So you’ve visited Rocky Point hundreds of times. Enough that it might make sense to invest in your dream vacation home on the beaches of Puerto Peñasco. You finally decide that the time is right. But hold up, you are not a Mexican citizen and owning a house on the beach in Mexico is not open to foreigners.
Why do I need a bank trust to buy a home in Mexico?
As a foreigner, Mexican law does not allow you outright own property in Mexico that is within the “restricted zone.” This is areas that are within 50 kilometers (31 miles) of the coast and 100 kilometers (62 miles) of the border.
But, just because you can’t buy property outright, the government has created a provision so allow foreigners to acquire property in restricted zones by becoming a member of a bank trust.
What is a Mexican Bank Trust?
A bank trust, also known as a Fideicomiso, is a legal instrument that allows a Mexican bank to hold the title to the property on behalf of you, the foreign buyer. The bank acts as a trustee and the foreign buyer is the beneficiary of the trust.
The bank trust ensures that the property is held in compliance with Mexican law. It is designed to provide a secure and transparent way for foreigners to own property in Mexico, as the bank is responsible for ensuring that all legal requirements are met and that the property is properly registered with the Mexican government.
How do I get a Mexican Bank Trust?
An experienced real estate agent should be able to help set up a bank trust when you purchase property in Mexico. A Mexican bank is selected and you enter into a trust agreement with them. The trust agreement will specify the terms of the trust, including the responsibilities of the bank and the beneficiary, and the rights of the beneficiary to use and enjoy the property.
How much does a Mexican Bank Trust cost?
There is a one-time fee to set up the trust, as well as an annual fee to maintain the trust. These fees vary by banks and may depend on whether or not your trust is a new trust or you are taking over a trust from another foreign owner. When we purchased our condo in Puerto Peñasco, Mexico in 2013, our bank trust fee was $1,870.00 and the annual fee was $388.00. (The annual fee has remained the same amount since.)
GRINGO TIP: In the excitement of buying your Mexico vacation property, you could miss the instructions for paying your annual trust fee and the bank may never send you a bill for your annual fee so be diligent about making sure you get it paid or years of back pay and interest can creep up on you in the form of a big bill.
What happens to my Mexican Bank Trust if I want to sell the property?
Selling property owned in a Mexican bank trust is easy. All you will do in the closing transaction is sell your rights as the beneficiary of the trust.
What happens to my Mexican Bank Trust if I die?
Your rights as the beneficiary of the trust can be passed on to your heirs in your estate planning.
Don't be intimidated. Mexico Bank Trusts are your friend.
Mexican Bank protect your ownership rights as a non-Mexican citizen to enjoy your home in Mexico. To make sure you are protected as much as possible, find a reputable bank and legal professionals to ensure that the bank trust is properly set up and maintained throughout the ownership of the property. If you are not acquainted with a reputable Mexican bank and legal professionals in Mexico, a good real estate agent should be able to assist you.
