Mexico Property FAQ
Does the Mexican government own my land if I purchase land in Mexico?
What is the North American Free Trade Agreement?
What is Fideicomiso?
Why was a trust system established?
When is a bank trust issued?
How does an American title agency ensure property purchased in Mexico?
Does the Mexican government own my land if I purchase land in Mexico?
The North American Free Trade Agreement, commonly know as NAFTA, has made it possible for foreigners to purchase land in Mexico. Trade agreements between the United States, Canada, and Mexico along with bank trusts called Fideicomisos, have created a legal structure to allow foreigners to own land in Mexico. American Title companies are also involved in the purchasing process, allowing for secure transactions.
What is the North American Free Trade Agreement?
In 1994, North American Free Trade Agreement (NAFTA) between the United, States, Canada, and Mexico was formed as the world's largest free trade area, allowing for purchasing land safely in Mexico. The agreement allows for economic growth and rising standards of living in these three countries, while establishing a strong foundation for future growth and setting an example of the benefits of trade liberalization.
Today, nearly 1.5 million Americans own property in Mexico. As a foreigner, the buyer can obtain all the rights of ownership by setting up a bank trust, similar to a U.S. family trust, known as a Fideicomiso.
What is a Fideicomiso?
A Fideicomiso is a bank trust which makes a buyer the beneficiary of the purchased property, allowing the buyer to use, lease, sell, will, improve or encumber the purchased property. The Trust does not give direct ownership to the foreign beneficiary. Instead, it establishes the legal basis by which the bank holds the legal title to the property in order to act on the foreigner's behalf.
The Foreign Investment Law, which was amended in 1993, allows the trust to be established for a term of 50 years and is renewable anytime during its existence. The beneficiary can instruct the bank to sell or lease the property at any time. The bank (trustee) holds the trust deed for the person who purchases the property (beneficiary). The property is not part of the bank's assets.
Why was a trust system established?
The Mexican government established the trust system as a protection for foreigners interested in owning property in Mexico. By making ownership pass through the trust process, the bank is required to check ownership, insurance, and liens against the property. There would be an automatic review of the transaction, thus ensuring valid ownership and no outstanding indebtedness of the property.
When is a bank trust issued?
Bank trusts are established by a Mexican Notario (Notary), following the receipt of a permit by the Minister of Foreign Affairs. This procedure is routine due to the large number of foreign property owners. The forms are standardized and the entire process is usually completed by the notary as part of the closing procedure.
How does an American title agency ensure property purchased in Mexico?
American title companies work to ensure that any claims will be handled in the U.S. without the buyer having to go through the Mexican court system. That means that the title agency will stand by the buyer in response to a challenge to the buyer's title in Mexico.