In a historic move, the lower house of the Mexican Congress voted on April 23 to loosen restrictions on foreigners buying property in coastal and boarder area.
It passed the lower house with a vote of 356-119 and will now move to the senate. This means that a change to the 1917 Constitution has to be made. If it passes the senate it still has to be ratified to the majority of the Mexican States. Currently, Article 27 of the constitution prohibits foreigners from owning properties within 31 miles from the coast and 62 miles from the international boarders. That forces foreigner to use the fideicomio, which was established in 1973. Foreigners own the beneficiary right to a property, which gives them the same right of ownership given to a Mexican National.
The senate is currently in session until the end of May. The attorney I talked to explained me that he doesn't believe that they will vote on during this session. He thinks that it will be discussed and voted on in September. He believes that it will pass very easily. All constitutional changes will have to be approved by the majority of the States here in Mexico. I don't think that this will be a hard hurdle to pass as all States on the ocean and boarder will be in favor of it. And the States that are not effected by this constitutional change won't care much about it anyway.
Once it has passed the senate and it has been ratified by the majority of the States, then they will have to modify two or three different laws in order to have this constitutional change going into effect. He was not able to give me a time frame. But he believes that it sill be fairly quick.
How would we be affected here in Los Cabos? The process of getting the permit from the Ministry of Foreign Affairs and the appoval of the bank is very time consuming. The cost of such a permit is approximatley $1,700 US Dollars. That includes the fee for registering the property in the Registry of Foreign Investment. The bank charge you an acceptance fee plus the first year in advance. That should be around $800 – $1,000 US Dollars. You will be able to save these two fees if you acquire fee simple.
The Fideicomiso is a very versatile figure and in my opinion sufisticated buyers will keep on usign it in the future. It is a protection for your assets that even Mexicans are using. Another advantage is that you don't need a will to pass your property on to your heirs. Without a fideicomiso you will need a will either in Mexico or your place of origen. The process of transfering your property to your heirs is much more complicated without a fideicomiso.
It might boost the investment in real estate without a fideicomiso in Mexico, but I don't think it is disappear in the near future.