Everything You Need to Know About a Bank Trust

My goal with this kit is to give you all the information you need to know when buying
a property in Mexico, so you have the tools to make the best decision.
If you are a first time buyer in Mexico, this information will be invaluable for you. If you have any questions feel free to contact us !

We are Here to Help.

Diego Manfredi + 52 1 984 184 98 64

What is a Bank Trust ?

Before defining what is a bank trust, known as Fideicomiso in Spanish, let me explain why you need it. You might be aware of a strip of land called Restricted Zone, an area of 50 km (30 miles) from any coastline or 100 km (60 miles) from any international border – i.e. with the United States, Belize or Guatemala; the entire Baja California Peninsula is part of the restricted zone.
According to the Mexican law, only Mexican citizens are allowed to own and purchase property in the restricted zone, but there is also a legal way for foreigner to own a property in these areas. When a foreigner wants to purchase property within the restricted zone, he has the choice to acquire the property using either a Mexican bank
trust, or establishing a Mexican corporation, which then acquires the asset.

Mexico’s Restricted Zone

The 1917 Constitution of Mexico outlines clearly that non-Mexican citizens are not allowed to own real estate along Mexico’s coastline or near any international border (within the distances mentioned above ).  As the Mexican government came to realize
that foreign investment in these areas was advantageous and attractive, special
arrangements were made that allowed investment without changing the constitution.
The Mexico Foreign Investment Law mandates the process for owning property in this restricted zone. This was first introduced in 1971, adjusted in 1993, and once again updated in 1998. If we take a closer look at these regulations we can find this interesting points.

  • If it is for residential purposes, foreigners
    can own property within the restricted zone
    using a Mexican bank trust for real estate
    (fideicomiso in Spanish).
  • For business purposes, foreigners can own
    property within the restricted zone using a mexican corporation

The Mexican corporation requires a minimum of2 shareholders; usually both can be foreigners, but one must have Mexican residency. Only a few industries do not allow 100% foreign ownership, such as the oil industry and communication.
The fideicomiso is an agreement set up between the foreign buyer and a Mexican bank. The bank acts on behalf of the buyer. The bank will hold the title of the property, but has a fiduciary obligation to follow the instructions and wishes
of the foreign buyer, who can enjoy, use, rent out, improve, expand, build on and even sell the property keeping 100% of the income and profits.

Other facts about the bank trust

There are three parties involved:

The seller of the property.
The bank acting as the trustee and holder of
the title.
The beneficiary or buyer of the property.

  • The term is for 50 years, and it is renewable
    indefinitely for 50-year periods.
  • Secondary beneficiaries can be established
    within the trust to establish automatic
    inheritance of the property in case of death of
    the first beneficiary.
  • The buyer can choose which bank he wishes
    to establish his bank trust with. There are
    various multi-national banks in Mexico
    including Scotiabank, HSBC and BBVA
    Bancomer, as well as Mexican national banks such as Banorte.


Bank Trust and Ownership

Paying for a property is not enough to become an owner in Mexico. In order to have a valid ownership it is necessary to have the title recorded, which puts the rest of the world on notice that the property is yours. If you are a foreign person purchasing a property within the restricted zone, the property will transfer not to your name but to the name of a Mexican bank as trustee for your interests.

As it was mentioned before in this guide, the Mexican constitution prohibits direct ownership of real estate by foreigners in the restricted zone; this is the reason for the bank trust, the fideicomiso,
which has been established under the guidelines of the Mexican government so that foreigners will be protected in their property acquisitions.

Recording the Title for Full Ownership

Whether you are purchasing in a zone requiring a bank trust or in an area where title can be taken directly into your name, it is necessary that this transfer of ownership take place and your interest be registered as soon as possible after the successful conclusion of the negotiations to
purchase your dream property. Be sure to find the
help of a trustworthy lawyer and notary public to
complete the steps.

The Difference Between Using a Bank Trust and a Mexican Corporation

Talk to your broker about bank trusts and Foreign
Owned Mexican Corporations (FOMC) to determine which the best vehicle for you to hold title is. Both have advantages and disadvantages.

