|Mexicomatters, specializing in foreign investor representation|
FIDEICOMISO - RealEstate Trust within the Mexican Restricted Area
By Hector Lara
(From Latin: Fedei commisum. Fedei=Faith=Trust). Fideicomiso is the only option which a foreigner in Mexico can acquire and maintain a property on the restricted zone, according to the article 27 of the Constitution and the stipulated in the Mexican foreign investment law.
Fideicomiso that is made when a foreigner is going to acquire a property that i son the restricted zone, according the article 27 of the Mexican United States Politic Constitution (Constitución Politica de los Estados Unidos Mexicanos), witch says “In the area along 100km from the borders and 50km from beaches, by any circumstance a foreigner could get direct domain over land and water”
The foreigners only can acquire properties that are in the restricted zone through a bank trust, which can have duration of 50 years.
Is there any restriction on the size of land I am purchasing?
Yes, acording to the article 14 of the foreign investment law, the Ministry of Foreign Affairs shall decide on the permits for seting up a bank trust according to the economic and social benefit of that trust to the Nation. In other words, they requiring a commitment from the beneficiary of the trust to invest certain amount of money on the property in order to give the permit for the fideicomiso.
Constitution of the Mexican United States
Article 27 section I.
Provides that in no manner foreigners may acquire the direct ownership of land and water within an area of 100 KMS. among the borders and area of 50 KMS. among beaches; such area is identified as “Restricted Area”.
Foreign Investment Law
Through trust deed foreigners are allowed to acquire rights over Real-state within such called “Restricted Area”; The aforementioned is subject to prior authorization by the Secretary of Foreign Affairs.
The maximum duration of a trust is 50 years, which is extendable.
The Ministry of Foreign Affairs shall decide on the permits to which this chapter refers, considering the economic and social benefit that such operations imply for the Nation.
Any application to obtain a permit must be resolved upon by the Ministry of Foreign Affairs within five business days following the date of the application with the competent central administrative unit or within thirty business days if submitted before the state offices of said Ministry; otherwise, approval shall be deemed to have been granted.
The Trust deed
By virtue of the trust deed, the Trustee (Institution) Receives one or more Real-state properties and destines such estates to any lawful and determined purposes in accordance to the purposes entrusted. “The Trust Agreement is a trusting commission”.
Parties in a Trust Agreement
Trustor / Grantor: Individual or legal entity which transfers one or more Real-states through the trust ownership.
Beneficiary: Individual or legal entity with the appropriate capacity to receive the benefit granted by the trust deed, being able to appoint several beneficiaries to receive the benefits simultaneously or successively.
Trustee / Institution: Financial Institution, with the appropriate capacity to act in Mexico, who receives the property of the trust fund for the benefit of the Beneficiary and who must carry out specific duties with regard to the property.
Subject-Matter of the Trust
Purposes of the TrustThe purposes of the trust is the commissions granted to the Banking Institution to be exercised in favor and for the benefit of the Trustee / Beneficiary.
The benefits of this kind of trust agreements are the following :
Prior to the agreement with the Trustee, the Trust deed may be amended under the understanding that a prior authorization granted by the Secretariat of Foreign Affairs shall be necessary in order to amend the purposes and/or to increase the subject.matter of the Trust Agreement.
Requirements for the incorporation of a Trust Agreement
Cost of seting up a Bank Trust - Cost of the fideicomiso
Prices from: www.banorte.com
Ensenada, Mexico: (646) 176 6759 US: 1(619) 819 9369