Fideicomiso Bank Trust

Fideicomiso/Real Estate Bank Trust.

Fideicomiso is the only option which a foreigner in Mexico can acquire and maintain a real estate property on the restricted zone for personal use, according to the article 27 of the Constitution and the stipulated in the Mexican foreign investment law.

The foreigners only can acquire properties that are in the restricted zone through a bank trust, which can have duration of 50 years and it is renewable.

 Article 11

Through trust deed foreigners are allowed to acquire rights over Real Estate within such called “Restricted Area”; the aforementioned is subject to prior authorization by the Secretary of Foreign Affairs.

Article 13

The maximum duration of a trust is 50 years, which is extendable.

Article 14

The Ministry of Foreign Affairs shall decide on the permits to which this chapter refers, considering the economic and social benefit that such operations imply for the Nation.

Any application to obtain a permit must be resolved upon by the Ministry of Foreign Affairs within five business days following the date of the application with the competent central administrative unit or within thirty business days if submitted before the state offices of said Ministry; otherwise, approval shall be deemed to have been granted.

By virtue of the trust deed, the Trustee (a Bank) receives one or more Real Estate properties and destines such properties to any lawful and determined purposes in accordance to the purposes entrusted. “The Trust Agreement is a trusting commission”.

Parties in a Trust Agreement

Trustor / Grantor: Individual or legal entity which transfers one or more properties through the trust ownership.

Beneficiary: Individual or legal entity with the appropriate capacity to receive the benefit granted by the trust deed, being able to appoint several beneficiaries to receive the benefits simultaneously or successively.

Trustee / Institution: Financial Institution, with the appropriate capacity to act in Mexico, who receives the property of the trust fund for the benefit of the Beneficiary and who must carry out specific duties with regard to the property.

The subject-matter is constituted by the Real estate transferred by the Trustor to the Trustee (The Bank), as well as the constructions, buildings and improvements, if appropriate, made by and on account of the beneficiary.

Purposes of the Trust

The benefits of this kind of trust agreements are the following:

• The Beneficiary acquires the right to use and enjoy the Real Estate subject matter of the Trust.
• The Beneficiary shall have the possession of the Real Estate with all the authority to occupy it.
• Alternate Beneficiaries may be appointed for the event of death, which shall enjoy the benefits in a simultaneous or successive manner.
• The Beneficiary shall have the right to transfer its rights and to freely agree upon the contribution or payment.
• The Beneficiary shall have the authority to instruct the Trustee to transfer the Real Estate Property to individuals or legal entities with legal capacity to acquire them.

 Prior to the agreement with the Trustee, the Trust deed may be amended under the understanding that a prior authorization granted by the Secretariat of Foreign Affairs shall be necessary in order to amend the purposes and/or to increase the subject matter of the Trust Agreement.

Requirements for the incorporation of a Trust Agreement

Trust requires:

• The authorization from the Secretary of Foreign Affairs that appoints article 11 of the Mexican Foreign Investment Law;
• A deed attested and certify by a Mexican notary, who is obligated to assure the authenticity and lawfulness of the transaction.

Typical cost of setting up a Bank Trust “Fideicomiso” US Dollars.

Secretary of Foreign Affairs & National Foreign Investment Register                                            $1,850.00

Bank Trust drafting:                                                                                                                     $1,950.00

First Annual administration Bank Trust fee:                                                                                   $   500.00

Baja Sur Legal S.C  service fee:                                                                                                   $1,500.00

Other miscellaneous fees & expenses:                                                                                          $   100.00 

Gran Total:                                                                                                                                  $5,900.00