Mexican Property Trust - Fideicomiso

In 1994, amendments to the Constitution permitted foreigners to purchase and own real estate in Mexico located This Law permitted ownership through a land trust or "Fideicomiso".

A "Fideicomiso" is a Mexican Trust. In this Trust, the Mexican Government issues a permit to a Mexican Bank of your choice, allowing the bank to act as the purchaser for the property. The bank acts as the "Trustee" for the Trust and you are the "Beneficiary" of the Trust. The "Beneficiary" rights are very similar to Living Wills or Estate Trusts in the U.S.

The law authorizes Mexican banking institutions to act as trustees. A trustee takes instructions only from the beneficiary of the trust (the foreign purchaser). The beneficiary has the right to use, occupy and possess the property, including the right to build on it or otherwise improve it. The beneficiary may also sell the rights and instruct the trustee to transfer title to another qualified owner.

The initial term of the Trust is 50 years. An investor can renew the trust for an additional period of 50 years within the last year of each 50-year period, and this process can be continued indefinitely, providing for long term control of the asset.

Agrarian ("Ejidos", Ranching /Farming , Forestry, Other)

Ejidos. Public agrarian land can be dedicated by the Mexican government for use by agrarian communities known as "Ejidos" which are created by federal law and Presidential Decree. Here a agrarian community is created and given the use and possession (not ownership) of certain land. This land is divided into communal (held in common by the members of the "ejido") or "parcelas" (parcels) which are held by individuals (members of the "ejido") for their personal farming use.

The traditional sole purpose of this "ejido" land is farming (mostly)or ranching (very little). It is not to be sold or encumbered in favor of non-members (especially foreigners) for use as an industrial, commercial or residential site.

In recent years, the "ejidos" have been losing political importance and as such, the Federal Mexican Government has seen fit to permit the dis-incorporation of "ejidos" via a dis-incorporation process through the Federal Agrarian Attorney Generalship (approved in a law dated 1992). At the end of the process the "ejido" members are the owners of their parcels, which they can then encumber, lease, sell or mortgage.

Other Rural Private Land. Certain private non-agrarian rural land or non-agrarian forestry land, which due to its nature, may be acquired in larger limits by Mexican individuals and foreigners, provided that the other normal rules are not circumvented. Case at hand would be a desert ecological zone not good for ranching, farming or forestry, where it is placed in a long term irrevocable title transfer bank trust.