You are here: Home / Real Estate / How to Fund and Set Up a Mexican Bank Trust
When you decide to purchase your dream home or ideal investment property in Mexico, there are several prerequisites that need to be arranged and fully understood. Know why and how will help make your buying experience more pleasurable. This simple but informative brief outlines several knowledgeable points to review. That way, buyers will cover everything during the purhcasing process. In this particular case, we’re focusing on funding and the Mexican bank trust.
Avoiding problems with funds
Having your finances in order beforehand is a must. Purchasing property in Mexico requires cash-only transactions in most cases. In some instances, there are owner financing options. However, this is only advised if it is for a family member or close friend. Make sure you have your funds readily available before making an offer. When making an offer on a property, you will need to back it up with earnest money.
Here are a few ideas to help you when asked for money down and/or secured funds with your offer:
- Have your funds in an account that can be easily accessible and under your control, whether it’s in Mexico and/or your specific location.
- Prearrange any special wiring procedures and/or instructions along with any chargeable fees.
- Work with a professional banker who has experience in foreign trust/escrow exchange and transfers.
The above bullets focus only on a few of many things you should be aware of when setting up a transfer that will be extracted from your bank account.
Mexico’s bank trust (or fideicomiso)
The word fideicomiso refers to an escrow or trust. The trust is comprised of one or more persons associated with a financial institution that is certified and/or commissioned within its residing state or country. Buyers can set up one of two types of trusts when purchasing property in Mexico: a bank trust or a Mexican corporation.
Mexican law defines the restricted zones as any property that lies within 50 kilometers (or 31 miles) from any Mexican shoreline or within 100 kilometers (62 miles) from any bordering country. So any property in Playa del Carmen, for example, would be in the restricted zone. When working with a qualified realter, they will be able to tell you if you need a trust or not. It is always a good idea to double-check the facts when water or borders are in proximity of the property you are purchasing.
Setting up a trust
First off, a bank trust is not a lease. The bank only takes its instructions from the beneficiary, or the property’s legal owner/purchaser. In no way is your property an asset to the bank and they are there only to help you manage it. The owner has full rights to occupy, lease, alter, and/or build on the property. The owner also has the right to instruct the trustee to transfer title to a new owner or heir. The Mexican Constitution will always protect your property.
As a new owner, you will need to find a bank trust or financial institution to hold the trust. You will draw up an agreement and discuss the benefits you will receive as being the first beneficiary. At this time, you will also assign a second beneficiary – an inheritor in case of death, physical illness or mental disorder. There is an initial fee to set up the trust, which varies depending on property and institution. On average, however, it costs $700 USD. Annual fees also vary depending on the institution. Trustees can set up the bank trust for a period of 50 years; upon reaching the final years, they can extend or renew the trust for a further 50 years.
If you plan to use your property for business and/or plan to purchase a business, setting up a Mexican corporation is the right thing to do. The costs to these are different than those of a bank trust and you can learn about them here.
In summary
Owning a property in Mexico is very obtainable. Thousands of North Americans have acquired first and second homes, as well as investment properties south of the border. One things all property owners have in common is that they have purchased through a reputable real estate company. Make sure your agent and their company have plenty of experience working with foreign buyers. You should also hire a qualified lawyer to assist you through the whole procedure from start to finish. The lawyer can also offer advice on finding the right bank for holding your trust. Make sure to ask for references from all parties involved.
And remember, at Top Mexico Real Estate…we make it happen!
About Thomas Lloyd
Hi, I am Thomas Lloyd, founder and CEO of Top Mexico Real Estate. Our mission is to help foreigners buy their dream home in Mexico and to offer an enjoyable and safe experience as they invest in Mexico. Read more
See Playa del Carmen listings
Reader Interactions
FAQs
Associated Costs
Trustee Fees: Expect to pay around $1,000 to establish the trust, with an annual fee of $700 to $1,000 for its maintenance. Permit and Registration for Foreign Investments: This fee, payable to the SRE, is approximately $1,600, but it may vary.
