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Article 27 of Mexico's Constitution prohibits foreign ownership of real property within 50 kilometers of any coastline or 100 kilometers of either international border (the "restricted zone", which includes the entire Baja Peninsula). However, In 1973, President Echeverria approved the “Fideicomiso” form of foreign ownership of real estate. The Fideicomiso is available to non-Mexicans and is similar to a US Bank Trust. Now, properties located within the restricted zone (Baja) may be owned by a foreigner through the Fideicomiso, which designates the buyer of the property as the beneficiary of the trust. Legal title is placed in the name of a bank and that bank administers the property in accordance with the instructions of the buyer/beneficiary. The buyer/beneficiary enjoys the same ownership rights as a Mexican National. The buyer may build on the property, tear down existing buildings, modify them, rent, lease or sell at anytime, conforming only to the general laws of the country established for all persons.

The duration of the Fideicomiso is 50 years; however, it may be renewed for unlimited, additional, 50-year periods. In other words, title to the property may rest with the beneficiary indefinitely, provided that it is renewed within the terms established by the law. The procedure for establishing the Fideicomiso is as follows:

  1. Application is made to the Secretary of Foreign Relations for the permit to establish the Fideicomiso.
  2. Upon receipt of the permit, the bank acting as the trustee, sends instructions to the Notario Publico for preparation of the deed to the beneficial rights.
  3. Applicable taxes are paid.
  4. The deed is recorded in the municipality where the property is located.

The cost for the permit to establish the Fideicomiso is (as of 12.01.06) approximately $2,400 USD. Annual bank administration fees generally range from $450 to $500 USD. Additional closing costs, such as an official appraisal, notario (attorney) fees, certificates, and registration costs must be paid for processing all required documents.