Buying Property In Mexico

Mexican Legislation

In Mexico there is what is known as the Restricted Zone. The Mexican Constitution prohibits foreigners from direct acquisition of land and waterways within a distance of 100 kilometers from any frontier and 50 kilometers from any coast. Such regions are known as "Restricted Zones". This means that, for example, the entire Baja California peninsula is in this restricted zone. However, given that most foreigners wish property in the coastal areas, in 1993 Mexico liberated ownership provisions of property in the Restricted Zone and passed the Foreign Investment Law.

Outside the Restricted Zone or within Mexico, foreigners can acquire direct ownership and buy any kind of real estate they like. This is as long as they abide by Mexican law and waiver their rights to any foreign government intervention in case of legal conflict.

Foreign Investment Law

The purpose of the Foreign Investment Law (FIL) is to promote Mexican and foreign investments in Mexico. It was passed with the intention of encouraging fair and balanced development, all the while maintaining the country's economic independence. The FIL specifies the rights and obligations of foreign capital when it comes to investments.

FIL and the Restricted Zone: The FIL specifies that by establishing a bank trust (or a “fideicomiso”) foreigners can obtain the rights of ownership of real estate within the Restricted Zone. This also includes property intended for industrial or tourism purposes. These rights of ownership means that foreigners can use, improve, rent or even sell their property as though they directly owned the property.

For non-residential or commercial property, another way to invest instead of setting up a bank trust is to buy the property through a Mexican corporation. Depending on the nature of the business, a foreigner can own 100% of the corporation as long as they agree to be subject exclusively to Mexican Law.