Historically Mexico property has been dominated by foreign ownership since the Spanish arrived in the early 1500’s. Which gives a good indication why the Mexican Government of today is protective of its land with regard to foreign ownership, while still remaining aware of the importance of a certain level of foreign investment in promoting and strengthening its economy.
Despite the 1822 Mexican declaration of independence from Spain, the majority of Mexico property continued to be owned by foreigners, a minority of wealthy Mexicans, and the Catholic Church. Furthermore, during the reign of President Porfirio Diaz, stretching more than 30 years from 1876 to 1911, most of Mexico was further divided up and sold to foreigners.
With the Federal Constitution of 1917, which resulted from the Mexican Revolution of 1910, new stricter laws were put in place in order to restrict foreign ownership of Mexican lands and give the land back to the Mexican people. The Constitution allowed for Mexican Nationals and Mexican Companies to own property, but foreigners were restricted from purchasing Mexico property in the newly defined restricted zones. These restricted zones extended 50km from the any Mexican coastline and 100km from any Mexican boarder.
Although the aim of the Federal Constitution was to give the lands back to the Mexican people, this did not take any real effect until the 1930’s when President Lazaro Cardenas distributed much of the large land holdings Ejido’s, or cooperative farms. Although the property still remained in the ownership of the Mexican Federal Government, Mexicans were given a right to farm these lands and receive the profits from the land. Over 50 million acres of Mexico property was given to the Mexican people to farm in the form of these Ejidos.
In 1992 Agrarian Law in Mexico made a significant decision to allow those working their Ejidos to allow them full ownership, therefore removing the property from Federal control. This, in turn, allowed the owners to sell or lease the land to a non-Ejido member, including foreigners. The land then becomes part of the public land registry. Since the passing of this Agrarian Law of 1992 there have been thousands of acres of Mexico property being sold on or leased.
In 1994 the Mexican government made amendments to the 1917 Federal Constitution which had restricted foreigners from owning Mexico property within the restricted zone. The creation of a Fideicomiso, or a Mexican Property Trust, enabled ownership by foreigners through this land trust. An appointed bank acts as a Trustee for the trust which the property is purchased under, and you as the owner are the Beneficiary of the trust. A Fideicomiso is not a lease of the land, the Beneficiary of the trust has a right to change, renovate, rent or sell the property on. They also have the automatic right to renew the trust after the 50 year expiry (this 50 year renewal carries on indefinitely), and in the case of death the trust may be passed on to whomever the Beneficiary wishes to appoint, just the same as with any deceased estate.
It is clear that the Mexican government is looking to increase its foreign investment within the country as it looks to strengthen its every growing economy. The new laws that are being put in place enable solid legal investment opportunities for foreigners to invest into the promising property market that is Mexico.
