Mexico’s allure as a destination for foreign property buyers is undeniable, with its vibrant culture, stunning coastlines, and rich history. However, navigating the legal landscape of property ownership can be complex, especially concerning the Restricted Zone.

This area encompasses land within 50 kilometers (31 miles) of the coastline and 100 kilometers (62 miles) of international borders. Under Article 27 of the Mexican Constitution, foreigners are prohibited from owning land directly within this zone. Nonetheless, Mexico has established legal frameworks to facilitate foreign investment in these regions.

Understanding the Restricted Zone

What Is the Restricted Zone?

The Restricted Zone in Mexico refers to:

• 50 km (31 miles) of coastline
• 100 km (62 miles) of international borders

This designation stems from historical concerns over national security and sovereignty. Consequently, foreigners cannot hold direct title to land within these areas.

🌍 Restricted Zone Locations in Mexico

Why the Restriction Exists

The primary rationale behind this restriction is to safeguard Mexico’s strategic territories. By limiting foreign ownership, the government aims to maintain control over sensitive regions and ensure that national interests are prioritized.

Legal Pathways for Foreigners to Acquire Property in the Restricted Zone

1. Fideicomiso (Bank Trust)

The most common and secure method for foreigners to acquire residential property within the Restricted Zone is through a fideicomiso, a bank trust. In this arrangement:

• Trustee: A Mexican bank holds the legal title to the property.
• Beneficiary: The foreign buyer retains all rights to use, enjoy, rent, sell, or bequeath the property.
• Duration: The trust is established for an initial period of 50 years, renewable indefinitely.

This structure ensures that the foreigner has full control over the property while complying with Mexican laws.

2. Mexican Corporation

For non-residential purposes, such as commercial ventures, foreigners can establish a Mexican corporation. This entity can hold title to property within the Restricted Zone, provided it includes a clause permitting foreign ownership and complies with all regulatory requirements.

Steps to Acquire Property via Fideicomiso

1. Select a Property: Identify a suitable property within the Restricted Zone.
2. Choose a Trustee Bank: Select a reputable Mexican bank to act as the trustee.
3. Obtain Authorization: Apply for approval from the Secretaría de Relaciones Exteriores (SRE), Mexico’s Ministry of Foreign Affairs.
4. Draft the Trust Agreement: Work with legal professionals to formalize the fideicomiso agreement.
5. Notarization: Have the agreement notarized by a Mexican notary public.
6. Register the Trust: Ensure the trust is registered with the Public Registry of Property.
7. Ongoing Compliance: Adhere to any annual fees and reporting requirements associated with the fideicomiso.

Rights and Responsibilities Under Fideicomiso

While the Mexican bank holds the legal title, the foreign beneficiary enjoys:

• Full Usage Rights: Live in, rent, or use the property as desired.
• Transferability: Sell or transfer the property to eligible buyers.
• Inheritance: Bequeath the property to heirs.
• Renovation: Make improvements or modifications to the property.

It’s essential to note that the bank acts solely as a fiduciary and cannot make decisions regarding the property without the beneficiary’s consent.

Common Misconceptions

• Myth: Foreigners cannot own property in Mexico’s Restricted Zone.
  • Fact: Through a fideicomiso, foreigners can legally acquire property in these areas.
• Myth: The fideicomiso is a temporary solution.
  • Fact: The trust is renewable indefinitely, providing long-term security.
• Myth: Only Mexican citizens can inherit property in Mexico.
  • Fact: Heirs can inherit property held in a fideicomiso, subject to legal procedures.

FAQs

Do I need Mexican residency to purchase property?

No, residency is not required. However, obtaining a Registro Federal de Contribuyentes (RFC), a tax identification number, is necessary for tax purposes.

Are there any size limitations for properties under a fideicomiso?

Yes, properties exceeding 2,000 square meters may require additional permits and justifications to ensure the investment benefits Mexico’s economy.

Can I get a mortgage for a property in the Restricted Zone?

Yes, some Mexican banks offer mortgage products for properties held under a fideicomiso. However, lending criteria may be stricter for foreigners.

Conclusion

While the Restricted Zone presents unique challenges for foreign property buyers in Mexico, the fideicomiso system offers a legal and secure pathway to ownership. By understanding the legal frameworks and working with experienced professionals, foreign investors can confidently navigate the process and enjoy the benefits of property ownership in Mexico’s most desirable locations.