Can Americans and Canadians have property in Mexico?
Are you American or Canadian and want to buy property in Mexico but you’re not sure if it is possible? The short answer is yes. But if you are looking to buy a property in Cabo, there is a law that restricts foreigners from buying land that is 50 km from the coastline or 100 km from the border, which applies to most of the Baja Peninsula.
However, foreigners can acquire this land, but it must be purchased through a “Fideicomiso” which is the same as a bank trust, but with clear differences from the US.
In Mexico, an authorized financial institution is the designated trustee, and the buyer is the sole beneficiary of the trust. The bank holds a “naked title” which means it has no benefits and the buyer has full power to sell, remodel, mortgage, rent, add beneficiaries, and will without restriction.
Your interactions with the bank will be scarce, only to pay the annual fee, and at the time of the sale.
Why is all this necessary? Well, the restricted area is the result of land restrictions put in place over a hundred years ago, Mexico intended to protect itself from invasion, unfortunately, this resulted in the blocking of a good deal of foreign investment.
This ended in 1971 when the constitution was amended to allow foreigners to invest in Mexico using the Fideicomiso. The good news is that this system of ownership is written in the constitution and secured by the Central Bank of Mexico.
If a financial institution goes bankrupt, its fideicomisos are transferred to another Mexican bank.
Fideicomisos originally lasted 30 years, but this was amended further to allow for 50-year renewable terms, which means that the owner and its designated beneficiaries can enjoy the property for as long as they want.
So, what happens if you die? The beneficiaries inherit the trust directly, with no probate needed. Fideicomisos offer so much protection, that even Mexican nationals put their properties in them as well.
You can find fideicomisos in any Mexican bank, you can compare rates to set it up as they compete for this business. Your realtor is the best person to suggest and negotiate the trust, as they have ample experience.
With these opportunities offered by Mexican laws, American and Canadian citizens can own their dream property in Cabo.