Business & Services

What's this thing called a Fideicomiso and do I need it?

Sometimes called a “fidi” for short by those who can’t remember the mouthful of letters, a fideicomisos (pronounced fee-day-ee-co-mee-so) is very simply a bank trust.

The Mexican Constitution prohibits direct ownership of real estate by foreigners, but does permit foreign investments in what is generally referred to as the restricted zone. That zone includes Mexico land within approximately 60 miles of any Mexican border, and within about 30 miles of all Mexican coastlines. While the Mexican bank holds the title to the land and is the owner of record, the foreign investor enjoys unrestricted use of the land and all rights of ownership – including the right to resell the property held in trust at its market value to any eligible buyer.



This real estate tradition, in modern times does little to ensure protection of the Mexican boundaries, but because it is part of the Mexican Constitution and has the backing of the Mexican banking industry, there is little chance the use of the fideicomiso will soon disappear.

For years many people tried to circumvent the fideicomiso trust set up fee (approximately $2,500 USD) and the annual fee (approximately $500 USD) by placing their properties in Mexican corporations. Unless you are going to be buying multiple properties most often a corporation is not the recommended means. Why?

1. Firstly, the cost of setting up a corporation is about the same as the set-up cost of the trust.

2. An active corporation would require accountant’s fees to make the required monthly declarations to the Mexican government.

3. The Mexican government frowns on owners of corporate property using it for personal means. In other words, they don’t want you living in the “corporate home” just for your convenience.

Compared to the amount of time and effort the corporation would involve its much more efficient to pay the trust fee and be able to spend carefree time at the beach.

There may be exceptions for placing property in a corporation, for instance, if you are investing in multiple properties or when buying large tracts of land for investment or development.

Before making a decision, besides consulting with your real estate agent, meet with one or more accountants or lawyers for professional and experienced advice. You will find that most lawyers have reasonable fees and in most cases won’t charge you for this initial consultation if you use them to assist you in the closing process.