If you haven’t brushed up on real estate investment in Baja California and mainland Mexico recently, you’ll be happy to learn that a lot has changed in the last fifteen years! Although Mexican law used to prohibit foreigners from owning property within 31 miles of any Mexican coast or 62 miles of any border, US citizens can now purchase property for residential or development purposes anywhere in Mexico including its spectacular coastline thanks to new foreign investment laws.
The special arrangement which now makes it possible for you to purchase land in the coveted "Restricted Zone" is called an Individual Land Trust. Here is how it works. If you are a US citizen with a valid Mexican entry visa, you should first look for the ideal property to match all of your residential or commercial needs. Once you have selected this property, you (the beneficiary) will then work with a Mexican bank (the trustee) to purchase the property from its seller (the trustor) and create your individual land trust.
A land trust is not like a private exchange where the buyer and seller trade money and a land deed or title papers. Instead, it is a special arrangement where your Mexican bank actually buys the property with your money, and is the technical owner of the 'real' property rights. However, YOU (the buyer) own the personal rights to use, rent, modify or transfer your rights to a third party for a period of 50 years. Before this time period expires, the beneficiary of your property (whether you, your spouse, an heir, etc.) can apply for a "renewal", which keeps the property in your family for another 50 years. There are no limits on renewals, so property rights can stay with your family or descendants for generations.
Of course, you may also sell your property at any time to another US or foreign citizen by assigning them bank rights ~ or to a Mexican national by having your Mexican bank endorse the title over to the new buyer.
Sounds complicated? Actually, it’s often easier than buying property in the United States! Thanks to the role of the banks in these transactions, the purchase process is actually quite streamlined for you. Your Mexican bank will handle all necessary paperwork including filing all foreign permits with the Mexican Ministries of Interior and Foreign Affairs. By Mexican law, your bank is required to make sure that your Trust is fulfilled down to the final detail, and that your rights as a purchaser are completely protected. Best of all, since all Mexican banks are protected against bankruptcy by the government, your individual land trust is federally guaranteed.
This system works so well that many foreign investors choose to purchase Mexican property this way even in the unrestricted zones!