The Mexican bank trust (fideicomiso), explained

If you’re a foreigner buying a house or condo in Nuevo Vallarta, the Riviera Nayarit or anywhere along Mexico’s coast, you’ll almost certainly do it through a fideicomiso, a Mexican bank trust. It’s a secure and widely used structure, but it pays to understand it before you sign.

What the restricted zone is

Mexico’s Constitution and its Foreign Investment Law define a restricted zone: the strip within 100 kilometers (about 62 miles) of the borders and 50 kilometers (about 31 miles) of the coastline. Inside that strip, a foreigner can’t hold direct title to real estate. The entire Riviera Nayarit falls within the restricted zone.

Why a bank trust

The law offers a solution: a Mexican bank takes title to the property as trustee and holds it in a trust for your benefit. This requires a permit from Mexico’s Ministry of Foreign Affairs (SRE). As part of that permit, you agree to be treated as a Mexican national with respect to that property and not to invoke your own government’s protection over it.

In practice, the bank is the formal title holder, but you’re the one who makes the decisions about the property.

Who’s involved

• The seller, who transfers the property into the trust.
• The trustee bank, a Mexican credit institution that administers the trust and follows your instructions. It charges fees for this service.
• You, as beneficiary (fideicomisario in Spanish), with the right to use and benefit from the property.
• The notario público, who formalizes the transaction in a public deed. In Mexico, a notario is a licensed attorney appointed by the state, with a far broader role than a notary public in the U.S. or most of Canada.

What rights it gives you

As beneficiary, you can live in the property, rent it out, improve it and sell it. To sell, you instruct the bank to transfer the property, or your rights in the trust, to the buyer. You can also name substitute beneficiaries, the people who will receive your rights if you pass away. This designation is one of the most important parts of the trust, and it deserves careful thought.

How long it lasts

Restricted-zone trusts are set up for a term of up to 50 years, which can be extended at the owner’s request. If you’re buying a property that’s already held in a trust, check how much of the term remains.

What to check before you sign

Before any money changes hands, it’s worth doing a legal review (due diligence) of the property:

• The seller actually owns the property and is able to sell it.
• There are no recorded liens or debts against it.
• The predial (annual property tax) is paid up.
• Permits and, where it applies, the condominium regime are in order.
• The promissory agreement states the price, deadlines and conditions clearly.

None of this is about distrust. It’s how you buy with peace of mind.

After you buy: trust bank acts

A bank trust isn’t a one-time piece of paperwork. Over the years you may need to make changes with the bank: naming or changing beneficiaries, updating your information, or transferring the trust to a new owner when you sell. Foreign owners usually call these trust bank acts. Each one has its own requirements, and some involve the notario.

How we can help

At Loyal Services, we coordinate the whole process from our office in Nuevo Vallarta. Our real estate team handles the trust, the title review and the closing with the notario. Our legal team prepares your powers of attorney and helps you plan your estate. Our tax team estimates the taxes on the transaction and reviews them with the notario, who calculates and collects them. One firm takes care of everything your property touches.