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    Trust vs. Lease

    Property Rights in San Felipe, Baja California, Mexico

    What is a fideicomiso?

    The “Restricted Zone” in Mexico is defined as 100 kilometers from the border and 50 kilometers from the high tide. For Residential properties that lay in the Restricted Zone, a Non-Mexican is afforded clear property rights through a fideicomiso, also called a real estate bank trust. Valid for a 50 year term, the trust is renewable and permits the Non-Mexican Rights to use, improve, enjoy, rent, or sell the property. The Non-Mexican is referred to as the “Beneficiary of the Trust”. As such you retain all ownership rights as well as the responsibilities to the property. The trust is also set up with your beneficiaries as “Substitute Beneficiaries” so the fideicomiso is a great estate planning tool!

    The real estate bank trust is the legal equivalent for deeded ownership (commonly referred to in the U.S. as fee simple) and is provided specifically for non-Nationals to own residential property in the “Restricted Zones” of Mexico (border and beach areas.) The bank trust system of ownership is the only legal way for foreigners to establish property rights to residential property in these areas that is sanctioned by the Mexican government, and provided for under the Mexican Constitution, thereby offering strong protection for your real estate interests.

    The parties within the fideicomiso are The Trustee (The Fiduciario or Bank), The Purchaser (The Fideicomsario or Beneficiary of the Trust) and the Seller (Fideicomiente).
    Currently, the fideicomiso is valid for a 50 year term and can be extended by an additional 50 year term.

    What happens if Someone dies while holding a fideicomiso?

    If a married couple are holding the fideicomiso, the trust is set normally up as 50%/50% to each party with Right of Survival, which then transfers 100% to the remaining party. In the case of both parties passing, the named Sub Beneficiaries inherit the trust without needing to go through the lengthy Mexican Probate system and without inheritance taxes.

    Is the fideicomiso in English?

    No, the fideicomiso is all in Spanish and on legal sized paper. The final document will contain the real estate trust documents including: the Identification of Buyer and Seller, Proof of Payments, the Public Deed, SRE Permit, Appraisal, Survey No Liens Certificate, Property History, and the Public Registry.

    So is my Property an asset of the Trustee Bank?

    No, although this is a common misconception. In the rare instance of the bank going into financial difficulty, the property trust can be transferred to another bank that handles fideicomisos. These types of transfers have occurred between Banorte and Banco Interacciones as an example.

    Should I title my Property in a Mexican Corporation?

    Some people have chosen to accept Residential Property Rights through a Mexican Corporation, thereby holding title as a Mexican entity. Technically if you are purchasing property as an investment (i.e. rental property, multiple properties, a partnership, or future development) you should hold title through a corporation. Many Foreigners have been told that by holding title through a Mexican Corporation, you can save time and money vs. a fideicomiso. What is not disclosed is that a Mexican Corporation is legally obligated to file taxes monthly, with the filing done by a certified Mexican Accountant, among other obligations. Also, holding title through a corporation significantly changes your capital gains taxes should you decide to sell the property. Please consult an accountant or attorney to discuss the best options for your tax situation.

    What role does the Notario Publico play in the transaction?

    A Notario Publico in Mexico is vastly different from a notary north of the border. In Mexico a Notario Publico is an experienced and licensed attorney who has graduated from an accredited University, attended Law School as a major, passed the National Bar exam, interned under a current Notario Publico, and is certified by the State and/or Federal government. The Notario Publico authorizes and the property sales transaction, verifies the documents presented are valid, calculates Sellers and Capital Gains Taxes, and ensures the transaction is authenticated and recorded in the Public Registry.

    Sometimes people have referenced the Notario Publico acting as a type of title search however that is not the case. The primary duty of a Notario Publico is to authenticate and record real estate transactions, as well as collect taxes for the Mexican government.


    This is one of the most misunderstood aspects of Mexican Real Estate. Many people don’t know that in Baja, the only legal lease is for a maximum 10 year period. Additionally, the Mexican Government only recognizes lease contracts that are in Spanish and Notarized by a Mexican Notario Publico.

    Please remember you do not get title to your leased property. Should the landowner decide to sell the campo, or not renew your lease you will lose your lease rights, unless specified otherwise if you have a notarized contract recognized by Mexican Notario Publico.

    Another confusing issue is Ejido properties. For an indepth explanation of Ejido land, please visit Real estate Attorney Rafael Solorzano’s Fcebook Page, Baja Legal Advice here:

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