Tulum, a picturesque coastal town located on the Yucatán Peninsula in Mexico, has gained significant popularity among tourists and investors in recent years.
With its stunning white sandy beaches, ancient Mayan ruins, and vibrant cultural scene, Tulum has become a sought-after destination for those looking to invest in real estate.
However, as a foreigner, you may wonder about the rules and regulations surrounding property ownership in Tulum.
In this comprehensive guide, we will explore whether foreigners can buy property in Tulum and provide you with the essential information you need to know.
Foreign Ownership Laws in Mexico
Mexico has implemented laws that regulate property ownership by foreigners. These laws were put in place to protect Mexico’s national interests and prevent massive land acquisitions by non-Mexicans.
However, Mexico also recognizes the significant contribution foreign investment makes to its economy and, therefore, provides avenues for foreigners to purchase property.
The Restricted Zone
In Mexico, there is a designated “restricted zone” which includes areas within 50 kilometers (about 31 miles) of the coastline and 100 kilometers (about 62 miles) from the country’s borders. Tulum falls within this restricted zone.
According to Mexican law, foreigners cannot directly own land within the restricted zone, particularly in areas where residential, commercial, or touristic activities take place.
To overcome this restriction, Mexico established the Fideicomiso (Bank Trust) system, which enables foreigners to indirectly acquire property within the restricted zone through a bank trust arrangement. This legal structure provides a secure and practical method for foreigners to invest in Tulum’s real estate market.
Fideicomiso (Bank Trust) System
To bypass the restrictions on foreign ownership, Mexico has established the Fideicomiso system. This system allows foreigners to indirectly acquire property within the restricted zone through a bank trust (fideicomiso) arrangement. Under this arrangement, a Mexican bank acts as the trustee, holding the title to the property on behalf of the foreign buyer.
The fideicomiso grants the foreign buyer all the rights of ownership, including the ability to sell, lease, and inherit the property. The trust has a fixed term of 50 years, which can be renewed for another 50 years, providing a total term of 100 years. The buyer is the beneficiary of the trust and retains full control and use of the property.
Establishing a Fideicomiso
To establish a fideicomiso, foreigners need to follow a few steps:
- Choose a reputable Mexican bank that offers trust services and has experience in handling foreign property ownership.
Engage the services of a notary public who will handle the legal aspects of the transaction, including drafting the trust agreement.
- Provide the necessary documentation, including a copy of your passport, proof of income or financial statements, and any other documents required by the bank.
- Pay the associated fees, which typically include a one-time trust set-up fee, annual trust maintenance fees, and notary fees.
Property Ownership via Mexican Corporation
While the fideicomiso system is the most common method for foreign property ownership in Tulum, establishing a Mexican corporation is another option.
This approach is typically used for commercial or large-scale investment purposes.
Setting up a Mexican corporation involves additional legal and administrative processes, such as creating the corporation, obtaining a tax ID number, and complying with corporate governance requirements.
It is advisable to seek professional legal advice before pursuing this avenue to ensure compliance with all regulations.
Recent Changes to the Law
It’s important to note that Mexican laws and regulations are subject to change.
In recent years, the Mexican government has been exploring the possibility of easing restrictions on foreign property ownership to attract more international investment.
Monitoring official government sources, consulting legal professionals, and engaging with reputable real estate agents can help you stay informed about any potential changes that may impact foreign property ownership in Tulum.
Ownership Rights and Protection
Foreigners who purchase property in Tulum, either through a fideicomiso or a Mexican corporation, enjoy the same ownership rights and protection as Mexican citizens. They have the right to use, enjoy, improve, lease, and sell the property.
Additionally, property ownership is secured through the legal framework, and there are provisions for dispute resolution in case of any conflicts.
Can a Foreigner Buy a Property in Tulum? Conclusion
While foreigners cannot directly own land in the restricted zone, including Tulum, they can still acquire property through the fideicomiso system or by setting up a Mexican corporation.
The fideicomiso provides a secure and practical method for foreign property ownership in Mexico, allowing buyers to enjoy all the benefits of property ownership without compromising on their rights or protection.
As with any real estate transaction, it is crucial to engage reputable legal and financial professionals to navigate the process smoothly and ensure compliance with the current laws and regulations. With proper due diligence and the right guidance, owning property in Tulum can be a rewarding and lucrative investment for foreigners.