Fidecomiso

The "Restricted Zone" is the strip of Mexican territory extending 100 Km (62 miles) from the borders and 50 Km (31 miles) from the coast line. In the “Restricted Zone” foreigners may not acquire direct ownership of real estate. This prohibition does not exclude the possibility that foreigners may use and enjoy real estate within this zone under legal titles other than ownership. If the real estate is for residential purposes, foreign individuals or companies, and Mexican companies with 100% foreign capital stock, may acquire rights to use and benefit from the real estate through a trust (Fidecomiso).

In a fidecomiso, the buyer enters into an agreement with a Mexican bank to act as a trustee for the purchaser of the property. The beneficiary acquires the rights to use and benefit from the real estate, including the rights to manage, operate, lease, inhabit and encumber the same, as well as the right to obtain the fruits, products and other benefits deriving from the utilization or exploitation of the real estate, transfer the rights to others, and to sell it receiving the proceeds from such sale.

Duration of trusts are up to 50 years, and are renewable. The trustee (the bank) receives an annual fee from the beneficiary of the trust (the purchaser) for the services it provides as trustee.