The End of the Trust?
Foreigners in Mexico are currently restricted from direct ownership of property in Mexico’s so-called “restricted zone,” which stretches 50 kilometers from the ocean or 100 kilometers from international borders. Article 27 of Mexico’s constitution sets forth an alternative: the trust, or fideicomiso, which provides safe and secure ownership through a bank trust. The trust guarantees the rights of the foreigner but also protects the interest of Mexico since the foreigner must agrees to not ask his or her own government to intercede in Mexico’s domestic affairs. That article has been in effect since the early 1970s and has proved to safe and effective.
This summer, with the support of all political parties and the banking industry, the lower house of Mexico’s Congress passed a resolution to amend the constitution to remove this restriction and to allow foreigners to buy coastal property in the same fee simple procedure that applies to Mexican nationals. That resolution must now be passed to the upper house, approved by the president, and then ratified by a majority of Mexico’s 31 states.
Prior to the lower house’s vote, there were great expectations that the requirements for amending the constitution would be achieved smoothly and rapidly. However, after the vote there was a good deal of negative public reaction to the news. Why would the Mexican public object to direct ownership of coastal and border properties by foreigners? Simple, the last time they allowed Americans who moved into the then-Mexican territory of Texas, Mexico ended up fighting a war and losing not only Texas but also California, New Mexico, Arizona, Nevada and all in all more than 30 percent of their land mass.
The bill is not dead, however, it is no longer expected to fast track to approval.—Carol S. Billups, www.caborealtypros.com.