A Fidecomiso is a trust agreement created for the benefit of a foreign buyer, executed between a Mexican bank and the seller of property in the restricted zone. The bank acts on behalf of the foreign buyer, taking title to real property. The bank, as trustee, buys the property for the foreigner, then has a fiduciary obligation to follow instructions given by the foreigner who is the trust beneficiary. The trust beneficiary retains and enjoys all the rights of ownership while the bank holds title to the property. The foreigner is entitled to use, enjoy, transfer, inherit, sell, or improve the property that is held in trust at its market value, and the Bank Trust provides for the same rights available through a U.S. fee simple real estate transaction. Trusts are viable for 50 years and renewable for an additional 50 years. There is a common misconception among foreigners investing in Mexico that once the trust expires, the beneficiary loses all rights and benefits of the sale of the property held in trust. THIS IS NOT THE CASE. On the contrary, the beneficiary has a contractual right under the trust agreement with the Mexican bank to all benefits that may result from the use or sale of that property, even though he or she does not hold title to the property. Under Mexican Law, the bank, as trustee, has a fiduciary obligation to respect the rights of the beneficiary. The beneficiary can instruct the bank to sell or lease the property at any time. The beneficiary can develop and use the property to his liking and benefit, within the provisions of the law. Generally, the law allows most activities engaged in by foreigners.
A buyer has the choice of assuming the remaining years in an established Bank Trust or of applying for a 50 + 50 year trust. If the Trust Rights are sold to a Mexican National, this person has the option of taking title in his/her name in the Trust or removing the property from the Trust and taking title in Escritura (Mexican National form of Ownership). Sometimes the Mexican National will opt to pay the annual Trust fee and stay within the Master Trust, especially if subsequent buyers would be other foreigners. Once property is removed from a Master Trust, it is more expensive for the buyer to place the property in a new Trust for the buyer. We are in year XXX of our original 50 year trust.
A Fidecomiso is not the same as a Land Lease. A land lease allows someone to build on land for which ownership is retained. So in a land lease, the house may belong to the buyer, but the land belongs to the seller. A land lease for more than 10 years is not legal under Mexican law. It is possible, however, to renew a 10 year lease for additional ten year periods. This arrangement is adviseable only for purchases that can be turned over easily. Land lease rents run about $150.00 to as much as $600.00 per month. Most leases have a cost of living adjustment at the end of your lease for the next lease term. Usually there is a 10% fee for the land owner when a land-lease structure is sold. This sale is not a land lease, but we wanted to give you this information to relieve any anxieties about the sale.
A Fidecomiso is also not used for the sale of ejido land, which is land deeded to a co-op by the Mexican government and not available for sale to an individual, foreigner or Mexican National. Our property is not ejido land, and was purchased directly from the original land owner.
Mexican real estate transactions are not carried out in the same manner as in the U.S. All real estate transactions involving a trust are governed by federal law. Registering a Bank Trust requires the input of the buyer and the seller (plus their respective legal counsel if applicable), the bank, and a notary public. |
