Learn about the 'Fideicomiso' or Mexican bank trust, a mechanism that allows foreign investors to participate in Mexico's dynamic tourism and real estate sectors.
We are pleased to present this overview of the 'Fideicomiso' or Mexican bank trust, a mechanism that has enabled some of the world's leading tourism industry companies, as well as individual investors, to benefit from the growth of Mexico's dynamic tourism sector.
Mexico, including some 6,000 miles of beautiful coastline, has attracted significant investment interest for many years. The trust mechanism was created to allow foreign investors to participate in Mexico's tourism and other rapidly expanding sectors exercising complete and legal control over their investment while complying with Mexico's investment laws.
A 'Fideicomiso' or bank trust is defined for real estate purposes as a transaction entered into between a Mexican bank and a foreign individual or firm investing in an area otherwise restricted to foreign investment. The bank serves as trustee for the legal owner with respect to certain real property interests and the investor serving as the legal beneficiary of the trust.
The law governing foreign investment through trusts requires a Mexican banking institution to act as trustee on behalf of a foreign entity with respect to property held in trust. The bank holds title to the property for the benefit of the investor and acts on behalf of that investor in transactions involving the property.
The beneficiary retains the use and control of the property held in trust and, except for direct acquisitions, makes the investment decisions with regard to the property. This can include the decision to transfer such property interest to another foreign or domestic investor.
The trust mechanism allows foreign entities to invest in Mexico's coastal and border areas, which in the past were restricted from foreign investment of any type. The trust permits foreign investors to obtain almost all of the economic benefits that accompany equity ownership, as the direct owner of such property would have except for direct acquisitions.
In addition, the beneficiary may transfer or assign beneficial interest to any person, keeping the profits from the sale, which are subject to applicable tax laws, according to the instructions given to the trustee.
It is renewable at the end of its 50-year term and for additional periods of 50 years each. The law provides that if an application is filed no more than 360 or less than 181 days before the end of the original trust, the Secretary of Foreign Relations must issue a new trust permit.
A trust interest may be sold or transferred much like any other interest in real property. Upon the sale, the Secretary of Foreign Relations is required by law to issue a new trust permit to the buyer.
Yes, but you can choose any authorized bank. The trust is not an asset of the bank.
Yes! Land held under a trust can be passed to your heirs, just like other forms of real estate.
A foreign person or company interested in purchasing real estate in the restricted area selects a Mexican bank to act as trustee. The investor provides basic information to the trustee, which applies to Mexico's Secretary of Foreign Relations for a permit authorizing the trust.
Permits are granted if the property is for commercial use or is undeveloped and under 20 hectares. Even if not, the permit can still be granted upon commission approval.
Once the permit is obtained (usually in 30 days), a notary draws up the deed, and the trustee registers the trust. The foreign investor as beneficiary retains the right to construct, operate, sell, rent, etc.
Since 1989, new rules have clarified trust procedures, ensuring legal certainty. Trusts can be renewed after 50 years, and interests can be sold or transferred with new permits.
Individuals also use trusts to acquire residential property in coastal and border areas. Title is transferred to a trust, but the bank must follow the beneficiary's terms.
The foreign beneficiary may build, improve, or transfer the property and collect profits (subject to taxes). Trusts are common in large-scale tourism investments where financial, not operational, control is key.
Finally, trust rules also permit investment in capital markets and regulated industries in Mexico.