Mexico’s Restricted Zone
An explanation of Mexico’s restricted zone
The Mexican Constitution expressly forbids the direct acquisition of real estate by foreign individuals or foreign entities in the restricted zone. The restricted zone is comprised of an area of 100 kilometers along the borders and 50 kilometers along the shoreline. In this restricted zone, only Mexican individuals and Mexican companies may directly acquire land and buildings.
This is why many people come to Merida and its immediate surrounding areas. It isn’t near the restricted zone but yet you can enjoy all that these areas have to offer. Over the past couple of decades, an increasing number of foreigners have wanted to invest their hard earned money in Mexico by purchasing property. However, most people not only want to own a home in this beautiful country, but they are looking to invest in any of the gorgeous beach towns and cities that Mexico has.
The number of American expats migrating to Mexico has grown exponentially because the cost of living in Mexico for retirees are much lower than those of living in the United States.
The 1917 Mexican Constitution did not allow foreign investment to be made on Mexican lands. According to Article 27 of the Constitution, a non-Mexican citizen is unable to own property within certain areas determined as the restricted zone. However, without foreign investment, these areas would not grow as fast and steady as they have. To allow foreigners to invest in the area, the Mexican government passed a law in 1973 called “foreign investment law” which allowed foreigners to safely purchase land and properties in Mexico.
There are two ways of owning property in the restricted zones of Mexico: through a bank trust called Fideicomiso, or through a Mexican Corporation.
The Fideicomiso is a bank trust where the bank, or trustee, holds the trust deed for the purchaser. In this case, the bank is the legal owner of the real estate in question; however, the purchaser has all ownership rights and freedom to do with the property as they please. They can sell, lease, mortgage, pass on to heirs, remodel, paint, etc. This trust is granted for a period of 50 years and is renewable for additional 50-year periods.
Since 1995, foreigners can operate a Mexican corporation aimed at purchasing and developing land for commercial use. The only limitations are mining, airports, and telecommunications. However, should a foreigner wish to invest in land or property, a Mexican corporation allows them to do so.
When deciding to use a Bank Trust or Mexican Corporation it is best to consult with a reputable lawyer. Your lawyer will discuss the pros and cons of each and depending on your personal needs and wishes for your property, you can decide which safe-investment method is best for you.