It may finally happen – foreigners may finally be able to own real property in the “Restricted Zone” without the use of a Mexican bank trust (“fideicomiso”).  Recently, a Constitutional Commission of the Mexican Federal Congress voted in favor of an amendment to the Mexican Constitution which will allow foreigners to directly own real property located within 65 miles of the international border and 30 miles from the coastline, i.e. the “Restricted Zone”.

Currently, foreigners cannot directly hold title to real property in the Restricted Zone but rather must use a bank trust or acquire title through a Mexican corporate entity, i.e. limited liability company, corporation, etc.  Before it can take effect, the proposed amendment must be ratified by the Mexican Congress and Senate and then signed by the President.  Nevertheless, the amendment marks one of many changes the Mexican government is trying to implement in order to promote and encourage foreign investment in Mexico.   The amendment, if passed, is likely to reduce the use of fideicomisos which will reduce trust management fees and other costs incurred by foreigners when purchasing and holding property within the Restricted Zone.  The amendment will also allow transactions to be completed more quickly as foreigners will own property directly, thus cutting out the formalities required by banking institutions presently offering the fideicomisos.