Category Archives: fideicomiso




Mexico is a wonderful and very beautiful country.  If you  enjoy your visit you may begin to think about acquiring a bit of our paradise.  We have mountains, lakes, rivers, forests, deserts and seashore in Mexico.  We also have history, ancient cultures, handcrafts, folklore and many other wonderful things to share.


Buying property in ANY country can be stressful.  A property purchase in Mexico can be just as safe and secure as in the U.S. or Canada… IF it is done correctly!


Here are some guidelines for success in a real estate acquisition in Mexico:


  1. Be sure the agent you select to represent you is a member of AMPI, the Mexican National Real Estate Association. Ask for references, check them out. Be satisfied the person representing you is experienced in Mexican transactions.


  1. Insist that the person representing you, represent ONLY you, the buyer, and not also the seller unless you understand, agree to and sign an agency disclosure agreement.


  1. Consider only the purchase of PRIVATE property. Ejidal property is often offered at a far lower price but it cannot legally be sold or promised to be sold until it becomes private property.


  1. Be certain that you and your agent are dealing ONLY with the owner of record or his or her legitimate power of attorney. Insist upon receiving a copy of the seller’s deed as a condition of your offer.  If you  and /or your agent don’t understand Spanish, get it translated.


  1. . Avoid costly and time consuming litigation, insist upon including a binding arbitration  clause in your contracts with the seller and other parties involved.


  1. Get a title investigation and buy title insurance for the full amount of your purchase price. While the initial search may seem expensive for some areas, the title policy transfers risk to the insurance company, and minimizes yours as the buyer.


  1. Think carefully about how you acquire title in order to avoid or minimize probate and transfer costs in the future.
  2. Closing costs may run from 13% to 20% of the cost of a $50,000. dll. property! The multimillion dollar property will be about 3.5% of purchase price.  Certain costs are fixed regardless of value.  Be sure to budget for closing costs and get a full estimate in writing from the company supervising your transfer.


  1. The major portion of your payment for the property should be withheld or held in escrow until the deed has been signed by the seller and, if applicable, the bank trustee (if a fideicomiso).


  1. INSIST upon receiving a registered title document for your property. If the seller is financing the property, sign a document protecting his interests in the event of your default.  Be SURE you know the amount which is declared in your deed and understand the tax implications of same.


  1. Use an experienced neutral third party to supervise the transfer of title to you. 


Rules2.articles. Copyright2003 2015. All rights reserved by Consultores Phoenix, S.C., and The Settlement Companyâ

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Renewing the Foreign Relations Permit


            What do we do when it expires?


Under Mexican law, all properties acquired by foreigners must be held in a Mexican bank trust which is known as a fideicomiso (fi day co me so).     These bank trusts are established by permission and a permit from the Mexican Secretary of Foreign Relations.


Originally, when the law was established in 1972, the permit was given for thirty years.   At that time no one knew what would happen when the permit expired except that the law stated that “property must be transferred to one who is legally entitled to hold title”.    This left a big uncertainty for those who were investing large sums of money in Mexican properties.


The law was clarified in 1989 with the following in Article 20 of the Foreign Investment law which was published in the Official Diary of the Federation on May 16, 1989.

The text states: When the term expires for those trusts created under Articles 18 and 19 of the Law, the Secretary of Foreign Relations will expedite, under the terms of the same laws, new permits requested for the same properties located in the restricted zone, providing the following conditions are met:


1.- That the new trusts involve the same foreign investors that are named in the trusts that are expiring;


2.- That the new trusts contain the same terms and conditions as those in the trusts that are expiring with regarding to purpose, usage and general characteristics.


3.- That the permits are requested within a time period of 180 days (minimum) and 365 days (maximum) prior to expiration of the trust.


4.- That the dispositions of the Law, of this Regulation and of the General Resolutions are observed.


This declaration gave clarity to the law.  It was established that the permits could be renewed and, in 1995, pursuant to the conditions of the NAFTA treaty,  the period for the foreign relations permit to establish a Mexican bank trust, fideicomiso, was extended to fifty years and could be renewed multiple times.    This was tantamount to ownership in perpetuity.


