If you have dreamed of owning a property in Cabo, Mexico, you might have heard the word “fideicomiso.” The first time you hear it, it may seem complicated. However, knowing this is important to achieve your dream of owning a home in one of the most beautiful and popular places.
Let me take some time to explain to you what a fideicomiso is, why it’s important, and how it might be used for your potential real investment in Cabo, Mexico.
Why Does the Fideicomiso Exist?
The Fideicomiso is a Mexican bank trust that exists because of Mexico’s constitution. Article 27 restricts foreign ownership of land in certain areas, that is, within 100 kilometers (about 62 miles) of the country’s borders and within 50 kilometers (about 31 miles) of its coastlines. These are referred to as the Restricted Zone, holding much of the most desirable real estate in Cabo, Mexico, including beachfront properties and vibrant resort towns like Cabo San Lucas.
The fideicomiso trust in Mexico was created as an answer to these problems, such that foreign nationals could enjoy all the benefits of owning property, respecting constitutional restrictions. It allows you to establish a secure and legal route to investing in property in these coveted areas.
How Does the Fideicomiso in Cabo, Mexico Work?
The fideicomiso is essentially a trust agreement. Here’s how it works:
Establishing the Trust
If you decide to buy a property in the Restricted Zone, the bank will establish a fideicomiso for you. The bank is your trustee and holds title to the property.
You as the Beneficiary
The bank holds the title for you; you are the beneficiary of this trust. That is, you have the rights of a property owner, such as the right to live there, rent it out, restore it, or sell it.
Long-Term Security
A fideicomiso is good for 50 years and renewable for another 50 years fully. This gives you long-term security for generations.
Legal Protections
The fideicomiso keeps you safe under Mexican law, making sure everyone knows you own it.
What Are the Benefits of a Fideicomiso in Cabo?
Owning property in Cabo, Mexico, through a fideicomiso has the following advantages:
You Have Full Control Over Your Property
A beneficiary has all rights to the property. It can be used in any manner as desired. It may be a vacation home, a rental property, or even one’s residence.
Ability to Transfer Ownership
If you are selling, the fideicomiso facilitates easy transfer of ownership of the property to another buyer.
Safe Investment
The fideicomiso is a legal tool that safeguards your rights as the owner under Mexican law. The bank, as the trustee, is obligated to work in your best interest.
Estate Planning Advantages
Inheritance becomes easy. You can decide who will take the property in the trust. So, it becomes easier to pass it to your heirs without going through lengthy legal steps.
Access to Prime Locations
With a fideicomiso, you may purchase a home in one of Mexico’s most beautiful and sought-after beach destinations, such as Cabo San Lucas, Tulum, Cancun or Riviera Maya.
How Much Does a Fideicomiso Cost?
The fideicomiso is not that expensive to establish or maintain. Creating the trust will require a one-time initial cost of setting it up, which varies between $1,500 and $2,500 USD, depending on the bank.
There is an annual maintenance fee paid to the bank that administers the trust, usually in the range of $500 to $700 USD per year. Such fees are small costs for the security and legal protections provided by the fideicomiso and the possibility of owning a property in some of the most coveted places in the world.
Is the Fideicomiso Right for You?
It’s the best solution for a foreigner looking to purchase a piece of property in Mexico’s Restricted Zone, as it allows you to enjoy all the rights of ownership but, at the same time, assures that your investment is secure and fully compliant with the Mexican law.
I can guide you through every stage of the process, from finding the perfect property to establishing your fideicomiso with the right Mexican bank.
Common Questions About Fideicomiso
1. Can I Own Property Outside the Restricted Zone Without a Fideicomiso?
Yes! If the property you are interested in falls outside the Restricted Zone like in Lake Chapala, then you can hold it directly without requiring a fideicomiso. I can give you an idea of whether the property that interests you actually falls within the Restricted Zone.
2. Can I Finance a Property Purchased Through a Fideicomiso?
Financing is available on the properties purchased through a fideicomiso. Financing for foreigners may vary, I can get you connected with some lenders who specialize in Mexican real estate loans.
3. What Happens if the Bank Holding the Fideicomiso Goes Out of Business?
Mexican law protects the fideicomiso, so your rights as an owner are guaranteed no matter what happens to the bank. If a bank were to close, for example, the trust would automatically be transferred to another institution and your ownership would not be impacted.
Why Cabo Is the Perfect Place for Your Investing
Cabo San Lucas is one of Mexico’s most lively and scenic locations. From golden beaches to high-end resorts, Cabo San Lucas offers an experience for any visitor. From a vacation home to an investment property or permanent residence, Cabo has something for everyone. With a steadily growing influx of tourists and expats, combined with a strong reputation for safety, this thriving beach destination presents a prime opportunity for real estate investment.
With its proximity to the U.S., welcoming community of expatriates, and unmatched natural beauty, it’s no wonder so many people want to make Cabo their permanent home. Moreover, it is possible to do so due to being part of the fideicomiso.
Start Your Real Estate Journey Now
Owning property in Los Cabos, Mexico proves to be more accessible than many of my clients have previously imagined, and I am here to make that process as smooth and low-stress as possible. Perhaps you have been wishing to own a home in Cabo, or in the Mexican Restricted Zone, for years and are ready to start making that a reality.
Let me guide you further with available listings and the fideicomiso process. Let’s make your Mexican property a reality for you!
Book a free consultation today to start!