The Mexican Trust

The Mexican Trust or better known as the fideicomiso is a commercial contract governed by Mexico’s general law of credit instruments and operations (GLCIO). Like most contracts in Mexico governed by a particular statute, the GLCIO includes a number of mandatory provisions which means they can not be modified or waived, but also allows trusts to include other contractual provisions, making them one of the most flexible types of contracts in Mexico, and one that is widely used for many different purposes.

Land Trusts

Perhaps the most widely known use of a Mexican trust, especially amongst Americans and other non-Mexicans, is the real estate or land trust for the restricted zone for acquiring residential property.

Under Mexican law, foreign persons and entities may not own land that is located within the restricted zone, which is an area of 100 kilometers from either border (north or south) and 50 kilometers from the coastline.

Administrative Trusts

These types of trusts will generally revolve around the administration and management of certain assets, and in certain instances, provide for payment and distribution features.

They can either be used by individuals as part of an estate plan, or by corporations as ways of managing their assets. Companies use these types of trusts to manage pension and retirement plans. 

The Guaranty Trust

Guaranty trusts are fairly new to Mexico. New legislation was enacted in 2000 introducing guaranty trusts as another structure to secure collateral, furthermore, the new legislation was clarified in 2004 removing many of the doubts and confusions created by the initial legislation.

Guaranty trusts present many advantages to lenders and secured party’s over other more traditional types of guaranties for instance mortgages, for several reasons.