A fideicomiso is the Spanish name of the process/vehicle used when a foreign buyer acquires residential property within Mexico's Restricted Zone.

Foreigners cannot hold direct title to real estate located within 50 kilometers of Mexico's coastline or 100 kilometers of an international border.

Because much of Baja California Sur—including Los Cabos—is within the coastal Restricted Zone, foreign buyers purchasing residential property here will generally acquire their properties through a fideicomiso.

The Mexican bank serves as the trustee. The fideicomiso is authorized by Mexico's Ministry of Foreign Affairs and can be established for a term of up to 50 years, with the ability to extend its duration in accordance with Mexican law.

What Can the Foreign Buyer Do With the Property?

Well, anything they like really! As beneficiary of the fideicomiso, (owner of the property), the foreign buyer receives the rights established in the trust and can generally use, enjoy the property, renovate and improve the property and of course sell it at any time. 

This makes the fideicomiso an important part of purchasing Los Cabos real estate as a foreign buyer.

How Can a Fideicomiso Protect a Foreign Buyer?

In addition to providing the legal structure that allows a foreign buyer to acquire residential real estate within the Restricted Zone, a properly established fideicomiso offers several important features:

  • Legal framework: The trust is created under Mexican law and requires authorization from Mexico's Ministry of Foreign Affairs.
  • Clearly documented rights: The buyer's rights as beneficiary are clearly laid out in the fideicomiso agreement and documented as part of the property's legal transaction.
  • Independent institutional trustee: A Mexican banking institution acts as trustee rather than an individual holding title on behalf of the foreign buyer.
  • Successor beneficiary planning: Your beneficiaries are named in the trust, which allows your heirs to inherit the property without having to go through probate in a foreign country.
  • Ability to transfer the interest: The beneficiary can easily sell the property to either a foreigner or a Mexican National
  • Long-term structure: Fideicomisos may be authorized for periods of up to 50 years and can be extended at the 50 year mark.

Common Misconceptions About a Fideicomiso

“The bank owns my house, so it isn't really mine.”

This is probably the most common misconception. The bank holds title in its capacity as trustee, while the foreign purchaser is the owner (beneficiary) with full ownerships rights established under the trust. 

“A fideicomiso is the same as leasing property.”

It isn't. A fideicomiso is a trust structure used to hold rights to real property for the benefit of the foreign buyer. It should not be confused with a conventional rental or lease agreement.

“After 50 years, I automatically lose the property.”

The 50-year period refers to the authorized duration of the fideicomiso—not an automatic forfeiture date. Mexican law provides a procedure for extending the duration of your fideicomiso.

“Foreigners can't buy property in Cabo.”

Foreigners absolutely can acquire residential real estate in Los Cabos, and they do it every day! The difference is that properties here are generally acquired through a fideicomiso rather than by the foreign individual taking direct title in the way they are typically used to.

Do All Foreign Buyers in Mexico Need a Fideicomiso?

No.

The fideicomiso requirement relates specifically to property within Mexico's Restricted Zone. Foreigners purchasing qualifying property outside the Restricted Zone can generally acquire real estate directly, subject to Mexico's applicable foreign-investment requirements.

Buying Real Estate in Los Cabos as a Foreigner

For international buyers, understanding the fideicomiso is simply one part of purchasing property in Cabo San Lucas, San José del Cabo and Baja California Sur.

Working with experienced local real estate, legal and notarial professionals can help ensure that the fideicomiso, title review and closing process are properly handled.

 

Written by Carol Boniuk. Los Cabos Real Estate Specialist.

This article is provided for general informational purposes and should not be considered legal or tax advice. Foreign buyers should consult a qualified Mexican attorney, notario and/or tax professional regarding their individual circumstances.