According to Article 27, Section l of the Constitution of the Mexican States, foreigners are prevented from direct ownership of property within the strip of land 100 km from the border and fifty 50 km from beaches, only being allowed the use and enjoyment of real estate within this restricted area.
As a legal forbiddance exists for foreigners from directly acquiring the property in such areas, the legal option for people of other nationalities is establishing a “Trust for the Administration of Real Estate in a Restricted area” or “Fideicomiso.”
This form of contract is established at a financial entity (usually banks which operate in the Mexican Republic), acting as “ trustees” (holders and administrators of the property), in a way that these entities become the owners of the trust property and the foreigners are the beneficiaries of the rights granted by the trust, permitting the foreigners to use and enjoy the properties, even allowing them to rent or designate a third party to use them; furthermore, giving them the possibility of taking advantage of the surplus value of the properties. When the beneficiary requires it, they can instruct the trustee to sell the property to a third party, receiving the economic resources and benefits from the sale.
This type of contract also has the advantage of offering the alternative of including one or several substitute beneficiaries in such a way that it operates as an instrument for probate purposes in case of demise of one of the beneficiaries.
The fideicomisos must be formalized before the notary public and registered with the city where the property is found, requiring all documents in order to buy or sell any property. Previous to the establishment of the trust, a permission from the Secretaría de Relaciones Exteriores (S.R.E) (Minister of Foreign Affairs) must be obtained, authority of the Federal Government of Mexico responsible for authorizing the establishment of the trust.
Also, the fideicomiso must be registered with the National Register of Foreign Investment, which belongs to the Department of Economy of the Mexican Government.
In case of any doubts or need of additional information, we would be happy to assist you in the establishment of this type of trust.
Yours sincerely,
Bernardo Macklis Anaya
Macklis, Barajas Attorney
www.abogadosmb.com
