Beyond the Myth: Why the Fideicomiso is the Gold Standard

If you have ever Googled "buying property in Mexico," you have likely encountered the scary buzzwords: Restricted Zone. Constitution. Bank Trust. Lease.

Let’s stop there. The rumor mill—often fueled by timeshare salespeople or outdated forums—suggests that foreigners can’t "really" own land in Mexico. They say it’s just a 50-year lease. They say the government can take it back.

They are wrong.

At Covest, we deal in Sovereign Ownership. To understand why our fractional assets are secure, you need to understand the mechanism that holds them: the Fideicomiso (Fee-day-co-me-so). Far from being a loophole or a lease, the Fideicomiso is one of the most robust asset-protection vehicles in North American law.

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The Origin Story: Article 27

To understand the solution, we must acknowledge the constraint. Article 27 of the Mexican Constitution (1917) prohibits non-Mexicans from directly holding title to real estate within the "Restricted Zone"—defined as:

• 100 kilometers from any border.
• 50 kilometers from any coastline.

This covers virtually every premier luxury destination: Los Cabos, Punta Mita, Tulum, Puerto Vallarta.

In 1973, recognizing the need for foreign investment, the Mexican government created the Fideicomiso system. It wasn't a workaround; it was a formal, federally sanctioned invitation. It allows foreigners to hold the undeniable rights of ownership through a Mexican Bank Trust.

The Mechanics: How It Actually Works

Think of the Fideicomiso as you would a Family Living Trust or an Estate Trust in the United States or Canada. It involves three parties:

1. The Fideicomitente (The Seller): The original owner placing the land into the trust.
2. The Fiduciario (The Bank): A major financial institution (e.g., BBVA, Scotiabank, Intercam) that holds the administrative title.
3. The Fideicomisario (You): The Beneficiary.

CRITICAL DISTINCTION: The Bank holds the paper title, but you hold the beneficial rights.

What does this mean practically?

• You can sell it.
• You can rent it.
• You can improve it.
• You can bequeath it (inheritability is seamless).
• You keep the profits. The bank claims no equity.

Myth-Busting: "It's Just a Lease"

This is the most pervasive myth. A lease implies that at the end of the term, the landlord takes the property back.

The Fideicomiso is PERPETUAL.

• The Term: It is issued in 50-year increments.
• The Renewal: It is legally renewable forever.
• The Fees: A modest annual fee (usually $500-$700 USD) keeps the trust active.

Platform Independence: The "Covest" Question

A smart investor asks: "What happens if Covest disappears?"

Because we use the Fideicomiso structure, your equity is Platform Independent.

• The Trust is not held by "Covest Inc."
• The Trust is held by the Bank for you (and your co-beneficiaries).

If our platform were to vanish tomorrow, your name is still on the Trust in the Public Registry. The legal structure of the house remains. The governance rules remain. You and your co-owners still own the asset. Covest is merely the operational layer; the Fideicomiso is the bedrock.