The Bank Trust

The bank trust or fideicomiso is a trust agreement that you establish with a bank to hold title of the property with you; you and the bank are both named in the title documents. The bank has a fiduciary responsibility to represent your interest
in the property. The Fideicomiso gives you the rights and the vehicle to hold the property in facts include:

  • You may transfer your rights in the fideicomiso
    to another foreign buyer (i.e. sell the property)
  • You may rent, sell, remodel or make improvements
    upon on the property you have in a fideicomiso
  • Your heirs may inherit the rights to the fideicomiso,
    effectively by-passing probate, should you depart
    without a proper will
  • The fideicomiso is easy to maintain by paying the annual fee to the bank


Keep in mind about the fideicomiso:


The main disadvantage of the fideicomiso is that it is restricted to a property of no more than 2000 square meters, (slightly more than 20,000 square feet) but there are exceptions. You can request a permit for acquiring a fideicomiso
that allows for a property larger than 2000 square meters, but this is a complicated process requiring an investment plan, time line, inspections, architectural renderings, business plan, and plenty of governmental red tape. All this extra work is only
recommended for an investor that plans to make a significant investment in the property.
Also you need to be careful, since if the title papers, property dimensions and corresponding documentation are not in perfect agreement,
the bank will not issue the fideicomiso, and a rectification of the property measurements will be required.
Finally, another disadvantage of the fideicomiso is that it is limited to one specific property. Sometimes you can put two adjoining properties
into the same fideicomiso, but generally speaking, the fideicomiso is only designed for an individual property.

Would we be able to use the same Mexico bank trust for multiple purchases or does each property have to have its own trust?

  • Each property will need to have its own separate bank trust. Trusts are propertyoriented, not people-oriented, thus a specific property is the object of each trust contract, and the reason for the trust being
    For example, when a property held in trust is sold, the trust stays in place, only the
    beneficiaries in the contract change — the original beneficiaries of the Mexico bank trust (sellers) cede their beneficiary rights to the buyers, who become the new beneficiaries of that same trust.”


  • A Mexico bank trust is required for each property since the trust (fideicomiso) is
    actually a deed to the rights in a specific property. A permit from the Secretary
    of Foreign Relations is required for each property and the text of the permit is
    included in the fideicomiso deed. The only exception to the one deed per property rule is where two lots are contiguous. Then both can be put into one deed but usually will still require two foreign relations permits.

Foreign Owned Mexican Corporation

The Foreign Owned Mexican Corporation (FOMC) is a vehicle that allows foreigners to open a business and work in Mexico. The corporation is a Mexican entity, and as such, has the right to hold title to real estate. An attorney or notary public can help to set up your corporation, but it is important to know what your goals are in respect to the property, business and type of real estate investment.
To set up a corporation you need:

  • A minimum of two individuals (stockholders), of
    any nationality, that are at least 18 years of age.
  • One of the stockholders will be required to be
    the managing partner, and will be required to
    acquire and maintain a Mexico FM-3 visa that
    must be renewed every year.
  • The corporation is required to make
    monthly reports to Hacienda (the Mexican
    Department of Treasury) reporting income and
    expenditures.The reporting needs to be done
    by a certified accountant.


Some advantages of the Mexican corporation

  • It allows for the purchase of properties larger
    than 2000 square meters
  • There is no limit to the number of properties it
    may own
  • It allows for one or more of the stockholders to
    legally live and work in Mexico year round.

Keep in mind:


If you decide to set up a Mexican Corporation, consider that, besides a managing partner with a resident visa, a Mexican corporation requires more hands on attention than the Fideicomiso. Consider carefully which option works best for you.
Also, the corporation pays taxes and cannot avoid capital gain taxes when it sells property.

We hope you found this information of same value and please feel free to contact us for any adition information.

All the best..  always !!


  1. Amazin article! Thank you so much, finally all the answers in one spot!!
    May I ask you what you would suggest for a couple coming from the US looking forward to purchase a house in Merida to open a small B&B?
    Our home would be used for “tourist activity” and simultaneously used for residential purposes.
    Our max income would be less than $60,000/year.
    We want to make sure we are doing things the right way for us and from a legal point of view.
    That is why we are wondering if our best (and ideally easiest!) option is a Fideicomiso or a Mexican Corporation?
    Thanks in advance for any tips you could provide!

  2. Hi Diego. Great and helpful article. If you’re buying the property in US dollars does the title deed (escritura) still have an equivalent peso price on the deed? What I’d be worried about is capital gains taxes. I have a friend that bought a condo many, many years ago and said he spent $500,000 US dollars but at the time the peso was only around 10 pesos to $1 US. Now that same $500,000 would be at 19 pesos to $1 US so would the capital gains be based on the peso amount or can you use the US dollar amount you paid?

    Thanks in advance.

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