Does the Mexican government own my land if I purchase land in Mexico?
Due to recent trade agreements made between the United States, Canada, and
Mexico, called the North American Free Trade Agreement (NAFTA), and bank
trusts, called Fideicomiso, foreigners are allowed to purchase land in Mexico.
American Title companies are also involved in the purchasing process, allowing
for secure transactions.
What is the North American Free Trade Agreement?
In 1994, North American Free Trade Agreement (NAFTA) between the United,
States, Canada, and Mexico was formed as the world's largest free trade area,
allowing for purchasing land safely in Mexico. The agreement allows for
economic growth and rising standards of living in these three countries, while
establishing a strong foundation for future growth and setting an example of
the benefits of trade liberalization.
Today, nearly 1.5 million Americans own property in Mexico. As a foreigner, the
buyer can obtain all the rights of ownership by setting up a bank trust,
similar to a US family trust, known as a Fideicomiso.
What is a Fideicomiso?
A Fideicomiso makes a buyer the beneficiary of the purchased property, allowing
the buyer to use, lease, sell, will, improve or encumber the purchased
property. The Trust does not give direct ownership to the foreign beneficiary.
Instead, it establishes the legal basis by which the bank holds the legal title
to the property in order to act on the foreigner's behalf.
The Foreign Investment Law, which was amended in 1993, allows the trust to be
established for a term of 50 years and is renewable anytime during its
existence. The beneficiary can instruct the bank to sell or lease the property
at any time. The bank (trustee) holds the trust deed for the person who
purchases the property (beneficiary). The property is not part of the bank's
assets and cannot be liened or attached for any other obligations.
Why was a trust system established?
The Mexican government established the trust system as a protection for
foreigners interested in owning property in Mexico. By making ownership pass
through the trust process, the bank is required to check ownership, insurance,
and liens against the property. There would be an automatic review of the
transaction, thus ensuring valid ownership and no outstanding indebtedness of
the property
When is a bank trust issued?
Bank trusts are established by a Mexican Notario (Notary), following the
receipt of a permit by the Minister of Foreign Affairs. This procedure is
routine due to the large number of foreign property owners. The forms are
standardized and the entire process is usually completed by the notary as part
of the closing procedure
How does First American Title Company (FATC) ensure property purchased in
Mexico?
First American Title Company works to ensure that any claims will be handled in
the U.S. without the buyer having to go through the Mexican court system. That
means that the title agency will stand by the buyer in response to a challenge
to the buyer's title in Mexico.
First American was the first U.S. Company to issue title insurance policies on
Mexican land and it is the most used agency. Its agents are experts in Mexican
law, property ownership and transfer system. First American Title Company has
been facilitating complex commercial, industrial and residential real estate
transactions throughout the country for over twenty -five years. The agency is
directly involved with property purchasing for The Pointe de las Conchas.
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