ACQUISITION OF PROPERTY IN MEXICO’S RESTRICTED ZONE BY FOREIGNERS

I. PURPOSE
This document aims to provide a detailed guide for foreigners interested in acquiring real estate located within the so-called “restricted zone” in Mexico, in accordance with the Foreign Investment Law and other applicable regulations.

II. THE RESTRICTED ZONE
The “restricted zone” encompasses the territory within 100 kilometers of the borders and 50 kilometers of the Mexican coasts, where, due to constitutional provisions, foreigners face certain restrictions to directly acquire land ownership.

1. Acquisition Through Restricted Zone Trust
According to the Foreign Investment Law (FIL) and the Credit Institutions Law (CIL), foreigners can acquire rights to use, enjoy, and benefit from real estate located in the restricted zone by establishing a trust.

1.1. Legal Framework
a. Foreign Investment Law (FIL): Articles 10, 11, and 12 regulate the possibility for foreigners to acquire real estate in the restricted zone through a trust. The trust must be established with an authorized Mexican fiduciary institution, with a maximum term of 50 years, renewable.
b. Credit Institutions Law (CIL): Defines the framework under which banking institutions operate, including their capacity to act as trustees in the establishment of trusts.

1.2. Process
a. Selection of Trustee Institution: The buyer must choose an authorized banking institution in Mexico to act as the trustee.

b. Application for Permission: Through the trustee, the foreigner applies for a permit from the Ministry of Foreign Affairs (SRE) to establish the trust before a notary public.
c. Establishment of the Trust: With the permit granted, the trust is formalized, stipulating the subject property, the rights and obligations of the settlor (seller) and beneficiary (buyer).

2. Acquisition through Formation of a Mexican Company with a Foreign Admission Clause
An alternative to the trust figure is the acquisition of real estate through a Mexican company formed by foreigners, incorporating a foreign admission clause.

2.1. Legal Framework
a. General Law of Mercantile Companies (GLMC): Regulates the constitution and operation of commercial companies in Mexico. Relevant articles for this case are those referring to the constitution of companies, the obligations of partners, and the company’s administration.

b. Foreign Investment Law (FIL): In its articles related to foreign investment in Mexico and the capacity of these companies to acquire real estate in the restricted zone, subject to certain restrictions and requirements, such as including a foreign admission clause in the company’s constitutive act.

2.2. Process
a. Company Formation: Foreigners must constitute a corporation before a public notary under Mexican laws, including in its constitutive act the foreign admission clause.
b. Company Registration: The company must be registered in the National Registry of Foreign Investments.

c. Acquisition of the Property: Once constituted and registered, the company can directly acquire property in the restricted zone in its name.

III. FINAL CONSIDERATIONS
The choice between a trust and the formation of a company will depend on the specific needs of the buyer, including tax, administrative, and long-term planning aspects. It is crucial to have the advice of lawyers specialized in real estate and foreign investments law in Mexico.

This legal article is provided for informational purposes only and does not constitute legal advice. The content is based on general legal principles, and laws may vary by jurisdiction. Readers are strongly advised to consult with a qualified attorney regarding their specific legal issues. The authors and publishers are not responsible for any actions or decisions taken based on the information provided in this article. The article does not create an attorney-client relationship, and any communication through this platform does not guarantee confidentiality. The accuracy, completeness, or adequacy of information in this article is not warranted or guaranteed. The authors and publishers disclaim any liability for any errors or omissions in the content.

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