areas of Mexico that are included in a zone 50 kilometers wide along the coast and 100 kilometers from the US border.
This is called the restricted zone. The Mexican government encourages foreign investment in Mexico. To this end, they passed in the early 70’s a law that allows foreigners to “own” real estate in the Restricted Zone by using a “bank trust deed” or Fedeicomiso, or Trust. This law was amended in 1993 to make it more liberal and to comply with the provisions of the North American Free Trade Agreement (NAFTA).
The Trust (Fedeicomiso) is basically a deed in the name of a Mexican bank and held in trust.  The Foreigner/Purchaser is named as the beneficiary of the trust and has all the rights of ownership.  The bank has no rights of ownership in the property.  The deed does not form part of the bank’s assets. Even if a bank were to fail or close, the deeds in trust would be transferred to another bank and would not be subject to bank creditor claims.
The Foreigner/Purchaser has all the rights of normal ownership including, but not restricted to selling, renting, improving, disposing or even destroying.  The Foreigner/Purchaser pays all property taxes, utilities, and other charges made against the property. The banks charge an annual fee ($500 to $650 depending on the bank) for holding the deed of trust.
For any foreigner to own property in Mexico, a permit must be obtained from the Secretary of State in Mexico City. As evidence that the government considers Trusts (Fedeicomisos) a form of ownership, the Foreigner/ Purchaser of a Trust must also obtain this permit. The trust allows the Foreigner/Purchaser to name primary and secondary beneficiaries as well, so the property can pass to descendants without the
need for a will or probate.
Under current law, the Trusts run for a term of 50 years and then they are renewable for another 50 years.  It is not the intention of the government to ever acquire these properties, so this does not happen. When a Foreigner decides to sell this property, the new purchaser has the option of assuming the existing Trust or taking out a new Trust for a new term of 50 years. Foreigners have also been known to switch banks and take out a new Trust for a new 50 year term without selling the property.
As a buyer, you will pay approximately 5-6% for closing costs in addition to costs associated with either assuming an old trust or starting a new trust. Trusts (Fedeicomisos) are not leases! They are simply a different kind of ownership.  Leases are a different matter and must be investigated thoroughly as the Foreigner has less protection with a lease.

The Mexican Constitution does not allow foreigners to register deeds to land in their own names in areas of Mexico that are included in a zone 50 kilometers wide along the coast and 100 kilometers from the US border.
This is called the restricted zone. The Mexican government encourages foreign investment in Mexico. To this end, they passed in the early 70’s a law that allows foreigners to “own” real estate in the Restricted Zone by using a “bank trust deed” or Fedeicomiso, or Trust. This law was amended in 1993 to make it more liberal and to comply with the provisions of the North American Free Trade Agreement (NAFTA).
The Trust (Fedeicomiso) is basically a deed in the name of a Mexican bank and held in trust.  The Foreigner/Purchaser is named as the beneficiary of the trust and has all the rights of ownership.  The bank has no rights of ownership in the property.  The deed does not form part of the bank’s assets. Even if a bank were to fail or close, the deeds in trust would be transferred to another bank and would not be subject to bank creditor claims.
The Foreigner/Purchaser has all the rights of normal ownership including, but not restricted to selling, renting, improving, disposing or even destroying.  The Foreigner/Purchaser pays all property taxes, utilities, and other charges made against the property. The banks charge an annual fee ($500 to $650 depending on the bank) for holding the deed of trust.
For any foreigner to own property in Mexico, a permit must be obtained from the Secretary of State in Mexico City. As evidence that the government considers Trusts (Fedeicomisos) a form of ownership, the Foreigner/ Purchaser of a Trust must also obtain this permit. The trust allows the Foreigner/Purchaser to name primary and secondary beneficiaries as well, so the property can pass to descendants without theneed for a will or probate.
Under current law, the Trusts run for a term of 50 years and then they are renewable for another 50 years.  It is not the intention of the government to ever acquire these properties, so this does not happen. When a Foreigner decides to sell this property, the new purchaser has the option of assuming the existing Trust or taking out a new Trust for a new term of 50 years. Foreigners have also been known to switch banks and take out a new Trust for a new 50 year term without selling the property.
As a buyer, you will pay approximately 5-6% for closing costs in addition to costs associated with either assuming an old trust or starting a new trust. Trusts (Fedeicomisos) are not leases! They are simply a different kind of ownership.  Leases are a different matter and must be investigated thoroughly as the Foreigner has less protection with a lease.

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Thank you 

PAM

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