There was a time when investing in Mexico was not as safe as investing in the U.S. However, recent amendments to the Mexican Constitution have made investing in Mexico both safe and prosperous.

Article 27 of Mexico’s 1917 Constitution prohibited direct investment in real estate assets by foreigners in what is known as the “restricted zone.” The restricted zone encompasses all land located within 62 miles of any Mexican boarder and within 31 miles of any Mexican coastline. However, numerous reforms have been applied to the Mexican constitution, giving international buyers the right to enjoy greater legal freedom and ownership rights.

In 1973, the Mexican government created the concept of “fideicomiso” to help protect foreign private real estate investors. A fideicomiso is basically a real estate bank trust. This type of trust is similar to trusts set up in the US, but require an approved Mexican bank to be designated as the trustee and have title to the property. The private foreign investors, however, are allowed a bundle of rights with the fideicomiso: the right of occupancy, the right to sell in whole or in part, the right to control the use of, the right to bequeath, the right to lease, and the right to exercise any rights obtained by the occupant for use of the property. Consequently, private U.S. second-home buyers now receive unprecedented protection in Mexico for their investment.

A greater protection is also afforded U.S. corporations. Under the 1993 Foreign Investment Law, a corporation established in Mexico is considered Mexican under the law, even if all the stockholders are foreigners. Thus, a Mexican corporation with 100% foreign ownership can acquire real estate property even in the restricted zone without the need for a fideicomiso. In other words, U.S. corporations have the legal right to outright own 100% of coastal property in Mexico and receive the same protection as a Mexican corporation.