Thus for trusts established between 1972 and 1995, these are expiring between 2012 and 2025, unless the owners have taken it upon themselves to extend the term of the trust to 50 years.    This indeed was done by many who were concerned about leaving a property to heirs with a trust that is expiring.


What is the procedure for renewing a trust permit?     It is relatively simple;  An application must be made to the Secretary of Foreign Relations to obtain a new fifty year permit.   Upon receipt of same, the old permit extinguished by the trustee bank and the new permit formalized by the trustee bank and the notary public.    The trustee bank may be the same or a different one from the original permit.   The primary beneficiaries however must be the same as per number one in Article 20 of the Foreign Investment law (see #1 above).    To change the primary beneficiaries in this renewal action will trigger an acquisition tax which is 2% of the value of the property,  and a possible capital gain tax which is 35% of the difference between the former value and the new value.   Substitute beneficiaries may be changed however.


Other costs involved are the bank cancellation fees for extinguishing the old permit,  a new permit fee, registration in the Foreign Investment Registry,  a signature fee and the first annual fee for the new trust, notary, public registry fees, etc.    It is wise to consider budgeting three to four percent of property value to renew the permit and receive the new notarized deed.


This may seem expensive to some but it is important to remember that this is once every fifty years and the only other expense to maintain the legal status of the property is the payment of bank annual trustee fees which range from US 350.00 to US 550.00 per year.   Compare these expenses with the cost of annual property taxes on a home of comparable value in the US or Canada and it will most likely be considered a bargain!


about the author:

LINDA JONES  NEIL is the founder of The Settlement Company®, which specializes in real estate transfers and escrows, as well as renewals of permits and other legal services for the foreign property owner. Licensed as a California real estate broker, she has pursued her profession in Mexico for over forty years. Her skills in negotiating contracts between parties from three distinct cultures have placed her services in demand as a consultant and for speaking engagements on Mexican law and customs in Mexico, the United States and Canada. She has been widely published on the subject of real property in Mexico. Memberships; FIABCI, AMPI and NAR.  Linda  is a former  member of the National Advisory Council of AMPI and has served as NAR Presidential Liaison to Mexico..E-mail,      website:


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The Bank Trust (Fideicomiso) Explained





Article 27 of the Constitution of the Republic of Mexico prohibits foreign ownership of real property located within 30 miles of any coastline or 60 miles of either border. This is referred to as the restricted  zone.


In 1973, recognizing that many Americans would enjoy the rights of ownership, and bring needed dollars to the country, President Echeverria approved the bank trust, fideicomiso, form of ownership which is available to non-Mexicans.  This regulation was further expanded in the Foreign Investment Law of 1989.


Properties located within the prohibited zone, which includes the entire Baja Peninsula, may be acquired by a foreigner through a Mexican bank trust naming the buyer of the property as the beneficiary of the trust.  Naked title is placed in the name of the bank selected by the buyer, as his trustee.  The bank administers the property according to the instructions of the buyer/beneficiary.  The buyer/beneficiary has full ownership rights: he may build on the property, tear down existing buildings, modify them, rent, lease or sell at anytime conforming only to the general laws of the country established for all persons.


The term of the trust is fifty years and can be renewed for additional fifty year periods, after which it must be transferred to “one entitled to hold property” in Mexico. In other words, title to the property may rest in one beneficiary indefinitely, provided that it is renewed within the terms established by the law.


The procedure for establishing the fideicomiso, the bank trust, is as follows: a permit must be obtained from the Secretary of Foreign Relations which includes a description of the property to be placed in trust, the use for which it is intended, and personal data on each of the beneficiaries.  Once granted the bank draws up the trust document which is recorded in the municipality where the property is located.


The costs for the permit to establish and register the bank trust are currently about $1,500. US and annual administration fees are generally $350.00 to $500.00 per annum.  There are additional closing costs, however, and it is wise to request a written estimate prior to beginning the transfer process.


copyright, 2003,-2014, Consultores Phoenix, S.C. Reproduction prohibited without permission.



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