What is a Fideicomiso

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The Real Estate Trust and Mexican Property Investment

New rules that provide stability and legal certainty for all foreign real estate investments in Mexico were put into effect in 1993. These rules are apparently not widely understood, and have been confused further by recent situations that predated and were not covered by these rules. The 1993 rules outline guaranteed methods by which foreign entities can safely invest in real estate along Mexico's coastal and border areas, including Pedregal de Cabo San Lucas.

How Foreign Individuals Can Purchase Property in Mexico

With a Fideicomiso Transaction:

* The Mexican bank holds the title to the property in trust for the beneficiary/foreigner who retains the exclusive right to use and control the property.
* The bank serves as a trustee or legal owner of the property while the foreign investor is the legal beneficiary of the Trust.
* The bank acts on behalf of the beneficiary in all transactions involving the property held in trust.
* The beneficiary controls and makes all decisions regarding the property including the decision to transfer, assign or otherwise dispose of his or her interest in the property.

A Fideicomiso is a contractual arrangement, which is almost identical to the type of Trust commonly used in the United States. These Mexican Bank Trusts are established for an initial 50-year period and can be renewed in perpetuity.

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With a Fideicomiso Transaction:

* Use, occupy and possess the Trust property.
* Build upon the property, while subject to applicable regulations.

Foreigners who decide to invest in Real Estate in Mexico agree, because of such action, not to invoke the protection of their governments with respect to the property or Trust.