What exactly is the annual “administration” of the Mexican Bank Trust? Does the bank actually do anything on an annual basis besides sending me an invoice?

[The bank that administers my trust] just sent me an invoice for $616.52 U.S. for the “annual administration” of the trust. Last year it was $603.66 U.S. I have asked them several times what exactly they do to administer the trust. They have been evasive and will only say “as referred in the contract, in the Foreign Relations Permit and the law the fiduciary has many responsibilities and reports to the state.” They do not seem to want to elaborate beyond this. Do you have any advice?

-Christopher, Vancouver, BC



In 1972-73, a law was passed which made it possible for a foreign person to have a legal right in Mexican property which is located in the “restricted” zone. The law requires that a bank or financial institution hold title for the foreign beneficiary. (For more information, see the article below.) The bank acquires title, in trust, and has to hold it for the beneficiary. Each bank must review all documents of acquisition and transfer and make frequent reports to the department of foreign relations. It is necessary for each bank to maintain a staff and a special department to comply. This is not to say that much work is actually done on an annual basis by the bank, but it is a necessary compliance with Mexican law. Without the trust, ownership in certain Mexican properties is not legal and therefore not secure.

Linda Jones Neil, Consultant,
Mexico Real Estate





Article 27 of the Constitution of the Republic of Mexico prohibits foreign ownership of real property located within 30 miles of any coastline or 60 miles of either border. This is referred to as the restricted zone.

In 1973, recognizing that many Americans would enjoy the rights of ownership, and bring needed dollars to the country, President Echeverria approved the bank trust, fideicomiso, form of ownership which is available to non-Mexicans. This regulation was further expanded in the Foreign Investment Law of 1989.

Properties located within the prohibited zone, which includes the entire Baja Peninsula, may be acquired by a foreigner through a Mexican bank trust naming the buyer of the property as the beneficiary of the trust. Naked title is placed in the name of the bank selected by the buyer, as his trustee. The bank administers the property according to the instructions of the buyer/beneficiary. The buyer/beneficiary has full ownership rights: he may build on the property, tear down existing buildings, modify them, rent, lease or sell at any time conforming only to the general laws of the country established for all persons.

The term of the trust is fifty years and can be renewed for additional fifty year periods, after which it must be transferred to “one entitled to hold property” in Mexico. In other words, title to the property may rest in one beneficiary indefinitely, provided that it is renewed within the terms established by the law.

The procedure for establishing the fideicomiso, the bank trust, is as follows: a permit must be obtained from the Secretary of Foreign Relations which includes a description of the property to be placed in trust, the use for which it is intended, and personal data on each of the beneficiaries. Once granted the bank draws up the trust document which is recorded in the municipality where the property is located.

The costs for the permit to establish and register the bank trust are currently about $1,500. US and annual administration fees are generally $350.00 to $500.00 per annum. There are additional closing costs, however, and it is wise to request a written estimate prior to beginning the transfer process.

For further information on the Mexican trust or real property custom and practice in Mexico, please contact:
the settlement company ®
E-Mail: info@settlement-co.com
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