Buying Property in Mazatlán: What is a Fideicomiso and Do You Need One?

Are you a non-Mexican citizen looking to purchase property in Mexico? Since our primary base is in Mazatlán, we assume that you want to buy a property in this beautiful city. In the off chance that’s not the case, it’s worthy to note that you need to figure out whether your property lies within the Restricted Zone.

The Restricted Zone is defined as being property within the specific zone per the 1917 Mexican Constitution under Article 27. “Under no circumstances may foreigners acquire direct ownership of lands or waters within a zone of one hundred kilometers along the frontiers and of fifty kilometers along the shores of the country.”

Even though the Constitution clearly states that a foreigner cannot acquire direct ownership within the Restricted Zone, the Foreign Investment Law that was approved by President Luis Echeverria in 1971 allows for the foreigner to purchase property through a bank trust called a fideicomiso.

Under the confines of the fideicomiso, there are certain restrictions and limitations. To create a fideicomiso, you must set up a trust to be managed by a financial institution such as Banorte, Scotiabank, HSBC, etc. in Mexico. The financial institution becomes the “owner” of the property with you, the property buyer being the beneficiary.

As beneficiary you have rights over the property including being allowed to remodel, build, sell or rent. The property is not a bank asset and the institution cannot sell or dispose of the property without the beneficiary’s consent.

In order to establish a trust, you must obtain a permit from the Secretaría de Relaciones Exteriores (Secretary of Foreign Relations) which lasts for 50 years, and is perpetually renewable and transferable.

Depending on where you live and how the financial institution sets up the fideicomiso, as the beneficiary you must pay an annual fee for the administration of the trust. Heirs can be assigned in the trust and much like a will, they can be identified as beneficiaries in the case of death.

Remember, always make sure to get professional and legal advice for any real estate transaction from your notario, a real estate attorney, who will be handling the purchase of your property.