Fedeicomisos in San Felipe

San Felipe, Baja, Mexico

The Bank Trust for Ownership of Real Property in

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 boarder. This is referred to as the "Prohibited Zone".

In 1973 President Echeverria, realizing that many Foreigners were more comfortable with the rights of ownership, and that they would bring needed dollars into the country, 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. Fee simple is placed in the name of the bank selected by the buyer, as his trustee. The bank administers the property according to the instruction 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 any time conforming to the general laws of the country.

The term of the trust is fifty years and can be perpetually renewed. 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 (bank trust) is as follows: application must be made to 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 date on each of the beneficiaries. Once granted, the bank instructs a notary to draw up the trust document, which is recorded in the state where the property is located.

Part of the cost to establish the trust will depend on the appraised value of the property. Normally the closing cost to the purchaser is around $5,000 US Dollars. Your agent will go over the closing costs when you make an offer on your chosen property.