Restricted zone bank trust: a guide for foreigners buying on the coast

The restricted zone bank trust (fideicomiso) is the legal structure that allows a foreigner to buy a house or condo near the ocean in Mexico with full legal certainty. If you are thinking about investing in Puerto Vallarta, Nuevo Vallarta, Bucerías or anywhere in the Riviera Nayarit, this guide explains the essentials.

What is the restricted zone?

The Mexican Constitution defines the restricted zone as the 50-kilometer strip along the coastline and the 100-kilometer strip along the borders. Within it, foreigners cannot directly own residential property, but they can acquire all of its rights through a trust with a Mexican bank. All of Banderas Bay is inside this zone.

How does the bank trust work?

The bank acts as trustee and holds title to the property; you, as beneficiary, have the right to use, enjoy, rent, sell or bequeath it. The trust is granted for 50 years and can be renewed. A permit from the Ministry of Foreign Affairs is required to set it up.

Advantages

• You control the property as if you were the owner.
• You can name substitute beneficiaries, which makes inheritance easier.
• You can sell your rights or assign the trust to a new buyer.

Steps to buy with a bank trust

1. Legal review of the property: deed, lien certificate, property tax and water.
2. Signing of a promissory agreement with payment and closing terms.
3. Choice of trustee bank and permit application before Foreign Affairs.
4. Signing of the deed before a notary and payment of taxes and fees.
5. Recording with the Public Property Registry.

Costs to consider

Besides the price, budget for the acquisition tax, appraisal, notary fees, the permit, the bank’s set-up fee and an annual trust administration fee. We recommend asking for a detailed estimate before committing.

Our recommendation

Before paying any deposit, make sure the property is free of liens and that the seller is able to transfer it. A timely legal review prevents most problems and lets you negotiate with full information.