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By Gisela Talamantes Saenz

gisela talamantesUnder Mexican law, all properties acquired by foreigners in the restricted zone – within 50 km of an ocean or 100 km of the borders – must be held in a Mexican bank trust which is known as a fideicomiso. These bank trusts are established through a permit issued by the Secretaria de Relaciones Exteriores (Ministry of Foreign Relations).

Back in the seventies, the first fideicomiso permits were issued for thirty years. In 1989, the Foreign Investment Law allowed the renewal of fideicomiso permits; and in 1995, the period for a fideicomiso permit was extended to fifty years and fideicomisos could be renewed multiple times. Provided that the renewal involves the same parties and same characteristics, a request for renewal needs to be presented within six months prior to the fideicomiso’s expiration date.

Fideicomiso trusts established between 1970 and 1995 expire between 2012 and 2025. Owners of these trusts will have the option of extending their trust for an additional twenty years with the same bank; or of applying for a new fideicomiso trust permit for fifty years, either with the same bank or a different bank. During the renewal process is a good time to either confirm or change the substitute beneficiaries who will continue with the new trust permit.

What is the procedure for renewing a fideicomiso trust permit? It is a simple procedure: to obtain a new fifty year permit or a twenty years extension of the original permit, an application must be presented to the Secretaria de Relaciones Exteriores (Ministry of Foreign Relations) through the fiduciary bank. Once the new permit or extension is issued, it is formalized by the notary and the bank.

Please be aware that if the property is in the municipality of La Paz, BCS, and the bank issuing the fideicomiso changes, an additional 2% transfer tax – based on the appraised value of the property – will be charged. Last fall the municipality adopted the standard that a change of bank is the same as a change of ownership.

This standard has created an additional tax to be paid by foreigners who have their fideicomisos with banks such as HSBC, Banamex, and other banks which are no longer renewing or accepting new fideicomiso trust permits. This has forced foreigners to move to other banks, such as Scotia Bank, Banorte, Banco del Bajio, and others which continue offering the fideicomiso trust service.

Other costs involved with fideicomisos are bank cancellation fees for termination of an existing permit; a new permit or renewal fee; registration in the Foreign Investment Registry (RNIE); a signature fee and the first annual fee for the new trust; and closing attorney, notary, and public registry fees. A new notarized deed will be issued and delivered to the parties.

It is important to remember that this is once every fifty years, and the only other expense to maintain the legal status of the property is the payment of the bank’s annual trustee fees – which range from $400.00 to $550.00 USD per year – and property taxes.

At Baja Legal Solutions, we can give you a free quote for renewal of your trust permit (fideicomiso). Contact us for an appointment. Please bring a copy of your trust deed (fideicomiso), and last property tax payment receipt.

Gisela Talamantes Saenz, LL.M, Attorney at law and Official Translator. She holds a master’s degree in International Legal Studies from the Washington College of Law at American University in Washington DC.

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