If you are not a Mexican citizen and want to buy a home or condo in Puerto Vallarta, Nuevo Vallarta, Bucerías or Punta de Mita, you will do it through a fideicomiso, a Mexican bank trust. It is a legal, common and safe structure that has been used along Mexico’s coastline for decades. Here is how it works.
Why do foreigners need a fideicomiso?
Article 27 of the Mexican Constitution defines a restricted zone: a 100 km strip along the borders and a 50 km strip along the coastline. Inside it, foreigners cannot hold direct title to residential property, but the Foreign Investment Law lets them hold all the rights to it through a bank trust.
Puerto Vallarta and all of Bahía de Banderas are inside the restricted zone, so this applies to any purchase around the bay.
How it works
A fideicomiso has three parties:
- Settlor (fideicomitente): the seller or the developer.
- Trustee (fiduciario): an authorized Mexican bank, which holds title to the property.
- Beneficiary (fideicomisario): you, the buyer, with full rights to use and enjoy the property.
The bank cannot sell, rent or mortgage the property without your instruction. You can live in it, rent it out, remodel it, sell it (by assigning your rights or instructing the bank to transfer it to the new buyer) and leave it to the substitute beneficiaries you name in the trust.
How long does it last?
A fideicomiso is set up for a term of up to 50 years and can be renewed. You ask the bank to renew it before it expires, and your beneficiaries can request the renewal too.
Step by step
- Choose the property and sign a purchase agreement, with your deposit documented in writing.
- Choose the trustee bank. Compare the setup fee and the annual fee: they vary a lot between banks.
- The notary or the bank applies for the permit from the Ministry of Foreign Affairs (SRE). It includes the agreement to be treated as a Mexican national regarding that property and not to invoke your government’s protection (the “Calvo clause”).
- The notary checks the property: lien certificate, no outstanding property tax or water bills, and appraisal.
- Closing before the notary. The seller transfers the property to the bank and the trust is created in your favor.
- Registration. The notary records the deed at the Public Registry and notifies the SRE.
With all documents in order, the process usually takes 4 to 8 weeks.
What does it cost?
On top of the closing costs every buyer pays (acquisition tax, notary, appraisal and registry fees), the fideicomiso has its own costs:
| Item | What it is |
|---|---|
| SRE permit | One-time federal fee for the permit to create the trust. The current amount is published on the SRE’s website. |
| Trust setup fee | One-time bank fee. As a reference, from a few hundred to a couple of thousand US dollars. |
| Annual fee | Yearly bank fee to administer the trust. As a reference, a few hundred US dollars a year. |
| Notary fees | For the trust deed, together with the purchase deed. |
Fees change by bank and over time: get written quotes from at least two banks before choosing.
Buying a property that already has a fideicomiso
This is very common in resales. Instead of opening a new trust, you can ask the bank to assign the existing trust rights to you. Sometimes it is cheaper and keeps the remaining term; sometimes a new trust is better so you start with a full 50 years. The notary will tell you which makes sense.
The alternative: a Mexican corporation
If you are buying for business purposes (for example, several rental units or a commercial space), a Mexican corporation with foreign investment can acquire property in the restricted zone for non-residential use, registering it with the SRE. It means keeping books and filing taxes as a company, so for a personal home the fideicomiso is almost always the better option.
Documents you will need
- Valid passport.
- Immigration document (visa, resident card or FMM tourist permit).
- Tax ID from your home country or a Mexican RFC.
- Proof of address.
- Your substitute beneficiaries’ details.