What is a Fideicomiso

A fideicomiso is a trust. In the case of owning property in Mexico it refers to a bank trust. It is a legal agreement between the “property owner” and his bank that establishes that the bank hold the property in trust for the “owner”. This arises from the fact that foreigners cannot own property within 50 kilometres of the coast or within 100 km. of the northern border.. This is sometimes called the foreigner exclusion zone.

The fideicomiso gives the person who owns the trust all the benefits of ownership like the right to use, rent, sell etc the property. The agreement carries an annual fee of approximately US$500 paid to the bank. It adds some complications. For example some applications to government require that the actual owner give legal permission for the application. A case in point is the application for a federal zone concession.

These situations require a power of attorney (poder) from the bank. The bank will charge a significant amount for a power of attorney and it has to be prepared by an attorney. The fee schedule for these types of transactions is usually set out in the fideicomiso documents.

Historically the solution to this foreign exclusion zone was that the person who wanted the benefit of property ownership would contract with a Mexican citizen to own the property. This was called a “preste nombre” agreement; from prestar — to borrow and nombre — name.