How to set up a trust in Mexico? ›
In order to form a Mexican trust, a settlor and trustee are required. Unlike the law in the United States, a Mexican trust may be valid even if no beneficiary is named in the act of its incorporation, as long as the trust's purpose is lawful and determined.
How long does it take to set up a fideicomiso in Mexico? ›
To get those documents and fill out those forms takes usually a good two or more weeks, so the closing time frame of a Fideicomiso is usually two to three months.
How to open a Mexican bank account from the USA? ›
What Documents Do I Need to Open a Bank Account as a Non-Resident?
- Government issued photo: (e.g., Passport)
- Letter with proof of address dated within the last three months (e.g. utility bill)
- Proof of legal entry into Mexico, such as a residence card, visa card, or FM2 form.
You can create a trust with any amount of assets, as long as they have some value and can be transferred to the trust. However, just because you can doesn't necessarily mean you should. Trusts can be complicated. The help of an attorney is usually required to set one up, and trusts come with costs and complexities.
What are the cons of fideicomiso? ›
Downsides of a Fideicomiso
There are fees associated with the creation of the trust, as well as annual fees for the maintenance of the trust. These fees can add up over time and may make owning a property through a Fideicomiso more expensive than owning it outright.
What is a Mexican bank trust? ›
The Mexican Bank Trust is based on a common set of fiduciary principles. Much like a trust in the United States, property owned or controlled by one party is turned over for the benefit of another party, using the stewardship of a trustee – a third party.
Who is the beneficiary of the fideicomiso? ›
The trust settler: This is the Mexican national, current owner of the property. The trustee: This is the government approved financial institution (e.g. Scotiabank) holding the trust. The beneficiaries: This is you, the non-Mexican owner with rights for use and benefits of the property.
How do I apply for a fideicomiso? ›
Apply for Your Fideicomiso: Select an approved trust bank in Mexico to open your trust. The bank will act as the custodian, while you'll be the beneficiary. Get Your SRE Permit: As a foreigner, acquiring properties in restricted areas requires a permit from the Ministry of Foreign Affairs (SRE).
How long does a fideicomiso last? ›
The fideicomiso is not a lease, but a renewable trust held currently for 50 years (and renewable) by the Mexican government.
The payment can be made at the bank that holds your fideicomiso, or you can obtain instructions from your bank on how to make a wire transfer.
How do I inherit property in Mexico? ›
Intestate Succession in Mexico
- The first to inherit are the deceased's children and other direct descendants, such as grandchildren if a child is already deceased. ...
- If there are no children or descendants, the surviving spouse is next in line.
According to the regulation, banks must observe the following limits: Individuals that are account holders of the bank can deposit no more than USD 4,000 per month in all banking branches. National citizens that are non-account holders of the bank can deposit USD 300 daily, but no more than USD 1,500 monthly.
Which bank works in Mexico and the USA? ›
These banks operate in both countries, and the links will take you to a location finder: Bank of America (affiliated with Santander Bank) Citibank (known as Banamex in Mexico) HSBC U.S. locations, Mexican locations.
How to transfer money to a Mexican bank account? ›
Send money transfers to Mexico from the United States in-store, online or in the MoneyGram mobile app, available on the App Store and Google Play. When using our digital services, you can send money transfers by credit/debit card to a bank account or for cash pickup at a MoneyGram agent in Mexico.
What is the fee for setting up a trust? ›
The cost of establishing a family trust is generally $1,000 to $2,000 depending on the structure used.
How much does it cost to set up a foreign trust? ›
Legal and Professional Advisory Costs
Legal fees for domestic trusts are often $10,000 to $25,000, but for foreign trusts, fees can be a bit higher. Depending on the lawyer you choose and the complexity of your trust, expect to pay anywhere from $10,000 to $100,000.
Can a US trust own property in Mexico? ›
As a U.S. citizen, you can't simply come over and buy property outright. Instead, you have two primary options: the bank trust, known as a fideicomiso, or setting up a Mexican corporation.
How much does it cost to build a house in Mexico in US dollars? ›
On average, the cost of a house in Mexico ranges from $100,000 to $500,000 USD (not including the land since usually it comes separately). However, beachfront properties and those located in popular tourist destinations can be significantly more expensive.
