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Foreign citizens who wish to buy property within designated regions of Mexico are required to obtain a “Fideicomiso” (fee-day-co-me-so), which functions as a Mexican Property Trust.
In 1971 and again in 1994, amendments to Article 27 of the Constitution permitted foreigners to purchase and own real estate in Mexico located within the “restricted zone” which is all land within 60 miles (100 km) of national border and within 30 miles (50 km) of the Mexican Coast, which includes all real estate in Los Cabos (the peninsula is about 50 miles -80 km- wide). This law permitted ownership through a Mexican bank Trust Deed or “Fideicomiso”.
The way the Fideicomiso works is the Mexican Government issue a permit to a Mexican Bank of your choice, allowing the bank to act as Trustee for the property and naming you the purchaser, the Beneficiary of the trust holding title. The beneficiary rights are very similar to Living Wills or Estate Trusts in the U.S.
The bank, as trustee, takes instructions only from the beneficiary of the trust (the foreign purchaser). The beneficiary has the right to use and enjoy the property, to rent if you wish, build on it even will it to heirs. All the same uses of property ownership enjoyed at home. The beneficiary may also sell the rights and instruct the trustee to transfer the title to a qualified owner.
Many people refer to the trust arrangement in Mexico as a lease agreement… this is not true. The home or property that you buy will be put into a trust with you named as the beneficiary of the trust- you are not a lessee. You have all the rights that an owner of property in the U.S. or Canada.
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.